David Davenport of the BC Davenport law firm has become the go-to attorney in a very specialized niche practice. In doing so, he’s helped maintain the availability of affordable rental housing for low-income people.
Back in the mid-1980s, the federal government created the Low Income Housing Tax Credit (LIHTC) Program. The tax credit is a credit against regular tax liability for investments in affordable housing properties constructed, acquired and rehabilitated after 1986. It enables developers to reduce the cost of developing housing so they can charge less than the market rate.
In 2020, Davenport helped a Florida-based nonprofit, Opa-Locka Community Development Corp. achieve a major victory against for-profit housing aggregators who threatened the preservation of affordable housing nationwide.
A key part of the LIHTC program is a special right of first refusal allowing nonprofit partners to purchase the development after 15 years, for a reduced price. The real estate, often with 15 years’ worth of residual equity value, enables access to capital that can be reinvested for support programs, additional housing, and more.
Davenport helped Opa-Locka secure full ownership of 216 units of affordable housing after its partners sought to sell the apartment community to a third party. The court ordered the defendants to comply with the right of first refusal by transferring the $27 million property to Opa-Locka for less than $100,000 under the LIHTC program.
The Opa Locka defense has led to more, similar cases for Davenport, who coined the term “aggregators,” which is now widely used in the industry.
“Our clients said there was a problem; we have new people who have bought positions in deals trying to get outcomes that are different from what is supposed to happen to these properties at the end of 15 years. I found out this was happening nationwide,” said Davenport
Davenport said the work has been “extremely rewarding, meaningful. It feels good to know that we are helping some of most vulnerable people in society, who need basic housing,” he said.
Read more about Minnesota Lawyer’s superb class of Attorneys of the Year for 2020 here.
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