A nonprofit housing group in Michigan has won a long legal battle over control of its property, in a settlement that’s being closely watched in Boston and across the affordable housing industry.
Under the deal, Presbyterian Villages of Michigan, a Detroit-area provider of low-income housing for seniors, came to an agreement with April Housing, part of the New York private equity giant Blackstone. Presbyterian Villages will be the sole owner of its 250 units of housing, and April Housing will give up any claims of ownership. April Housing also agreed to donate $350,000 to help the nonprofit fund future development.
The settlement is the second acrimonious fight of its kind that Blackstone has agreed to resolve this summer. Blackstone inherited these legal battles when it acquired a $5.1 billion low-income housing portfolio last year from American International Group Inc., the big New York insurance and investment company.
AIG was one of a handful of investors taking an aggressive stance in exits from investments in a federally backed housing program, as previously reported by WBUR.
Historically, investors received tax credits in exchange for financing low-income housing for a span of 15 years; the nonprofits running the housing would then acquire the properties at a low price at the end of that period. But in recent years, some investors have challenged that practice, and tried to take control of properties in cities, including Boston, where real estate values had climbed.
Roger Myers, chief executive of Presbyterian Villages, took a break from the grill Monday, where he was helping prepare a meal for residents. In a phone interview, he said he was pleased with the outcome of the case.
“Obviously, we wish we didn't have to go through what went on for the last three years,” Myers said. “But we reached a very fair and equitable settlement.”
It’s hard to predict how Blackstone and its April Housing will deal with future tax-credit investments. But, Myers said, “We believe they acted in good faith to get a resolution.”
In a press release Friday, April Housing chief executive Alice Carr said, “We are pleased to reach an agreement with PVM that supports our shared mission of preserving affordable housing and settles this dispute.” She also said the firm hopes to work with Presbyterian Villages in the future.
The settlement talks came after a federal appeals court judge ruled against AIG’s housing unit in May, saying Congress’s intent with the tax-credit law was for properties to be “transferred to nonprofit organizations to ensure that the housing remains affordable over the long term.”
In July, April Housing settled another high-profile case in New York that had started with AIG. Under that agreement, RiseBoro Community Partnership acquired a majority interest in its 190 affordable units in Brooklyn and restructured its financial arrangement with April Housing. The investment group committed to donate $1.2 million over 15 years to fund RiseBoro’s resident services.
In both the Michigan and the RiseBoro cases, the Boston law firm Nixon Peabody had represented AIG. The firm had no immediate comment on the settlements. Nixon Peabody also represents other investors seeking to control affordable housing, including one in a long-running Boston housing case.