MINNEAPOLIS – June 24, 2019 – Winthrop & Weinstine, P.A., on behalf of and in collaboration with client Downtown Action to Save Housing (“DASH”), a Bellevue, Washington based non-profit affordable housing developer, has prevailed in an important Year-15 Exit dispute in the Low Income Housing Tax Credit (“LIHTC”) industry that has been in litigation in federal court in Washington State since January of 2018.
In February of this year, a federal judge in the Western District of Washington ruled in DASH’s favor on summary judgment, determining that the Investment Partnerships—managed by their general partners at Boston Financial Investment Management (“BFIM”)—had breached the LIHTC partnership agreements by failing to sell their investor limited partner ownership interests in three affordable housing developments to DASH, leaving only the issue of DASH’s damages on the table for a scheduled jury trial. Following this, DASH commenced a second, related case involving BFIM in which similar issues were presented concerning an Investment Partnership’s failure to transfer its limited partner interests to DASH in a fourth LIHTC partnership. Last week, the parties reached a global settlement agreement involving all four LIHTC partnerships, in which BFIM has agreed to transfer the investor limited partner interests to DASH. Pursuant to the Agreement, DASH will receive the investor limited partner interests in all four LIHTC partnerships at no cost to DASH because it will not have to pay BFIM approximately $70,000 for those interests, which was the appraised fair market value of the ownership interests in question in the litigation. In addition, BFIM agreed to pay the mediation fees associated with the settlement. Prior to this crucial result, BFIM had sought more than $2 million from DASH for the transfer of the investor limited partner interests.
“We are honored to help another LIHTC developer navigate the complex issues within Year-15 Exits and are excited that DASH can now renew its focus on its future, core mission of affordable housing for all, and ongoing preservation efforts in its LIHTC portfolio,” said David Davenport, a shareholder at Winthrop & Weinstine and lead attorney for DASH. “However, as the LIHTC industry continues to mature and change, we expect to see a continued increase in disputes that arise around the end of the 15-year Compliance Period. Winthrop & Weinstine hopes to remain on the forefront of these disputes on behalf of its real estate developer clients.”
DASH’s Executive Director, Kim Loveall Price, “appreciates the depth and expertise that David and his colleagues at Winthrop & Weinstine brought to the table, and their tireless commitment and dedication to DASH.” According to Loveall Price, “all of us at DASH are thrilled with the result and we hope that this can, in some way, help other LIHTC developers facing similar issues across the country.”
Year-15 Exit disputes are often hyper-specialized and often involve parties whose objectives have changed due to changes in ownership structures since inception of the LIHTC partnerships. Adding to these complex issues is the fact that, because it is still a relatively young industry, there is very little case law involving LIHTC partnerships to cite when resolving these disputes. Since 2013, Davenport has led litigation and other efforts for general and managing partners in disputes in 12 states in more than 32 cases and other matters that have involved more than 75 LIHTC developments.
To learn more about DASH, visit www.dashhousing.org.