The state attorney general’s office has determined that for the past four years, Massachusetts Housing Opportunities Corporation (MHOC), the development company seeking permits to build two Chapter 40B projects in Harvard, has failed to file informational tax forms required by state and federal law. MHOC’s president said this week that his company and the state are negotiating with the goal of bringing the company into compliance.
—Dan Ferrullo, Division of Public Charities
According to Dan Ferrullo of the attorney general’s Division of Public Charities, MHOC should have filed forms required by nonprofit, charitable corporations, but did not do so. The missing forms are IRS 990, a federal informational return for organizations exempt from income tax, and form PC, which must be filed with the attorney general’s office by all nonprofit, charitable, tax-exempt organizations doing business in Massachusetts. MHOC has not filed the forms since its inception in 2003.
“We are pursuing the organization and trying to get them registered [with the IRS] and in compliance,” said Ferrullo in a May 18 telephone interview. “They have made some efforts to try to amend their articles of organization to avoid having to register and file, but it does not appear they are going to be able to do that.” Articles of organization legally define a corporation, stating its mission, naming directors, and spelling out the conditions and restrictions of its business practices.
Currently, the office of Assistant Attorney General Sandra Cardone is in charge of negotiating with MHOC attorneys to bring the corporation into compliance.
According to MHOC President Gerard Welch, MHOC’s founding attorneys believed they had crafted articles of organization that did not require MHOC to register as a charitable nonprofit with the IRS and file the attendant forms, 990 and PC.
“We never said we were tax-exempt,” said Welch in an interview Monday, “so our attorney [at the time of incorporation] did not think we needed to register as a charitable organization and file the forms.” The assistant attorney general’s office disagreed and has directed MHOC to register with the IRS as a nonprofit charitable corporation and file its backlog of forms. Welch added, “Our lawyers are negotiating with the attorney general’s lawyers. We’ll adjust as we need to.”
Asked whether it still made sense to operate as a nonprofit organization, Welch replied, “It’s a fair question. We might adjust our mission statement.” He offered reasons why MHOC had incorporated as a nonprofit in the first place in 2003. The initial goal, he said, was to pursue actual nonprofit affordable-housing projects. “We were looking for 100 percent HUD-subsidized projects built on town-owned land when we incorporated.” As time passed, many factors worked against that goal, he said, including opposition at town meetings and the resulting failure to secure HUD (U.S. Department of Housing and Urban Development) funding. MHOC has never built a 100 percent affordable project, he said.
In Harvard, the nonprofit MHOC has created a for-profit corporation to develop its proposed projects on Ayer and Littleton roads. Ayer Road calls for 32 housing units, of which eight are to be sold as state-defined affordable units, and 8,000 square feet of commercial space, with no more than 2,000 square feet to be used for office space. Plans for 15 Littleton Road show nine market-rate units and three state-defined affordable units.
According to Ferrullo, the attorney general’s finding grew out of a complaint filed in February by Anthony J. Marolda of Jacob Gates Road, who was prompted to complain when the developer refused his request to see the nonprofit reports.
Ferrullo asked for patience as the negotiations between MHOC and the assistant attorney general’s office continue: “This is a long process. There’s a lot of financial data that has to be collected, but it is being pursued. We’ll get them registered soon.”
