Municipal Capital Appreciation Partners

Investment in a 128-unit, Elderly, Section 8 Assisted Complex in Westchester County, New York

MCAP acquired the facility in August 2011 with the proceeds of $14.5 million in tax-exempt debt and subordinated seller financing. MCAP will realize its return through the sale of Low Income Housing Tax Credits (LIHTC) and developer fees earned on the rehabilitation of the building. MCAP had a previous investment in debt secured by this property in 1999. Read More


  • Acquire the property with the proceeds of tax exempt municipal financing
  • Acquire LIHTC, which would fund the rehabilitation of the property, with tenants in place
  • Make a Construction Loan to the property at an attractive interest rate
  • Earn a Development Fee for providing services related to the development and rehabilitation at the property

Value Added Actions

  • MCAP successfully sought an extension of the Section 8 Housing Assistance Payments Contract for the property until 2031. A long term HAP contract contributed to higher equity pricing, favorable financing terms, and will reduce operational risk.
  • Structuring the acquisition with tax exempt debt qualified MCAP to pursue a Payment in Lieu of Taxes Agreement with the local municipality. The Agreement ensures that annual payments to the town are substantially below market real estate taxes for the next 40 years.
  • MCAP secured approval for LIHTC prior to the acquisition and over $7.2 million in LIHTC will be received rom the acquisition and rehabilitation work at the property. MCAP purchased the credits and subsequently sold them at a 25% premium.
  • Substantial capital improvements and apartment upgrades will improve demand and allow for higher rents. The renovation costs of $3.8 million were funded with a construction loan made by MCAP.
  • By acting as a developer, construction lender and initial syndicator, MCAP was able to maximize its return. Furthermore, since MCAP was able to negotiate attractive financing, the Fund's investment, excluding the short term construction loan, was limited to $510,000.


  • The return on this investment will be generated through gain from the LIHTC sale, development fees, and from construction interest and fees.