Hunt Capital Loses Novel Ruling on Affordable Housing Investment

Hunt Capital Partners owes damages and legal fees after trying to oust a Hudson Housing Capital LLC affiliate from an investment over its refusal to participate in a complex plan to wring additional profits out of the affordable housing venture, a Delaware judge said in a novel decision Monday.

Vice Chancellor Morgan Zurn found in a 100-page ruling that a Hudson affiliate acted properly when—in its capacity as general partner of the investment—it permitted the partnership’s below-market sale to a nonprofit, under special statutory mechanisms, after certain federal tax benefits were exhausted.

The decision could rewrite the playbook used by ...