N.Y. AG Joins Appeal To Determine Control Of A Brooklyn Affordable Housing Property
The state’s top prosecutor is getting involved in a court battle between an investor and a nonprofit affordable housing developer over who is entitled to ownership of a Bushwick apartment building under Low Income Housing Tax Credit policy.
New York State Attorney General Letitia James and nonprofit affordable housing developer RiseBoro Community Partnership have appealed a federal judge’s 2018 decision that granted ownership of the property — located at 420 Stockholm St. — to a private investor, AIG-affiliated SunAmerica Housing Fund, The City first reported.
SunAmerica invested in the project in 1999 and received a tax credit on the property for doing so through the use of the federal Low Income Housing Tax Credit, which was created in the 1980s to incentivize investors to partner with nonprofits to build sustainable affordable housing.
As part of the partnership, SunAmerica received 15 years of tax credits, after which time, RiseBoro was expecting to purchase property from the investor at a below-market-rate cost.
In the case of 420 Stockholm St., Eastern District of New York Judge Raymond Dearie ruled that RiseBoro could not legally require SunAmerica Housing Fund to sell the property to it after the 15-year period was up, because their agreement included a right of first refusal for RiseBoro, not a purchase option.
“The LIHTC program encourages both the initial creation and long-term preservation of affordable housing by giving valuable tax credits and other tax benefits to private investors for limited time periods,” a statement released by the State Attorney General’s office reads. “After these limited periods, the properties are typically turned over to non-profit developers that ensure the properties are used for long-term affordable housing.”
James’ office and RiseBoro have filed an appeal to the U.S. Court of Appeals for the 2nd Circuit, asking it to overturn Dearie's ruling, arguing that, if it is upheld, it will mean LIHTC will be less effective in the future, jeopardizing a critical tool in building and preserving affordable housing.
“The decision removes a long-recognized and critical aspect of the Low Income Housing Tax Credit program’s design and undermines its twin purposes of incentivizing the creation of new affordable housing and preserving long-term affordability,” the AG's office wrote in its brief.