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BPDA charges developers sold 'affordable' Dorchester condos at market rates, sues over the profits

The BPDA says a developer that took over a 14-unit condo building near the South Bay mall sold two units for several hundred thousand dollars more than it was supposed to under a city program aimed at ensuring at least some people of moderate means can keep living in Boston.

In a lawsuit filed yesterday in Suffolk Superior Court, the BPDA - going by its older but still legal name of BRA - is asking a judge to order the "disgorgement of all rents, profits, or proceeds Defendants have collected by selling the Affordable Housing Units in excess of the Maximum Resale Price" and to award the agency triple damages on top of that, from both the project's original developer and the company to which he sold his interest in the new five-story building.

At issue are two units at 85-93 Willow Ct., off Allstate Road. The then BRA approved the project in April, 2016, on the condition that developer Patrick Cibotti sell two of the units at "affordable" rates. Under the city's "inclusionary development policy," developers of new projects above a certain size have to sell or rent at least 13% of the units at rates that people making no more than the Boston area median income might be able to afford.

Under an "affordable housing agreement" Cibotti signed, that meant selling one two-bedroom unit to a family making no more than 80% of the Boston area median income, which equaled a sales price of $221,900 when it was sold in 2020. A three-bedroom unit, to be offered to a family making up to 100% of the area median income, was supposed to be sold for no more than $327,900, when it was sold in 2019, according to the lawsuit.

But the company to which Cibotti sold the project actually sold the smaller unit for $690,000 and the larger one for $799,000, the agency says, siting records with the Suffolk County Registry of Deeds - which also show the deeds for the units did not have attached "affordable housing covenants, which would require that should the buyers decide to sell, the units be sold at no more than the "affordable" rates set each year by the BPDA.

Even aside from the issue of the excess profits from the two units, Cibotti never notified the BRA he was selling the building to Eighty Five Willow Court, LLC, as required by his BRA approval, the agency says.

The agency says it discovered the issue in early 2020 and held four "substantive" meetings with Jason Kahan of Eighty Five Willow Court in May and June of last year about the two affordable units, but that he then stopped talking - and sold both units without the required affordable-housing covenants attached to the deeds.

The complaint concludes that in addition to penalizing the LLCs involved, a judge should punish the individuals who run them specifically:

The conduct of the individual defendants, as managers of the LLCs, has resulted in fraudulent and injurious consequences to BRA and the public, by generating private profit from units that were designated as affordable housing to benefit middle income families.

The individuals and LLCs named in the suit have until March 30, 2022 to file their responses.

Complete complaint (9.1M PDF).

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Comments

It's just a measly hundreds of thousands over the suggested retail price.

What's dond is done.
Can't we just come to an understanding?
Negotiate a compromise, if you will?

C'mon...

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Voting closed 11

Everything else aside, are these units now legally market rate? The most recent deeds don't have income restrictions; are those deeds invalid? Will the new owners have to forfeit the property and sue these scummy companies for restitution?

I sure hope they do, because if not, I'm pretty sure all a developer would need to do to get around income restrictions would be to transfer the property to a paper entity with no assets, sell them with modified deeds, then declare bankruptcy; the deeds would be permanently modified and the money safely hidden away somewhere else. That can't be allowed.

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Voting closed 32

This picked my interest. I took a look at the developer’s filling on the BPDA website and it clearly states the commitment to the two affordable units.

https://bpda.app.box.com/s/dd6la2sd3o2wzpahmx9bturlhtyukb1b

The developer also reports a development cost of $4.2 million. Weirdly, that same number is used twice in the same paragraph as “Total development cost” and “Construction cost” (hard cost). A quick look at the registry of deeds shows that the total sale value of the 14 condos combined was likely over $10 million -most sold for over $700k. The developer could still have cleared several $millions by respecting his affordable units agreement. That's more profit in one project than what most Dorchester residents earn in a lifetime of steady work.

Glad that the BPDA is pursuing this aggressively; it would be interesting to find out whether this is an isolated case or if there is a pattern here. Also worth noting the name of the architect and attorney on that project. Both have been associated with their fair share of similarly morally-flexible developers over the years (Doug George, LaRosa etc.)

As an aside, the fact that some people are now willing to pay $1 million to live in a condo off Mass Ave between the Eversource depot and the South Bay Mall remains a great city mystery to me.

https://www.movoto.com/boston-ma/85-willow-ct-apt-401-boston-ma-02125-30...

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Voting closed 43

The NIMBYs have opposed new housing so fervently that what you see here is what $1 million gets you now. And if you think such units are "luxurious," you should see what gets called luxurious elsewhere in the country. These often have the cheapest "in style" furnishings.

If we do not increase housing supply (building more, higher and denser), Boston will become increasingly unaffordable... and for what?

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Who was the buyers attorney? I can’t believe they didn’t pick up on that when doing title or reviewing condo docs, if you look at the ownership percentages, it’s clear two units had something funky going on.

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"Buyer's attorney" is too often slipshod on something that's 'supposed to be simple', such as a condo and new construction - even with the regulatory reforms that went in several years ago. What's more surprising is the mortgage provider (if there were mortgages for these two units) - that their attorney missed it.
Unless bank environment has been relaxed again... A few years ago, my wife and I refinanced - had to jump through hoops to fix documentation that had gone through without any problems for a previous refi years before and the original purchase before that. The bank was dotting every i and crossing every t.

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Voting closed 12

Who have lost these two affordable housing opportunities?
Will the current owners be forced to sell and the units returned to availability to the legal income group? Will they have to relinquish them?
It would suck for them but when you receive stolen goods, whether you were aware of their status or not, those goods are returned to the rightful owners at no charge to them.
I see ripples of lawsuits coming forth from this.

I also wonder how many more of these type scams will surface and if it’s just the cost of doing business for these developers.

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Voting closed 29

...and what good will triple-damages do? Pad the BPDA budget?
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I'd be shocked if they tried forcing the unit owners to sell. I don't know if there is any enforceable legal grounds to try it. It sounds like they're going after the developers instead.

Could they put restrictions on the unit deeds for when the current owners sell? Require that any future sale be restricted to the income specifications described, and pay the seller the difference between that and fair market price from the damages?
I suspect not.

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Voting closed 12

One would like to hope that if the BPDA wins, the money would go into its affordable-housing fund, which helps preserve or acquire affordable units (funded in part by payments of developers who would rather pay the equivalent of 18% of the sales of their units rather than set aside the required 13% of their units as affordable).

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Voting closed 18

That difference in sales price would be hard to predict. I think they would be due triple damages as well, considering the loss in investment. Padding the BPDA budget would be the logical choice in my book. It might be more important to bar the entity from doing business in MA.

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Voting closed 11

BPDA benefits with triple damages. Law Firms get lucrative work. Wealthy Buyer’s investment guaranteed and protected. Developer chastened. BPDA and Developer return to closed door sessions for power adjustment and distribution of gains. General Public left by the wayside.

If I was someone working hard to navigate the maze of getting into affordable housing, I would be thoroughly disgusted and discouraged by this obscene circus. I am that as a member of the General Public who has seen years of this and is affected in infinite ways by what happens to the lesser fortunate members, those I know and those I don’t.

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Voting closed 12

To try to abolish their condo conversion ordinance - which was designed to give low income tenants enhanced eviction protections, and required that existing tenants in a condo conversion get right of first purchase in case of a sale. Stand up guy . .

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Voting closed 20

My takeaway from all this is that even after spending a bunch of money and going through the whole rebranding exercise, the BPDA is still legally called the BRA. Just seems so dumb to go through that just to not even be able to change the name legally.

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Voting closed 10

… when the suit was filed.

The rebranding of the BRA and the possible rebranding and a phony change up within the developer are just ways to distance themselves from previous scandals, as we all know. Waste of public funds in the case of the BRA/BPDA.

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Voting closed 9