Town of Wakefield Settles 40B Lawsuit Against Millbrook Estates

02Oct08

Developer will pay $500,000 to town over five years

The Town of Wakefield, Massachusetts has settled its lawsuit concerning the Millbrook Estates affordable housing project.

Under the agreement, the town has agreed to drop its pending lawsuit and the developers in return will pay the town $500,000 over five years, Town Counsel Thomas Mullen announced at last night’s meeting of the Wakefield Board of Selectmen.

“The settlement is a good result for the town,” Chairman Betsy Sheeran said. “Wakefield was among the first communities in the Commonwealth to recover excess profits identified by the Inspector General in a report on Chapter 40B developers. The town has aggressively pursued its claim. The settlement means that there will be a substantial return of funds to the town without the costs, delays and uncertainties of further litigation.”

The Inspector General’s report, issued in March 2007, suggested that the developers of Millbrook Estates off Water Street owed as much as $1,324,019 in excess profits to the town. The report claimed that the developers, who were obliged under the state’s affordable housing program to pay to the town all profits in excess of 20 percent, had understated their income and overstated their costs in an attempt to avoid having to pay anything to the town.

The suit was filed in December 2007 on behalf of the town in Middlesex Superior Court by the town’s attorney in this matter, Stephen D. Anderson of Anderson and Kreiger, LLP of Boston.

The suit named as defendants Millbrook Estates, LLC; Ronald J. and Raymond S. Falite; Falite Bros., Inc.; Millbrook Rentals Realty Trust, (MRRT); and Pine Tree Realty Trust (PTRT).

Ronald J. Falite of 24 Walton Lane in Wakefield and Raymond S. Falite of 15 Ross Lane, Middleton were identified as members of Millbrook Estates, LLC. Falite Bros., Inc. and Millbrook Estates, LLC both list their principal place of business as 9 Broadway, Wakefield MA.

Millbrook Estates, a 40-unit condominium complex on a 105,804 sq. ft. parcel off Water Street, was developed by the Falites under the Commonwealth’s affordable housing statute, General Laws Chapter 40B.

The town maintained in its lawsuit that in return for Chapter 40B’s authorization to obtain a comprehensive permit allowing the developer to circumvent numerous local bylaws and regulations, Millbrook and its principals entered into a Regulatory Agreement stipulating that project profits would be limited to 20 percent of total development costs. Under Chapter 40B, any profit in excess of 20 percent must be turned over to the municipality for future affordable housing purposes.

Under the settlement, the defendants will pay the town $150,000 by June 30, 2008, and $70,000 per year for the next five years. The defendants’ obligation will be secured by mortgages on units at Millbrook Estates, according to Mullen.

Under state law, all the money recovered through the settlement must be applied to affordable housing and related purposes, including the town’s enforcement action to recover these proceeds. The town’s legal costs in pursuing the matter will be paid out of the money recovered in the settlement.

Presenting the proposed settlement to the selectmen last night, Mullen said that the town’s suit raised “cutting edge legal issues” and “complicated accounting questions.” Mullen praised Attorney Anderson’s work, adding that both he and Anderson believed the settlement to be in the best interests of the town.

Mullen noted that Anderson was “probably the lawyer in the state with the greatest experience in asserting excess profit claims against developers in 40B cases.”

Mullen said that the recommendation to settle was due to the “highly uncertain” outcome of the litigation, coupled with the fact that it would be “extremely expensive and time consuming” to pursue the lawsuit to its conclusion.

“For all of these reasons,” Mullen said, “we believe that the compromise of $500,000 represents a good result for the town.”

The defendants continue to deny any wrongdoing and defend their actions on the grounds that the Inspector General’s report and the town’s litigation applied new regulations and guidelines to Millbrook Estates, which were not in effect when the project was built.

In the agreement, the defendants maintain that the settlement does not “constitute an admission of fact, law or liability on the part of any party” and that they entered into the agreement “to avoid significant transaction costs of litigation.”

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One Response to “Town of Wakefield Settles 40B Lawsuit Against Millbrook Estates”


  1. 1 Town Suing Developer of Millbrook Estates « Mark Sardella

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