Preview
FILED: COLUMBIA COUNTY CLERK 01/05/2024 04:24 PM INDEX NO. E012023021189
NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 01/08/2024
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF COLUMBIA
___..-------__________------------__________________-----------______Ç
GALVAN HOUSING RESOURCES INC., f/k/a
HOUSING RESOURCES OF COLUMBIA
COUNTY, INC., HUDSON CITY HOUSING Index No.: E012023021189
DEVELOPMENT FUND COMPANY, INC., and
HRCC HOMES, LLC, individually and derivatively
on behalf of HUDSON KTD LIMITED
PARTNERSHIP,
Plaintiffs, AFFIDAVIT IN SUPPORT OF
-against- MOTION TO DISQUALIFY
CROSSWINDS HUDSON, LLC, WNC HOUSING,
L.P., and WNC INSTITUTIONAL TAX CREDIT
FUND X NEW YORK SERIES 7, L.P.,
Defendants,
-and-
HUDSON KTD LIMITED PARTNERSHIP,
Nominal Defendant.
__________-----------..------------------___----------_________________Ç
STATE OF NEW YORK )
) SS:.
COUNTY OF ERIE )
Bruce Levine, being duly sworn, deposes and says as follows:
1. I am a member of Crosswinds Hudson LLC ("Crosswinds").
2. Crosswinds is the Managing General Partner of Hudson KTD Limited Partnership
(the "Partnership"). The Partnership was formed to develop and operate 70 affordable housing
units located at 15 Rogers Lane, Hudson, New York (the "Property").
3. At the outset of the Partnership in 2006, Plaintiffs were affiliated with a small,
grassroots nonprofit called Housing Resources of Columbia County, Inc. ("HRCC").
4. In or around March 2007, the Partnership and HRCC entered into the Purchase
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NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 01/08/2024
Option and Right of First Refusal Agreement ("POA"), a copy of which is attached hereto as
Exhibit l.
5. Some years later, Plaintiff Galvan Housing Resources Inc. acquired
("Galvan")
HRCC.
6. Galvan did not notify Crosswinds when Galvan acquired HRCC. Initially, Galvan
was largely absent and uninterested in the operation and affairs of the Partnership.
7. When Galvan was required to be involved in the Partnership's affairs, Galvan
proved difficult to deal with. In or around 2012, for example, Crosswinds desired to refinance
debt on the Property on behalf of the Partnership in light of favorable interest rates. A refinancing
would permit Crosswinds, as the Partnership's Managing General Partner, to make capital
improvements and ensure that the rents remained affordable. At the time, the census reported the
incomes in Columbia County having decreased. Crosswinds desired to cut costs to ensure that the
restricted rents allowed under the Low-Income Housing Tax Credit ("LIHTC") program remained
atTordable and suitable to support operations and to maintain the highest quality affordable housing
in the county. Crosswinds made numerous attempts to invite Galvan to participate in the proposed
Crosswinds'
refinancing, without meaningful engagement. Galvin's failure to engage with
proposal in any meaningful way prevented Crosswinds from refinancing the Property. The
Partnership lost the opportunity for a substantial reduction in monthly interest payments,
hampering its ability to improve the Property for the benefit of its tenants.
8. In Galvan reached out to the Partnership's Limited Partners - WNC
early 2022,
L.P and WNC Institutional Tax Credit Fund X New York Series L.P. - to express
Housing 7,
interest in exercising its Purchase Option under the POA. Galvan did not initially include
Crosswinds in these discussions.
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9. On March 17, 2022, Galvan issued a notice that it was exercising its option to
purchase the Property pursuant to Paragraphs 1 and 5 of the POA. Galvan's notice stated that it
had already engaged the Government Consulting and Valuation Advisory Services for
group
Novogradac & Company LLP ("Novogradac") to determine the 11tir market value of the Property.
A copy of the Notice is attached hereto as Exhibit 2.
10. Crosswinds disagreed that it was appropriate for Galvan to select the appraiser to
perform the fair market valuation. Pursuant to Paragraph 3(b) of the POA, the Managing General
Partner alone - Crosswinds - has the right to select the appraiser.
11. On November 28, 2022, Galvan sent the Novogradac appraisal to the Limited
Partners - once again to inform Crosswinds. The Novogradac appraisal amounted to
failing
$2,900,000. By contrast, in 2012 the Property had been appraised at $4,850,000 in connection
with the failed refinancing proposal.
12. Through the end of 2022, Galvan continued to communicate with the Limited
Partners, without informing Crosswinds, in an attempt to execute on Galvan's Purchase Option.
Galvan then changed course and informed the Limited Partners (again without notifying
Crosswinds) that Galvan intended to invoke its right of first refusal ("ROFR") under the POA.
The Limited Partners notified Galvan that the ROFR would only become available in the event of
a bona fide purchase offer from a third party.
13. On Galvan sent the Limited Partners - once again
January 17, 2023, circumventing
Crosswinds - a so-called Letter of Intent from Lantern Organization, Inc. to purchase
("Lantern")
the Property. A copy of the Letter of Intent is attached hereto as Exhibit 3.
14. I became aware of Galvan's effort to invoke the ROFR via Lantern's Letter of
Intent on February 7, 2023, when Galvan sent Defendants a formal notice of Galvan's purported
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invocation of the ROFR. Subsequently, the Limited Partners informed me of Galvan's prior efforts
to communicate with the Limited Partners without Crosswinds' knowledge.
15. Upon becoming aware of Galvan's attempt to invoke the ROFR on February 7,
2023, and under the impression that Galvan had attempted to circumvent Crosswinds in that effort,
I decided to seek legal counsel for Crosswinds.
16. I instructed Jeremy Root - transactional counsel to Crosswinds - to interview
potential attorneys to advise Crosswinds on its rights under the Partnership's Limited Partnership
Agreement ("LPA''), the POA, and applicable law in light of Galvan's attempts to acquire the
Property for less than fair market value and, if necessary, to represent Crosswinds in litigation.
17.
18.
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19.
20.
E
21. I conveyed the above-described concerns to Mr. Root in connection with my
request that he interview potential counsel to represent Crosswinds.
22. Attached as Exhibit 4 is a true and correct copy of an email exchange between Mr.
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NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 01/08/2024
Root, his colleague Chris Ollinick, and David Davenport and Alex Hagstrom from the BC
Davenport LLC firm. The email exchange begins on March 3, 2023. Mr. Root added me as a
recipient on the exchange on March 7, 2023.
23. On March 10, 2023, I participated in a telephone conference with Mr. Root and
Mr. Davenport. The call lasted approximately one hour. On the call, I shared many of the concerns
set out above that I had previously expressed to Mr. Root about the matter. We shared the name
of the project and the location of the project.
24. The facts Mr. Root and I shared with Mr. Davenport should have left no doubt in
Mr. Davenport's mind, when he later discussed the matter with Galvan, that the parties and dispute
were the same as discussed on our March 10, 2023, call and in prior email exchanges.
25. At the end of our telephone conference, Mr. Davenport expressed sympathy for
Crosswinds'
position but said that his firm could not take on the matter because he typically
represented parties in LIHTC litigation seeking to enforce a ROFR, and taking the opposite
position in this case would undermine his credibility.
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NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 01/08/2024
26. I have not had any cominunications with Mr. Davenport, Mr. IIngstrom. or anyone
from the l}avenport lirin si11ce the March l o. 2023. eall. No one from Llte I)avenport Ann Ims ever
Crosswinds'
sought consent for the Davenport firm to represent Plaintiffs in this litigation.
Dated: Bufthlo, New York
Bruce l.evine
Sworn to hefore me this
Erika R Curran
Notary Public
State of New York
. Qualified in Erio County
My Commission Expires 5/6/20
IDNumber: 01CU6074087
Notary Pubbe
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Preview
FILED: COLUMBIA COUNTY CLERK 01/05/2024 04:24 PM INDEX NO. E012023021189 NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 01/08/2024 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF COLUMBIA ___..-------__________------------__________________-----------______Ç GALVAN HOUSING RESOURCES INC., f/k/a HOUSING RESOURCES OF COLUMBIA COUNTY, INC., HUDSON CITY HOUSING Index No.: E012023021189 DEVELOPMENT FUND COMPANY, INC., and HRCC HOMES, LLC, individually and derivatively on behalf of HUDSON KTD LIMITED PARTNERSHIP, Plaintiffs, AFFIDAVIT IN SUPPORT OF -against- MOTION TO DISQUALIFY CROSSWINDS HUDSON, LLC, WNC HOUSING, L.P., and WNC INSTITUTIONAL TAX CREDIT FUND X NEW YORK SERIES 7, L.P., Defendants, -and- HUDSON KTD LIMITED PARTNERSHIP, Nominal Defendant. __________-----------..------------------___----------_________________Ç STATE OF NEW YORK ) ) SS:. COUNTY OF ERIE ) Bruce Levine, being duly sworn, deposes and says as follows: 1. I am a member of Crosswinds Hudson LLC ("Crosswinds"). 2. Crosswinds is the Managing General Partner of Hudson KTD Limited Partnership (the "Partnership"). The Partnership was formed to develop and operate 70 affordable housing units located at 15 Rogers Lane, Hudson, New York (the "Property"). 3. At the outset of the Partnership in 2006, Plaintiffs were affiliated with a small, grassroots nonprofit called Housing Resources of Columbia County, Inc. ("HRCC"). 4. In or around March 2007, the Partnership and HRCC entered into the Purchase 1 of 7 FILED: COLUMBIA COUNTY CLERK 01/05/2024 04:24 PM INDEX NO. E012023021189 NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 01/08/2024 Option and Right of First Refusal Agreement ("POA"), a copy of which is attached hereto as Exhibit l. 5. Some years later, Plaintiff Galvan Housing Resources Inc. acquired ("Galvan") HRCC. 6. Galvan did not notify Crosswinds when Galvan acquired HRCC. Initially, Galvan was largely absent and uninterested in the operation and affairs of the Partnership. 7. When Galvan was required to be involved in the Partnership's affairs, Galvan proved difficult to deal with. In or around 2012, for example, Crosswinds desired to refinance debt on the Property on behalf of the Partnership in light of favorable interest rates. A refinancing would permit Crosswinds, as the Partnership's Managing General Partner, to make capital improvements and ensure that the rents remained affordable. At the time, the census reported the incomes in Columbia County having decreased. Crosswinds desired to cut costs to ensure that the restricted rents allowed under the Low-Income Housing Tax Credit ("LIHTC") program remained atTordable and suitable to support operations and to maintain the highest quality affordable housing in the county. Crosswinds made numerous attempts to invite Galvan to participate in the proposed Crosswinds' refinancing, without meaningful engagement. Galvin's failure to engage with proposal in any meaningful way prevented Crosswinds from refinancing the Property. The Partnership lost the opportunity for a substantial reduction in monthly interest payments, hampering its ability to improve the Property for the benefit of its tenants. 8. In Galvan reached out to the Partnership's Limited Partners - WNC early 2022, L.P and WNC Institutional Tax Credit Fund X New York Series L.P. - to express Housing 7, interest in exercising its Purchase Option under the POA. Galvan did not initially include Crosswinds in these discussions. 2 2 of 7 FILED: COLUMBIA COUNTY CLERK 01/05/2024 04:24 PM INDEX NO. E012023021189 NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 01/08/2024 9. On March 17, 2022, Galvan issued a notice that it was exercising its option to purchase the Property pursuant to Paragraphs 1 and 5 of the POA. Galvan's notice stated that it had already engaged the Government Consulting and Valuation Advisory Services for group Novogradac & Company LLP ("Novogradac") to determine the 11tir market value of the Property. A copy of the Notice is attached hereto as Exhibit 2. 10. Crosswinds disagreed that it was appropriate for Galvan to select the appraiser to perform the fair market valuation. Pursuant to Paragraph 3(b) of the POA, the Managing General Partner alone - Crosswinds - has the right to select the appraiser. 11. On November 28, 2022, Galvan sent the Novogradac appraisal to the Limited Partners - once again to inform Crosswinds. The Novogradac appraisal amounted to failing $2,900,000. By contrast, in 2012 the Property had been appraised at $4,850,000 in connection with the failed refinancing proposal. 12. Through the end of 2022, Galvan continued to communicate with the Limited Partners, without informing Crosswinds, in an attempt to execute on Galvan's Purchase Option. Galvan then changed course and informed the Limited Partners (again without notifying Crosswinds) that Galvan intended to invoke its right of first refusal ("ROFR") under the POA. The Limited Partners notified Galvan that the ROFR would only become available in the event of a bona fide purchase offer from a third party. 13. On Galvan sent the Limited Partners - once again January 17, 2023, circumventing Crosswinds - a so-called Letter of Intent from Lantern Organization, Inc. to purchase ("Lantern") the Property. A copy of the Letter of Intent is attached hereto as Exhibit 3. 14. I became aware of Galvan's effort to invoke the ROFR via Lantern's Letter of Intent on February 7, 2023, when Galvan sent Defendants a formal notice of Galvan's purported 3 3 of 7 FILED: COLUMBIA COUNTY CLERK 01/05/2024 04:24 PM INDEX NO. E012023021189 NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 01/08/2024 invocation of the ROFR. Subsequently, the Limited Partners informed me of Galvan's prior efforts to communicate with the Limited Partners without Crosswinds' knowledge. 15. Upon becoming aware of Galvan's attempt to invoke the ROFR on February 7, 2023, and under the impression that Galvan had attempted to circumvent Crosswinds in that effort, I decided to seek legal counsel for Crosswinds. 16. I instructed Jeremy Root - transactional counsel to Crosswinds - to interview potential attorneys to advise Crosswinds on its rights under the Partnership's Limited Partnership Agreement ("LPA''), the POA, and applicable law in light of Galvan's attempts to acquire the Property for less than fair market value and, if necessary, to represent Crosswinds in litigation. 17. 18. 4 4 of 7 FILED: COLUMBIA COUNTY CLERK 01/05/2024 04:24 PM INDEX NO. E012023021189 NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 01/08/2024 19. 20. E 21. I conveyed the above-described concerns to Mr. Root in connection with my request that he interview potential counsel to represent Crosswinds. 22. Attached as Exhibit 4 is a true and correct copy of an email exchange between Mr. 5 5 of 7 FILED: COLUMBIA COUNTY CLERK 01/05/2024 04:24 PM INDEX NO. E012023021189 NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 01/08/2024 Root, his colleague Chris Ollinick, and David Davenport and Alex Hagstrom from the BC Davenport LLC firm. The email exchange begins on March 3, 2023. Mr. Root added me as a recipient on the exchange on March 7, 2023. 23. On March 10, 2023, I participated in a telephone conference with Mr. Root and Mr. Davenport. The call lasted approximately one hour. On the call, I shared many of the concerns set out above that I had previously expressed to Mr. Root about the matter. We shared the name of the project and the location of the project. 24. The facts Mr. Root and I shared with Mr. Davenport should have left no doubt in Mr. Davenport's mind, when he later discussed the matter with Galvan, that the parties and dispute were the same as discussed on our March 10, 2023, call and in prior email exchanges. 25. At the end of our telephone conference, Mr. Davenport expressed sympathy for Crosswinds' position but said that his firm could not take on the matter because he typically represented parties in LIHTC litigation seeking to enforce a ROFR, and taking the opposite position in this case would undermine his credibility. 6 6 of 7 FILED: COLUMBIA COUNTY CLERK 01/05/2024 04:24 PM INDEX NO. E012023021189 NYSCEF DOC. NO. 19 RECEIVED NYSCEF: 01/08/2024 26. I have not had any cominunications with Mr. Davenport, Mr. IIngstrom. or anyone from the l}avenport lirin si11ce the March l o. 2023. eall. No one from Llte I)avenport Ann Ims ever Crosswinds' sought consent for the Davenport firm to represent Plaintiffs in this litigation. Dated: Bufthlo, New York Bruce l.evine Sworn to hefore me this Erika R Curran Notary Public State of New York . Qualified in Erio County My Commission Expires 5/6/20 IDNumber: 01CU6074087 Notary Pubbe 7 7 of 7