The city’s Housing Authority will receive $3.5 million as part of a settlement stemming from its lawsuit against Advanced Development Investment Inc., the affordable housing developer that allegedly bilked Glendale out of millions of dollars.

The agreement reached between the city and PNC Multifamily Capital, a national bank and investor, ends any conflict regarding the Metropolitan, Glendale and Vassar City Lights housing projects, which it controlled, City Atty. Mike Garcia said.

“PNC is one of the good actors in this story,” he said. “As soon as they took control of these projects, they worked to complete them in as cost effective manner as possible. In the end, they were able to complete Vassar and pay the Housing Authority as part of this settlement.”

The $3.5 million will be used by the Housing Authority, but Garcia declined to comment on what project.

The city had issued a $13.9-million loan for the Vassar project, an affordable housing complex on San Fernando Road.

Once PNC completed the project, it applied to the state to receive tax credits. But it didn’t need to use all of the proceeds, so company officials agreed to return the funds to the Housing Authority.

“As we entered the litigation, we were trying to recoup as much of the funds that we believed had been fraudulently obtained once we learned about it,” Garcia said. “These funds are used to provide affordable housing throughout our community.”

The city filed a lawsuit in April 2011 against ADI for allegedly inflating costs for construction work, falsifying accounting records and engaging in other fraudulent activities.

While the city has reached one settlement in the case, litigation is still ongoing with ADI and its principals, which include its former president Salim Karimi and company founder Ajit Mithaiwala.

Glendale has paid ADI roughly $34 million since 2005 for four projects, which include Metro Loma in south Glendale.

A court-appointed receiver, David Pasternak, alleged in court documents that ADI reported $24.7 million in construction costs for Vassar City Lights, but about $6.5 million was fraudulent.

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Follow Veronica Rocha on Google+ and on Twitter: @VeronicaRochaLA.

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