Interactive tool · 3 adjuster types
Syndication Adjusters
When delivered credits differ from underwriting, the LPA adjuster clause kicks in. Three flavors: credit adjusters (basis/applicable % shortfall), basis adjusters (final cost certification), and timing adjusters (PIS slips into the next year).
From the original deal model
After basis adjustments / IRS Form 8609
Cents per credit at original close
1.0 = full clawback; some LPAs use scaled (1.0–2.0)
Statutory floors: 4% — bond-financed or non-§42(b)(2) buildings (§42(b)(3)); 9% new non-bond (§42(b)(2))
Months past projected PIS date
Annual rate for the cost-of-carry on delayed equity
What adjusters are and why they exist
LIHTC syndication agreements include adjuster clauses protecting the investor (LP) when the deal delivers fewer credits than underwritten. Three triggers:
- Credit adjuster: Annual credits delivered are less than projected (after Form 8609 issuance).
- Basis adjuster: Final cost certification yields lower eligible basis than projected.
- Timing adjuster: Placed-in-service date slips, shifting the 10-year credit period later and reducing LP IRR by deferring the present value of first-year credits (prorated under IRC §42(f)(2)(A), with the disallowed portion recovered in Year 11 under §42(f)(2)(B)).
When triggered, the LP equity contribution is reduced by an adjuster amount = (credit shortfall) × credit price × adjuster ratio. The GP must make up the gap via reduced developer fee, deferred contributions, or other sources.
FAQ
What's a typical adjuster ratio?
Most LPAs use 1.0 (dollar-for-dollar). Some — especially in tight deals — include a scaled ratio (1.5×–2.0×) as a penalty for material shortfalls, encouraging the GP to underwrite conservatively.
When do basis adjusters get triggered?
At cost certification, typically 90 days after the final certificate of occupancy. The 8609 is issued based on certified eligible basis. If certified basis is less than 95% of projected (common LPA threshold), the adjuster fires.
Are timing adjusters statutory?
No — they're entirely LPA-negotiated. The statute provides for credits over 10 years starting at PIS, but doesn't mandate any IRR protection for LPs. Adjusters are private contracts between GP and LP.