The Puerto Rico Public Housing Administration (PRPHA) and Ballard Spahr's Housing Group worked together to close the largest-ever low-income housing tax credit transaction, which was valued at more than $600 million and which paved the way for the modernization of thousands of units of public housing and earned "Deal of the Year" recognition from The Bond Buyer.

The deal was complex, requiring sophisticated financing that involved the leveraging of public funds, with more than $235 million in tax credit investment. "Ballard acted as our legal adviser and special counsel to PRPHA and the Department of Housing," said PRPHA Administrator Carlos Laboy-Diaz. "Their counsel was central to the successful conclusion of this complex transaction, which is the largest low-income housing tax credit transaction in history, both in number of units and amount of equity investment."

The PRPHA deal, which closed in August 2008, was the first four percent low-income housing tax credit transaction in Puerto Rico, and introduced a new financing source for developers there. It involved the first volume cap private activity housing bond issues of the Commonwealth, and was the largest single low-income housing tax credit transaction closed in the 22-year history of the federal low-income tax credit program, enabling the PRPHA to upgrade 4,100 units. Finally, the deal generates net cash of approximately $165 million from sale and developer fees. The money will be applied to modernization of public housing units beyond those in this transaction.

Ballard lawyers worked with others on the financing team to develop a plan that required numerous HUD approvals and involved a team of two dozen central and local HUD personnel. They navigated unique issues under Commonwealth of Puerto Rico law related to transferring 33 properties from public to private ownership while maintaining them as public housing. The sale of Puerto Rico Public Housing Finance Authority bonds had to be timed to immediately follow passage of the Housing and Economic Recovery Act of 2008.

"All of these considerations combined to make the deal challenging but especially satisfying, most importantly because the modernized units will improve the lives of thousands of low-income families," Ballard partner Paul Casey said. The team included partners Teri Guarnaccia, Linda Schakel, and Lila Shapiro-Cyr, and associates Amy McClain and Michelle McGeogh.

Paul Casey noted, "Our work to close this deal was particularly gratifying because of its landmark nature. This is the sort of legal work that really enables us to apply our intellect and creativity to complete deals that benefit our clients."