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David A. Davenport

Affordable housing is vitally necessary in our country – I help clients preserve it.

My Approach

I was trained to be a trial lawyer.  As a young associate, I tried my first solo case to a jury in 2003.  Since then, I have had many jury and bench trials across the United States, all of which, combined, give me a skill set that allows me to help my clients solve their problems, whether they are partnership disputes in the Low Income Housing Tax Credit (“LIHTC”) industry, a construction, real estate or land use dispute, a shareholder dispute, or some other business, commercial or intellectual property dispute.  While amicable, negotiated business-to-business resolutions are ideal, I also understand that not all disputes can be resolved this way; some problems can only be fixed through judicial intervention, arbitration or some other form of dispute resolution.  My clients rely on the seasoned approach and easy communication with judges and juries that comes with 20-plus years of trial court experience, in more than 25 states across the country.

My practice is keenly focused on helping real estate developers, including non-profit and for-profit developers, in the LIHTC industry preserve affordable housing.  What started as helping clients enforce their rights through litigation has since evolved to also include counseling clients on best practices for “year-15” contract provisions and rights, all aimed at avoiding future disputes as new LIHTC deals are being syndicated, negotiated, and eventually reduced to writing in complex partnership agreements.  I also conduct client-focused training, often with asset management and development staff, where we evaluate contracts, develop disposition strategies, and work together toward achieving limited partner exits following the end of the LIHTC year-15 Compliance Period.

Because I also believe that almost no problem, whether settled amicably or fought hard before a jury, lies on the shoulders of one person, I take a team-oriented approach and involve my clients – working with them rather than for them. It is also of paramount importance that I understand my clients’ businesses, and know “the deal” and intentions from which the problem arose, so that I may work to achieve the most optimal outcome for my clients.  Throughout the process, I look to provide effective, efficient solutions to complex issues facing my clients, and I bring a direct approach to complicated disputes and emotionally charged situations.

Outside of work, my wife, kids and I enjoy all that the outdoors has to offer, including winter sports, hunting, camping, hiking, and biking.

A Groundbreaking Moment in My Career

In 2013, I realized that significant changes were occurring in the Low Income Housing Tax Credit (“LIHTC”) or affordable housing industry, and I set out to determine why.  As the industry has matured and changed over the years, there has been an increase in disputes that arise near the end of the 15-year Compliance Period.  I purposefully shifted my practice to focus on representing real estate developers who are general or managing partners in the LIHTC industry, and I have a particular expertise in litigating partnership exit and “year-15” disputes. These specialized exit disputes involve extremely complicated transactions, new and existing parties, and parties whose objectives have changed since inception of the partnerships. Adding to these complex issues is the fact that this is still a relatively young industry insofar as partner disputes are concerned, thus there is very little specific case law to look to in order to resolve these disputes.

In the years since, I have been on the forefront representing clients in these matters, in many cases helping to actually create that much-needed case law. Throughout more than three dozen lawsuits and disputes affecting more than 100 LIHTC properties, the outcomes and precedents we achieved on behalf of our clients are already working to frame future cases and negotiations, as well as inform future LIHTC partnership agreements. Despite the multitude of existing issues surrounding year-15, we continue to uncover even more emerging controversies in this area.  Some of the issues that have arisen in these Year-15 exit disputes include:

  • Disputes over Purchase Options, Put and Call Rights, and Rights of First Refusal
  • Fair Market Value and Appraisal Disputes
  • Disputes over Purchase Option Price Determinations
  • Ownership Interest Disputes
  • Capital Transaction Disputes
  • Capital Account Disputes
  • Disputes concerning Forced Sale Rights
  • Project Refinance Disputes
  • Limited Partner Removal Initiatives
  • Qualified Contract Issues

I have a deep understanding of the LIHTC program in general, including its purpose and intent, as well as the finance vehicles used by LIHTC developers and the underwriting strategies employed by investors. I use this understanding, combined with my extensive experience representing business owners in partnership disputes, to advise clients on their rights, obligations and duties under their partnership agreements and other operative documents to avoid litigation, if possible, and to fiercely litigate for their rights, if necessary.

In addition, I firmly believe that industry participants must work together to take control of the problems that have emerged in recent years due to the emergence of “The Aggregator,” and frequently speak and write on the subject nationally. I also serve on the National Housing Trust Preservation Working Group, a national coalition dedicated to the preservation of multifamily housing for low-income families.

Representative Matters
  • Successfully represented a non-profit affordable housing developer to achieve its mission to preserve affordable housing through the enforcement of a right of first refusal (“ROFR”) provided under the LIHTC program.  The firm’s client—Opa-Locka Community Development Corporation, Inc.prevailed over its partners (commonly known as Hallkeen Development or Management) who sought to sell a 216-unit affordable housing development located in Miami-Dade County, known as Aswan Village, to a third-party investment firm without first involving OLCDC or honoring its ROFR.  Through a summary judgment decision, the Florida Court issued a decisive ruling in favor of OLCDC on all issues before it and confirmed that, under Section 42 of the United States Code, a non-profit’s ROFR is not conditioned upon the receipt of any third-party offer or contract to purchase the development. Instead, the Court confirmed that all that is necessary to trigger enforcement of a Section 42 ROFR is for the owner of the affordable housing development to manifest an intent or willingness to sell the development.  And, because the contract giving OLCDC its Section 42 ROFR contained no other conditions for enforcement, it was not necessary for the owner of the development to have received or entered into an enforceable purchase agreement before OLCDC’s ROFR was triggered.  The Court granted OLCDC summary judgment, dismissed all claims and defenses presented by the Hallkeen defendants, and ordered them to specifically perform under the ROFR by transferring Aswan Village to OLCDC under the Section 42 minimum purchase price.  A trial on damages is pending, wherein OLCDC will seek to recover more than $1 million.
  • Representation of the general partner of Berkshire Club Partners, Ltd., who had exercised its option to purchase the limited partner interests in a LIHTC partnership in the Orlando, Florida area pursuant to a contractually mandated process providing for a formulaic option price at fair market value.  At the time, ownership and control of the limited partner interests had changed from what it was initially when the project was financed and the limited partner interests were managed and controlled by Hunt Capital Partners (“Hunt”).  Despite the general partner’s full compliance with the partnership agreement and option process, Hunt caused the limited partner to refuse to accept the tendered option proceeds, sought to monetize a positive capital account balance of more than $5.3 million through the option purchase price, and later declared alleged defaults under the partnership agreement to support an initiative to remove the general partner in order to prevent the acquisition of the limited partner interests.  Prior to this, the general partner had never been accused to be in default of its obligations, never had any performance issues raised, and had diligently served as general partner for more than 15 years, delivering the anticipated tax and other benefits to the preceding limited partner.  Our team obtained a summary judgment ruling, which found that the parties’ option process and formulaic fair market value option price would be enforced.  The court held that there were no grounds to remove the general partner from the partnership and that the option purchase price is determined “as if there were a hypothetical sale of the Project, not as if the Partnership were being dissolved or liquidated” as the limited partner argued.  As a result, the court rejected the limited partner’s arguments that the option price must include credit for a capital account balance.  The Court also found that the limited partner’s alleged defaults, lodged to remove the general partner and prevent the option, were also found to be “baseless and intended to deprive” the general partner of its rights, further ordering the immediate transfer of the limited partner interests to the general partner and reserving jurisdiction to later enter a damages order and an award of attorney’s fees to the general partner.
  • Representation of Centennial Partners, an affiliate of Milwaukee, Wisconsin based real estate developer Wimmer Communities, in a LIHTC Year-15 Exit dispute involving a 97-unit affordable senior housing development in Oak Creek, Wisconsin, owned by Centennial, LLC.  The dispute centered around Centennial Partners’ effort to exercise and close on its option to purchase the limited members’ ownership interests in Centennial, LLC.  The limited members were ORC Tax Credit Fund 10, LLC and SCDC, LLC, both managed by and affiliated with Wentwood Capital Advisors, LP (“Wentwood”).  Through Wentwood, the limited members refused to sell their ownership interests in Centennial, LLC to Centennial Partners for fair market value and sought, instead, to recover a more than $1 million positive capital account balance in the form of a cash payment.  In December 2018, a Milwaukee County Circuit Court granted summary judgment to Centennial Partners, confirming that its exercise and pursuit of its purchase option was not a capital transaction, and therefore did now allow for consideration of a positive capital account when determining the fair market value of the limited members’ ownership interests in Centennial.  Following this decision, the case went to a jury trial on Centennial Partners’ claims of breach of contract and breach of the duty of good faith and fair dealing.  The jury was also asked to determine the fair market value of the limited member interests in Centennial, as well as Centennial Partners’ claim for damages.  On behalf of the limited members, Wentwood sought a more than $1.7 million purchase price for the ownership interests, while Centennial Partners argued that $500,005.00 was the fair market value.  After a four-day jury trial and only 40 minutes of deliberations, the jury agreed with Centennial Partners and returned a favorable verdict.  The jury found that the limited members had breached the Operating Agreement and violated their duty of good faith and fair dealing owed to Centennial Partners.  As a result, the jury awarded Centennial Partners $470,000.00 in damages.  The jury also agreed with Centennial Partners that the fair market value of the limited member interests was $500,005.00, resulting in Centennial Partners only needing to pay $30,005.00 for the limited member interests, which was further decreased by certain court related costs.  The more than $1 million positive capital account balance remained with Centennial.
  • Representation of Downtown Action to Save Housing (D.A.S.H.), a Seattle-based non-profit affordable housing developer in a Year-15 LIHTC dispute with Investor Limited Partners, managed by and affiliated with Boston Financial Investment Management (“BFIM”), involving three affordable housing communities, and three separate but nearly identical partnership agreements, each of which contained a detailed buyout option that would allow D.A.S.H. to purchase the entire ownership interests of three limited partners at the end of the 15-year Compliance Period.  When D.A.S.H. attempted to exercise its buyout options, the limited partners refused, through BFIM, despite D.A.S.H. having met all of the requirements of the buyout options, including relying on the assessment of fair market value by an appraiser all parties had agreed upon.  According to the limited partners, they refused D.A.S.H.’s buyouts because they did not agree with the fair market valuation of their ownership interests in the three Partnerships.  The Federal Court ruled in D.A.S.H.’s favor on summary judgment, determining that the limited partners (“Investment Partnerships”) had breached the partnership agreements by failing to sell their ownership interests to D.A.S.H.  According to the Court, “[n]either the partnership agreements nor the buyout options entitled the Investment Partnerships to subjectively disagree with the appraised [fair market value] of their interests and then hold out for what they believed to be a more accurate price.”  The Court further ordered the Investment Partnerships to transfer their limited partner and special limited partner interests in each of the three Partnerships to D.A.S.H. for a collective $70,000.  Rather than go to trial to recover damages, D.A.S.H. agreed to resolve the matter with BFIM and received an assignment of all of the limited partner interests, along with the limited partner interests in an additional partnership, for no payment.
  • Represented Arch Apartment Management, LLC in a Year-15 LIHTC litigation.  Arch was attempting to acquire the Investor Members’ interests in the Company, pursuant to its purchase option in the Operating Agreement. However, the Investor Members, managed by and affiliated with Wentwood, were demanding more than $1 million for those interests. Our team argued, and the Court agreed, that Arch was to pay only $44,911, which would place the Investor Members in the same after-tax cash position they would be in if the Company sold the underlying Apartment Complex at the appraised fair market value. Shortly after Arch prevailed on these and other important LIHTC industry issues, the Court also issued an order in a related case, which the Investor Members had filed in retaliation against two of Arch’s owners individually.  Pursuant to that order, the Investor Members were required to pay attorney’s fees and costs, thereby confirming for Arch and its owners that the retaliatory suit claiming breaches of fiduciary duty and self-dealing was entirely frivolous and without merit. The district court decision was affirmed by the Minnesota Court of Appeals.
  • Representation of CommonBond Communities, a long-standing non-profit affordable housing developer in Minnesota, who was looking to exercise a right of first refusal to purchase its partner’s interest in an affordable housing project for seniors at a fixed and discounted price, based on the project’s existing debt and taxes owed.  CommonBond’s limited partner in the development project sought, instead, to require CommonBond to pay market value for the property, thus putting the future of the senior-based affordable housing project in jeopardy by making it too expensive to continue to operate.  We demonstrated to the court that the original contract, drafted 20 years prior, had a mutual mistake in it, which lead to the court’s ultimate decision to reform the contract to allow CommonBond to buy the property at the lower price and continue to operate the senior home.
  • Representation of Pelican Rapids Leased Housing Associates I, L.P., a local partnership and affiliate of a large, national affordable housing developer, in a year-15 exit dispute involving an investor limited partner’s refusal to consent to a refinance of project debt. The refinance was needed to avoid the Partnership’s default on its long-term debt financing obligations that were scheduled to mature, but the investor limited partner, managed by and affiliated with Alden Torch Financial, was refusing consent for the refinance and demanding to be paid the return of its invested amount in exchange for exiting the partnership to nullify the need for its consent for a refinance.  Our team successfully obtained an injunction allowing for a short-term refinance without the investor’s consent, which was then followed approximately six months later by a favorable summary judgment order finding that the investor limited partner had unreasonably and unlawfully withheld consent to refinance as a means to obtain rights that it otherwise did not have (i.e., a forced buy-out of its interests).
  • Representation of Cottages of Stewartville and Stewartville Development Corporation, a local partnership and affordable housing developer, in a year-15 exit dispute involving another affordable housing project. The dispute arose after the investor limited partner, managed by and affiliated with Wentwood, fully exhausted the tax credits available to the partnership and sought to exit the partnership with a forced sale of the project by unreasonably withholding consent to allow the general partner to refinance project debt.  Successfully obtained an injunction and court order that allowed his clients to refinance the project debt without the investor limited partner’s consent and prohibited the investor limited partner from involuntarily removing his client from the partnership.  Following the injunction, the case proceeded to a trial more than a year later.  Ultimately, the Court ruled in favor of our clients and confirmed that the investor limited partner had unreasonably withheld consent to refinance.

Practice Areas

Honors & Awards

The Best Lawyers in America©

Commercial Litigation, 2017-2021

Local Litigation Star

Benchmark Litigation, 2016-2020

Minnesota Super Lawyers®

2014-2020

Attorney of the Year

Minnesota Lawyer, 2013

Future Star

Benchmark Litigation, 2015

Rising Stars

Minnesota Super Lawyers®, 2004-2009, 2011

AV Preeminent

LexisNexis Martindale-Hubbell, Peer review ratings

Associations & Memberships

American Bar Association

American Intellectual Property Law Association

Federal Bar Association

Minnesota State Bar Association

Intellectual Property Section
Labor and Employment Law Section

Minnesota Intellectual Property Law Association

Hennepin County Bar Association

National Housing & Rehabilitation Association

National Council of State Housing Agencies

Affordable Housing Finance

Minneapolis Chamber of Commerce

Leadership program

Winthrop & Weinstine, P.A.

Board of Directors, 2019

National Housing Trust

Preservation Working Group

National Council of Housing Market Analysts

Certificate of Professional Designation