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Blog Posts
Congress Considering Retroactive Changes Affecting Low-Income Housing Tax Credit Property Owners, Part I
July 24, 2019
Reader Comments
Multiple Affordable Housing Organizations Respond to Right-Of-First-Refusal Blog
IRS, Treasury and CDFI Fund Representatives Share NMTC and LIHTC Insights
James Rider, General Attorney (Tax) in the IRS Office of Chief Counsel, said that when considering the nonprofit right of first refusal under IRC 42(i)(7), an option to buy is different than a right of first refusal. He noted that as the statute was being drafted, the wording was initially stated to be an "option," but later changed to use the term "right of first refusal." This legislative history suggests that Congress intended for it to be a true right of first refusal, and not an option. Rider observed that under a right of first refusal, an owner must first choose to sell, whereas an option holder can compel a sale. However, Rider also observed that a 3rd party bona fide offer may not be required, as that doesn’t seem to have been Congressional intent. Moreover, Rider suggested that a plan to sell the property would not necessarily require all partners to agree to that sale.
June 16, 2017
IRS, Treasury and CDFI Fund Representatives Share LIHTC, NMTC and HTC Insights
Michael Novey, associate tax legislative counsel in the Office of Tax Policy at the Treasury Department, said that when considering the nonprofit right of first refusal under IRC 42(i)(7), an option to buy is different than a right of first refusal. He noted that as the statute was being drafted, the wording was initially stated to be an "option," but later changed to use the term "right of first refusal." This legislative history suggests that Congress intended for it to be a true right of first refusal, and not an option. Novey said standard setters are concerned about a pre-arranged timeline to sell the property planned in advance. However, he also said that if the property owner were to put the building up for sale, that alone might be enough to trigger a right of first refusal.
June 3, 2016
Court Rulings
SunAmerica Housing Fund 1050 v. Pathway of Pontiac, Inc. et al.
The United States Court of Appeals for the Sixth Circuit reversed the district court’s grant of summary judgment to SunAmerica and remanded the case to the district court for further proceedings consistent with that opinion.
May 10, 2022
SunAmerica Housing Fund 1050 v. Pathway of Pontiac, Inc. et al.
In this case, the right of first refusal was not exercisable because there was no bona fide offer—the solicitation of an offer wasn’t made in good faith. In addition, the common law definition of right of first refusal adopted by this partnership meant that the General Partners needed to have the intent to sell. The General Partners did not truly manifest that intent.
Feb. 4, 2021
Defendant's Reply in Support of Cross-Motion for Summary Judgment
Oct. 10, 2020
Defendant's Response in Opposition to Plaintiff's Motion for Summary Judgment and Cross-Motion for Summary Judgment
Sept. 1, 2020
Plaintiff's Memo in Support of Motion for Summary Judgment
July 29, 2020
Plaintiff's Motion for Summary Judgment
July 29, 2020
JER Hudson and Hudson Housing Tax Credit Fund v. DLE Investors
The Court of Chancery in the State of Delaware found in favor of the general partner and the partnership. The opinion contibutes to the body of law about right of first refusal through the lens of fiduciary duties and the internal affairs of Delaware limited partnerships.
May 2, 2022
Centerline Housing Partnership v. Palm Communities (Order Regarding Plaintiffs/Counter-Defendants’ Motion for Partial Summary Judgment)
Jan. 12, 2022
Amtax Holdings 227 LLC, et al. v. Tenants’ Dev. II Corp. (Motions for Summary Judgment)
District court’s dismissal without prejudice AFFIRMED. The court found the interpretation of a right of first refusal as used in the LIHTC property partnership agreement, need not be made by federal courts. As such, federal jurisdiction over the case was not established.
Oct. 13, 2021
Tenants' Dev. II Corp. v. AMTAX Holdings 227 and Alden Torch Financial LLC
ORDER dismissing actions without prejudice. This case concerns a contract dispute regarding a nonprofit's right of first refusal for a LIHTC-eligible property. Parties asserted the issue for the Court was the meaning of 26 U.S.C. § 42. The Court found the meaning of 26 U.S.C. § 42 to not be "substantial" to the dispute and therefore the Court lacked subject matter jurisdiction.
Dec. 23, 2020
Riseboro Community Partnership Inc. v. SunAmerica Housing Fund, SLP Housing I LLC, and 420 Stockholm Street Associates LP (Amicus Brief)
July 14, 2021
QUOTE: [A] reallocation of property rights in this manner would directly implicate the concerns at the core of the Takings Clause and Due Process Clause by retroactively reallocating the economic value of a complex commercial arrangement years after the fact.
Riseboro Community Partnership Inc. v. SunAmerica Housing Fund, SLP Housing I LLC, and 420 Stockholm Street Associates LP (Amicus Brief)
April 14, 2021
The decision below threatens amici’s interests. If for-profit investors who have already obtained tax credits under the LIHTC program may now refuse to transfer their interests to non-profits after year fifteen, the inevitable outcome will be either (a) onerous new transfer costs for non-profit partners, depleting the capital that non-profits need to sustain long-term affordable housing or (b) a conversion of these developments to market rate, putting them beyond the reach of low-income New Yorkers. Both outcomes harm residents of LIHTC-funded projects and undermine the significant investments that the State and City have made in these projects for the purpose of long-term affordability.
Riseboro Community Partnership Inc. v. SunAmerica Housing Fund, SLP Housing I LLC, and 420 Stockholm Street Associates LP
ORDER in favor of defendants. The Court found that the right of first refusal (ROFR) granted in the partnership agreement operates by the New York common law definition of a ROFR, and was not an option.
Sept. 1, 2020
Senior Housing Assistance Group v. Amtax Holdings 260 LLC, et al.; Amtax Holdings 260 LLC, et al. v. Senior Housing Assistance Group (Motions for Summary Judgment)
ORDER denying motions for summary judgment. With respect to a nonprofit affordable housing provider's right of first refusal (ROFR), the court found parties' intent unclear in the LIHTC partnership agreement as to whether the ROFR was meant to conform with the ordinary meaning. To determine this and whether or not bona fide offers for purchase of the property was received, the Court needs to act as a fact finder.
Feb. 19, 2019
Senior Housing Assistance Group v. Amtax Holdings 260 LLC, et al.; Amtax Holdings 260 LLC, et al. v. Senior Housing Assistance Group (Findings of Fact and Conclusions of Law)
Judgment in favor of the AMTAX entities.
March 29, 2019
Homeowner's Rehab Inc. v. Related Corporate V SLP LP
ORDER affirming NY Superior Court's order granting motion for summary judgment.
June 15, 2018
Amicus Brief of Holland & Hart LLP
Sept. 27, 2017
Amicus Brief of Bradley Myers
Sept. 27, 2017
Homeowner's Rehab Inc. and Memorial Drive Housing Inc. v. Related Corporate V SLP LP and Centerline Corporate Partners V LP
ORDER granting summary judgment. The Court found that the LIHTC partnership GP was permitted to solicit a third party offer and issue a disposition notice without the special limited partner's consent. To trigger the nonprofit's right of first refusal contained in the LIHTC partnership agreement, the partnership needed to receive a third party's enforceable offer to purchase the property interest, but special limited partner consent was not needed.
September 16, 2016
Legislation
S.B. 1703, Affordable Housing Credit Improvement Act
Relevant text appears on pages 19 through 21.
Introduced June 4, 2019
H.R. 3077 (Introduced June 4, 2019)
Relevant text appears on pages 19 through 21.
Affordable Rental A.C.T.I.O.N.'s Extended Bill Summary of ACHIA
Relevant text appears on page 5.
Affordable Rental A.C.T.I.O.N.'s Selected Differences between 116th and 115th Congress Versions of ACHIA
Relevant text appears on page 3.
Journal of Tax Credits
Options for the End: Typical Partnership Agreement Exit Provisions
June 1, 2013
Preparing For Year 15: Know the Landscape
Mar. 1, 2013
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