Question
From:(redacted)
Sent: Thursday, September 20, 2007 9:34 AM
To: Verne, B. Michael
Subject: Question re:802.2 and 802.5 exemptions
Mike,
I have a question regarding a transaction that I haveanalyzed and concluded would likely be exempt from the HSR reportingrequirements pursuant to Rules 802.2, 802.4, and 802.5. In this proposedtransaction, my client would sell 100% of the limited liability limitedpartnership interests in Subsidiary A, which is in the business of developingor acquiring affordable rental housing communities. It also sells thelow-income housing tax credits generated as a result of the acquisition and/ordevelopment of these communities. While Subsidiary A does not directly holdtitle to any rental property developments, it holds ownership interests innumerous partnerships that it has set up or invested in for the purpose ofdeveloping or acquiring affordable housing communities.
On a consolidated basis with the partnerships that,directly or indirectly, develop or acquire the affordable housing communities, Subsidiary A holds the followingcategories of assets, all of which are related to its business ofdeveloping or acquiring low income housing and selling the associated taxcredits:
Fees and other amounts receivable earnedfrom the development of affordable rental housing communities and the sale ofthe tax credits associated with those developments;
Interests in partnerships established to develop oracquire affordable rental housing communities;
Receivables stemming from advances made topartnerships established to develop and operate affordable rental housingcommunities;
Notes receivable as a result of loans made or linesof credit extended to developers and project partnerships for the purpose ofdeveloping affordable rental housing communities (e.g., pre-development loansand bridge loans);
Goodwill;
Cash, fixed assets, and other miscellaneous assetsincidental to operations, corporate and partnership offices, and prepaidexpenses.
Though I've not found any informal interpretations onpoint, I would think that these types of assets would be considered incidental to the ownership of real propertypursuant to 802.2 or incidental to the ownership of rental propertyassets pursuant to 802.5. Do you agree with this analysis?