South End housing group wins court victory, but may owe investor millions

A Superior Court judge in Boston has ruled that Tenants’ Development Corp., a nonprofit affordable housing group, has the right to purchase and retain its properties, after a years-long battle with an investment firm that wanted to force a sale of the buildings.

The decision is a victory for TDC, in a case that’s been widely watched across the affordable housing industry, as some investment firms have tried to wring larger profits from federally backed housing deals. The ruling means TDC can keep housing hundreds of people with low and moderate incomes in the South End properties it has run for decades.

But Alden Torch Financial, the Denver-based investment firm that was trying to force a sale of the buildings, also won on a key matter: Judge Peter Krupp ruled that TDC must pay Alden Torch “exit taxes” as part of the purchase price.

That could amount to millions of dollars, according to TDC’s lawyer, David Davenport. He said the housing group is considering an appeal.

“The contract does not say, in our opinion, that we have to pay their exit taxes,” Davenport said in an interview. “We believe they should be responsible to pay their own tax liability associated with their highly profitable investment.”

Alden Torch’s lawyers at Nixon Peabody in Boston declined to comment through a spokesman.

TDC’s fight for its property was the subject of a WBUR investigation in 2021. The housing group took on investors back in 2003, to renovate some buildings, through a federal program that provides Low-Income Housing Tax Credits.

Under these deals, a nonprofit forms a partnership with a large bank or investor, which provides funding in exchange for tax breaks. Historically, at the end of the 15-year partnership, the investor walked away with its gains and the nonprofit got to take ownership of the property for well below market value.

But as property values climbed in urban locations like Boston, some investors sought to play hard ball — and force property sales or extract cash in other ways from the housing groups. Federal lawmakers have said the intent of the tax credit program was not to enrich investors, but to keep housing in local hands for the long term.

In numerous court cases across the country, large investors like SunAmerica of New York have been dealt setbacks in their efforts to reap larger gains in housing tax-credit deals.

In the Boston case, Judge Krupp dismissed Alden Torch’s claims that TDC had breached its fiduciary duty and failed to act in good faith. He wrote that Alden Torch’s consent “was not required for a sale of the property” and “the property was not required to be sold at fair market value.”

Under the terms of the contract, to regain control of its buildings, TDC would have to pay off the debt on the properties — $17.1 million. If it has to pay the taxes on Alden Torch’s gains, as the judge has ruled, that would add millions more to the cost.


Beth Healy Deputy Managing Editor
Beth Healy is a senior investigative reporter for WBUR.



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