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LIHTC Investors Fight Back, Say Judge’s Ruling Will ‘Chill’ Investment In Affordable Housing

Last month, a Miami judge ruled that a local nonprofit could buy a housing complex by assuming its debt and paying taxes owed — about $110K — icing out its Boston-based private investment partners who had hoped to sell the project for $21M and make a nearly $5M profit on the deal.

But the investors, HallKeen, haven’t given up the fight. They’re asking the judge to set aside the order, arguing that the decision was wrong and, if it stands, will chill investment in affordable housing.

Aswan Village in Opa-Locka, Florida.

The nonprofit, the Opa-Locka Community Development Corp., "has been trumpeting its victory throughout the country,” attorneys for HallKeen wrote in a motion for reconsideration filed July 31. The judge gave it an “improper windfall” and his decision “will have an adverse chilling effect” on LIHTC partnerships, they argued.

The dispute centers on Aswan Village, a 216-unit apartment complex in Opa-Locka, Florida, that was redeveloped by an arm of Bank of America under the federal Low Income Housing Tax Credit program. When BoA sought to exit the project — after it had claimed the tax credits but while affordability restrictions remained — HallKeen and its subsidiary, HK Aswan, bought its stake for about $400K and came in as the new managing partner and property manager.

Given real estate appreciation in the area, HallKeen in 2019 sought potential buyers for the complex, and worked out a deal that could have given HallKeen and OLCDC approximately $4.5M apiece, potentially letting them each keep minority stakes, keeping it affordable for renters and generate millions in capital improvements.

But the nonprofit argued that HallKeen’s actions, including signing a letter of intent, amounted to a forced sale, which triggered the nonprofit’s right of first refusal to purchase the property for debt plus taxes, outlined in LIHTC program rules. The judge sided with the nonprofit, which characterized the decision as a win for affordable housing. An attorney for the OLCDC pointed to cases around the country in which nonprofits get squeezed while real estate “aggregators” like HallKeen profit as properties appreciate.

HallKeen argued that it had merely floated a preliminary, nonbinding proposal for further discussion, not made a “manifest decision” to sell the property, and OLCDC could have rejected it or proposed something else. The proposal shouldn't have triggered the nonprofit’s right of first refusal, they argued. As it stands, OLCDC was able to increase its 49% participation in equity proceeds to 100%, without having to pay HallKeen market value for its share of the business.

HallKeen argued that an unintended consequence of the judge’s decision is that investors “will fear that any good-faith attempt to fulfill their duties by evaluating recapitalization options could be interpreted holistically as ‘manifest intention to sell,’ creating an artificial trigger to a preemptive right granted in a LIHTC transaction.”

Mark Solov of Stearns Weaver, HallKeen’s attorney, said in a statement that Judge William Thomas ”is a fair judge who was understandably concerned about achieving a good policy outcome, but was misled about the impact of this decision on this project, the affordable housing industry generally and the law which must provide certainty with respect to the rights arising from rights of first refusal.”

OLCDC's attorney, David Davenport, said, "We generally do not comment on pending motions, but would otherwise say that we believe the Court ruled correctly in its thorough and carefully considered decision, and we will deal with the motion for reconsideration accordingly."

Contact Deirdra Funcheon at