MS&B Closes on Complex and Significant Transaction for the Newark Housing Authority
Our firm closed on a complex and significant transaction in representation of our client the Newark Housing Authority (“NHA”) to acquire three affordable housing developments known as West Kinney (133 units), Stella Gardens (93 units) and Hayes (37 units) (collectively, the “Developments”). By way of background, NHA undertook the Stella Wright Homes Hope VI Revitalization Plan which consisted of the construction of five (5) new affordable housing properties (“Development Plan”). The Development Plan, in collaboration with a private developer, was financed by a HOPE VI grant received from the U.S. Department of Housing and Urban Development (“HUD”), low-income housing tax credits (“LIHTCs”), and loans from the New Jersey Housing and Mortgage Finance Agency (“NJHMFA”), the Department of Community Affairs (“DCA”) and NHA, among other sources. NHA partnered with a private developer (the “Developer”).
The transaction had its beginnings back in 2017 when, upon the expiration of the LIHTC 15-year compliance period, the Developer refused to honor NHA’s purchase option rights pursuant to purchase option and right of first refusal agreements entered into between NHA and the Developer for each of the Developments. Accordingly, we filed suit in order to enforce NHA’s purchase option rights. On December 27, 2022, the eve of trial, the Parties executed a settlement agreement and three respective Purchase and Sale Agreements (the “PSAs”) in which the Developer agreed to sell the Developments to NHA. The PSAs, however, required NHA to secure preliminary and final approval from HUD, NJHMFA and DCA.
The NJHMFA and DCA approvals required the submission of detailed financial documents, procurement of insurance, third-party management, and navigation of the NJHMFA’s often draconian board process. HUD had a its own approval process albeit slightly less onerous. NHA initially sought to secure financing from the private market but later negotiated acquisition financing from the City of Newark (“City”) through a $20MM bond anticipation note issuance. Among a host of other things, MS&B assisted NHA in negotiating terms with the City to secure the loan.
Ultimately with the MS&B’s guidance, NHA was able to obtain the necessary approvals and acquire the Developments despite multiple challenges including navigating the administrations of three executive directors at NHA.
MS&B brings such a high level multi-disciplinary approach to these transformative projects, that its unique and outstanding qualities consistently shines through.