An affordable housing developer with multiple properties in Connecticut has filed a lawsuit against the Connecticut Housing Finance Authority (CHFA), alleging the quasi-public state agency fraudulently misrepresented funding caps, showed favoritism toward entities associated with Connecticut Department of Housing (DOH) Commissioner Seila Mosquera-Bruno, and aided and abetted DOH’s wrongful conduct in awarding funds to projects.
Dr. Harold Foley and his Atlanta-based HF3 group originally filed a claim against the Connecticut DOH and Mosquera-Bruno with the state’s claims commissioner, who determines whether an individual or business can sue the state. However, because the CHFA is a quasi-public agency, Foley’s new lawsuit can move forward in court without going through the claims commissioner’s office.
As previously reported by Inside Investigator, Foley claims funding caps listed on CHFA’s website indicate DOH will provide between $4.5 to $5.5 million toward a project approved for federal tax credits through CHFA’s competitive bidding process, but that DOH has awarded far more funding to housing nonprofit organizations with whom she is associated, and that DOH has funded the entire cost of some projects outside of the competitive bidding process.
Generally, CHFA will only approve six to seven affordable housing projects in a given year through a bidding process that awards federal tax credits to developers, thus attracting private investment for housing projects. DOH will then offer “subordinate funding” for the project.
According to prior years’ language published on CHFA’s website, DOH funding is “limited to $100,000 per unit or $4,000,000 maximum per project,” although the total can vary depending on the year.
According to multiple documents and term sheets provided to Inside Investigator, several projects proposed by the Mutual Housing Association of South Central Connecticut (MHASCC) received funds well over the stated “maximum,” and received tens of millions toward projects outside of the CHFA process altogether, pushing the per-unit funding well over $300,000 in some cases.
DOH Commissioner Mosquera Bruno was the executive director of MHASCC before becoming commissioner and even approved additional funding for projects she started while head of the nonprofit organization and awarded funding for MHASCC projects that were rejected by CHFA, where she serves as the board chairman.
Foley and HF3 Partners claim this shows a bias and favoritism and has led to their projects receiving less funding than those of “preferred developers.” CHFA and DOH forced Foley to exit one project due to an existing lawsuit over loan repayment; however, DOH moved forward with funding a project for MHASCC while that organization had a similar pending lawsuit.
In prior comments to Inside Investigator, DOH argued the “maximum” funding limitations listed on CHFA’s instructions to developers are merely “target investments,” and subject to the commissioner’s discretion.
The lawsuit alleges CHFA violated the equal protection clause by treating HF3’s projects differently from others, that CHFA committed “fraud” by misrepresenting that funding decisions were made through “a competitive application process based on objective criteria,” and “aiding and abetting DOH’s wrongful conduct when the agency denied or reneged on funding commitments to HF3.
“Had Plaintiffs known that CHFA was not applying objective criteria and allowing or permitting other deals to receive substantially higher funding to favored developers, Plaintiffs would not have committed years of predevelopment effort or millions of dollars in reliance on CHFA’s false and misleading statements,” attorney Scott Orenstein writes in the complaint. “The funding guidelines and caps were not applied equally to all developers and projects, as evidenced by the disparate funding provided to projects associated with the CHFA Chair of the Board of Directors’ former employer.”
Foley has traveled to Connecticut to meet with various lawmakers regarding these issues with DOH, and has offered testimony before various committees with oversight of state funds, like the Appropriations Committee and the Finance, Revenue, and Bonding Committee.
State funds dedicated to affordable housing are awarded through the State Bond Commission, which recently approved another $37 million in bond funding for the state’s Flexible Housing Program, DOH’s primary funding mechanism for affordable housing developments.
The most recent report by state auditors found DOH had poor accounting practices for its various programs, including its Housing Trust Fund (HTF) that also provides affordable housing funds, including making a nearly $3 million payment outside of the “approved budget period” for an affordable housing development, not monitoring approved program costs for the HTF, and not closing out projects for up to 14 years after their budget expiration.
As part of their 2026 DOH parameters for subordinate funding, the language has been changed from a “maximum,” as listed in other years, to “DOH Subordinate Financing Targets,” which lists targets between $100,000 and $150,000 per unit, and essentially gives DOH broader funding capacity.
Under these new parameters, “DOH will rely on CHFA’s underwriting of the proposal to determine the amount of debt and deferred developer fee that a development can reasonably support; any resulting funding gap will constitute the DOH funding request,” and “DOH reserves the right to make awards based on development team capacity.”
DOH and CHFA released a joint press release in January 2026, highlighting nine affordable housing developments that will receive a total of $49 million in loans and grants from DOH, $39 million in financing through CHFA, and $85 million in private investment through CHFA’s tax credits.
“These developments reflect our commitment to delivering high-quality housing that meets the needs of Connecticut residents across income levels,” Mosquera-Bruno said in the press release. “With funding now in place, these communities are ready to move forward, bringing new life to underutilized properties, supporting working families, and creating housing stability across the state.”
Foley and HF3 Partners are seeking monetary damages, interest, attorneys’ fees, punitive damages and any other relief the court may deem proper.
“As a direct and proximate result of CHFA’s aiding and abetting DOH’s wrongful conduct, Plaintiffs suffered damages, including lost developer fees, diminished or lost tax-credit allocations, lost operating and residual income, increased project costs, lost business opportunities, and the loss of multiple affordable-housing developments that Plaintiffs would have otherwise successfully completed,” the lawsuit states.
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