1. Negotiating the Partnership Agreement
Ben Applegate
Rachel Goetz
Hilary Jaffe
2019 Applegate & Thorne-Thomsen, P.C. Investor & Syndicator Boot Camp, September 9, 2019

2. General Principles for Negotiation/Working With Your Lawyer:
WORK AS A TEAM: KNOW WHAT IS “LEGAL” VS. “BUSINESS”? OR BOTH?
KNOW WHY YOU ARE NEGOTIATING WHAT YOU ARE NEGOTIATING
WHO IS THE INVESTOR? (WHERE WILL THIS DEAL END UP?)
EXPERIENCE OF AND WITH THE DEVELOPER

3. What Does Your Lawyer Need to get Started?
Letter of Intent (blackline to form is helpful)
Projections (and do a tax tech review)
Core Due Diligence
Organizational documents
Loan documents/commitment letters
Tax Credit Application
Reservation and Carryover
Real Estate Due Diligence

4. Capital Contributions
Timing for Payments
Debt Service Coverage
Breakeven Operations
Construction Completion
Lender Estoppels
Opinion Updates
Generic delivery requirements
Cost Certifications and Initial Tenant Files
Title date downs (state specific)

5. Guarantee Obligations
Construction completion/stabilization
Operating Deficits
Tax Credit Compliance
Environmental
Termination/Burn off provisions

6. Reserves (Replacement, Operating and Other)
Initial capitalization
Ongoing funding and replenishment
Conditions for use (interplay with guarantees, consents, etc.)

7. Distributions Order of the Waterfall
Incentive and administrative fees (from distributions or reserves)
10% savings language/overall cap on General Partner fees
“Soft” loan repayments
Tax considerations
Qualified allocations
Acquisition credits/related parties
Historic or other credits

8. Year 15 Related Provisions
Purchase Option and ROFR
“Forced Sale” Provisions
Investor Puts

9. Repurchase Obligations
Cliff issues
Timeframes
Developer argument: they create a “back door” guaranty?

10. Adjusters Timing (early and late) Basis (upward and downward)
Other Credits (historic, energy or state)
15 year credits
Change in law and LP actions

11. Defaults/Remedies Materiality standards
Fraud, gross negligence and willful misconduct
Notice and cure
Power of Attorney
Consider GP Loans and Developer Fee
Related party lenders/ground lessors
Removal Rights

12. Transfers General Partners Death or incapacity Bankruptcy
Change in control

13. Transfers (continued)
Limited Partners
Status of Capital Contributions
Related party transfers
Lender requirements

14. Representations and Warranties
Materiality and Reasonableness
Knowledge vs. Strict Liability
Regulatory and compliance with laws issues
Environmental
Projections/Financial

15. Nonprofit considerations
Limitations on remedies
Non-profit set aside
Tax exemptions
Tax-exempt use property
Special allocation issues
Material Participation
Right of First Refusal
Choi/Urban Memo

16. Reporting Requirements
Check with Asset Management
Penalties

17. Ancillary Documents Development Agreement Guaranty
Incentive Management Fee Agreement
General Partner/Manager Pledge
Purchase Option and ROFR Agreement

18. Thank you!