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).