Introduction

Summit Capital Services, LLC is a Washington limited liability company doing business as The Summit Group (“Summit”). Summit specializes in creating, preserving and maintaining affordable housing that empowers and prospers all involved.  Summit’s success can be attributed to the dedication of its founders and the business philosophy Summit has established.

 

History of The Summit Group

Summit raises equity funds for properties providing Section 42 Federal Low-Income Housing Tax Credits (“Credit”) with a primary focus on the Rural Housing Service of the U.S. Department of Agriculture (“RHS”) Section 515 program properties qualifying for the Credit.  Prior to 1995, this department was known as the Farmers Home Administration.  As industry conditions changed, Summit syndicated properties with other forms of government assistance such as HOME funds or State Housing Finance Agency funding. 

 

Since 1985, Summit has syndicated 38 investment funds representing $219 million of equity.  They total 410 projects with over 12,000 units and aggregate development costs of $1.170 billion. 

 

Summit continues to meet their investment objectives.  Through 2013, the investors in Summit’s funds have received 100% of their annual projected Credit benefit.  Overall, the prior programs of Summit are expected to generate 100% of their forecasted investment benefit.

 

Business Philosophy

Summit has always believed in creating long-term business relationships.  By its very nature, investment in low-income housing is a long-term business.  Summit believes that if over an extended period its investors and developers prosper from Summit’s investment activities in affordable housing, Summit will prosper as well.

 

Focus

Summit focuses on meeting the needs of rural America for affordable housing. A primary program for meeting this need is the RHS/FmHA Section 515 program.  Our structure and philosophy allows us to be flexible in meeting the challenges and opportunities of this industry.  In fact, Summit not only has responded, it continues to thrive during these years of challenge and change in the affordable housing industry. Our structure and philosophy allows us to be flexible in meeting the challenges and opportunities of this industry.  In addition to RHS-financed projects, Summit syndicates properties financed with conventional, HOME, State Housing Finance Agency or other program funds.  We continue to focus on the financial worthiness and the capabilities of the development and management team supporting the acquired properties.

 

Summit focuses on selected areas of the country.  The majority of our properties are located in the upper midwest, midwest and northwest regions.  Summit has established relationships with a select group of qualified developers in these geographic regions.  Expansion into other areas of the country is accomplished with a long term strategy in mind.

 

Transaction Structure

Summit endeavors to create investments that provide a high return with a minimum of risk.  This is accomplished through our unique and proven investment structure.

 

Summit structures its transactions to address the requirements of all programs from which its properties benefit.  The tax code relating to Credit properties mandates a lengthy holding period.  Current tax law requires a 15-year holding period to avoid recapture of previously allowed Credits as well as an additional 15 year extended use period.  In addition, programs such as the RHS Section 515 program may place additional limitations on a property. 

 

All properties are expected to have some type of government subsidy, typically in the form of below-market interest rate financing (“BMIR”), rental subsidy, or both. 

 

Another method used to minimize risk during the construction and lease-up period is incentivizing the developers to achieve benchmarks.  Their fees are generally paid in installments which they earn upon completion of certain crucial events. 

 

Accountability

Summit remains accountable to its investors.  Summit is also accountable to its developers and expects accountability from them.  Summit realizes its fiduciary responsibilities and takes actions with these responsibilities in mind.

 

Summit strives to provide the forecasted tax benefits through its investment structure and through the use of capital adjusters.  If investors do not receive the forecasted benefits, adjustments are made to the investment schedule to maintain the relationship between invested capital and benefits and investment yield. 

 

Summit strives to provide timely communications.  We believe it is our responsibility to keep our investors informed.  For previous programs with individual investors, an early Summer property status report and a Fall property status report are provided.  The Fall property status report includes an updated investment benefit projection.  For institutional investor programs, annual financial statements and quarterly updates are sent.  AHIC format data is provided quarterly.  Investment models are updated for actual operating results.

 

Summit holds the developers accountable.  The developers are paid over time subject to certain performance benchmarks.  If the properties generate less than a previously agreed upon percentage of the projected credit amount, adjustments and reductions are made to current and future payments to the developer.  After all payments are made, the developer is obligated to pay in cash certain amounts based on performance benchmarks.  Thereafter, adjustments are made at the time of any sale or refinancing of the property.  Summit has the right to remove a developer or managing agent if their performance is substandard.

 

Investment Oversight

Summit realizes oversight of the management company and developer is critical to the long-term protection of property value.  We have established reporting criteria designed to keep us up to date on property status and performance.  Additionally, we perform on site inspections every 12 to 18 months in order to confirm proper maintenance and management actions are being taken in order to keep in compliance with regulations and maintain high occupancy levels.  If we detect any issues, we request the developer take appropriate actions to correct them. 

 

Our focus on select parts of the country and a select group of developers with whom we have forged long-lasting relationships enable us to monitor our investments efficiently.

 

Financial Stability

Summit has always taken a long-term approach to business.  This has created a strong financial base so that our future has not been leveraged.  This stable financial base has allowed the Company to adjust to changes in the business climate.

 

The Summit Group

Experience and Track Record

 

29 Years in Affordable Housing
 

·         The Summit Group was founded in 1985 to raise equity funds for properties providing Section 42 Federal Housing Tax Credits

 

·         38 Programs sponsored/structured

 

·         Over 1,843 individual and corporate investors

 

·         Over $1.170 billion in real estate assets acquired

 

·         Over 12,000 affordable rental units

 

·         Over 410 properties syndicated in seventeen states

 

Proven Tax Credit Sponsor
 

·         Comprehensive acquisition process

 

·         Specific investment guidelines

 

·         Philosophy of steady, reasonable rate of growth

 

Track Record
 

·         History of sponsoring quality tax credit offerings that continue to provide tax credit benefits

 

·         Through 2013, investors in Summit programs have received approximately 100% of the adjusted annual projected Credit benefit and are expected to receive 100% of projected benefit in total.

President

Don W. Beaty

dbeaty@smtgrp.com