Goldstein Hall is pleased to share news of a recent settlement agreement involving our nonprofit client RiseBoro Community Partnership. The agreement results in the protection and preservation of permanent affordability for nearly 200 apartments in three Bushwick buildings. And our work on behalf of RiseBoro has paved the way for similar victories across the nation.
In addition to representing RiseBoro, Goldstein led advocacy efforts that helped educate and unite dozens of New York City and national nonprofits about potential threats to affordable housing projects that are part of the federal Low-Income Housing Tax Credit (“LIHTC”) program. Goldstein Hall’s leadership on this issue has helped ensure greater security for affordable units now and in the future.
Under the LIHTC program, investors receive tax credits for by virtue of their membership or partnership interest in properties developers purchase and improve through capital projects. In certain instances, the nonprofit partner acts as developer and manager for the properties and has the “right of first refusal” to acquire the property from the investor for a minimal purchase price after the tax credit compliance period of 15 years. In a case involving RiseBoro and the Bushwick properties, the investment firm SunAmerica (whose interest was later succeeded by Blackstone/April Housing) challenged the definition of the “right of first refusal” and the nonprofit’s right to acquire the property back at the minimal right of first refusal price.
RiseBoro and other affordable housing groups feared the buildings—and scores of others across the city and nation reaching the expiration of the compliance period—could eventually be converted to market rate projects. (For more background, please see this WBUR radio segment featuring David Goldstein’s comments on the issues involving LIHTC buildings.) RiseBoro lost an interim decision in the initial lawsuit but appealed. We were instrumental in the creation of a negotiated agreement earlier this month that restructures the partnerships between RiseBoro and the investment firm and gives RiseBoro a majority interest and effective control of the buildings’ future affordability. As noted here [link to press release from April Housing/Blackstone] the investment firm also has committed donations of $1.2 million over 15 years to help RiseBoro provide support services for the buildings’ residents.
The agreement and our client’s commitment to the long-term affordability of these units is a win for Bushwick, New York City, and the entire community of housing nonprofits and their tenants. We’re proud of our role in advocating for the protection and preservation of affordable housing and our collaboration in this case with a range of organizations and agencies, including the New York City Department of Housing Preservation and Development (HPD) and the New York State Division of Housing and Community Renewal. Notably, New York State Attorney General Letitia James was among those who filed amicus briefs in support of RiseBoro and our position on the “right of first refusal” language.
As a result of our work, HPD is taking a closer look at rights of first refusal and option agreements, has modified language in their Qualified Allocation Plan to strengthen protections of nonprofits and their right of first refusal. Arguments in our case also have led to success when used in legal disputes involving other projects outside of New York City facing similar issues. We’re happy to have taken a leadership role in effectively codifying the protection and oversight of nonprofits that own and manage thousands of affordable units in the LIHTC program. And we’re privileged to have helped RiseBoro achieve success so it can continue its mission of serving Brooklyn residents.
For more information on how Goldstein Hall can assist you with your tax credit transaction, please contact us at 646-768-4100 or [email protected].
Official Media Release: RiseBoro and Blackstone Announce Agreement to Preserve Affordable Housing