Legal Aid: 'New day' awaits troubled apartments

Posted at 3:27 PM, Feb 01, 2016
and last updated 2016-02-02 07:30:34-05

CINCINNATI – A court-appointed receiver is expected to immediately begin making repairs to a cluster of low-income properties so neglected they were deemed public nuisances late last year.

Hamilton County Common Pleas Court Judge Beth Myers on Monday named Jodi Ridings of Milhuas Developer as the receiver of five apartment communities owned by New Jersey-based PF Holdings.

The properties are the focus a lawsuit filed last year by city of Cincinnati and low-income housing advocates who say the out-of-state investors ignored criminal activity and “willfully” concealed building hazards to cover up unsafe living conditions.

All told, more than more than 1,800 health and safety code violations have been issued for the buildings, according to city records.

In recent months problems at the properties have ranged from lack of hot water and heat to broken sewer lines and a roof collapse forced dozens of residents temporarily from their homes.

A chair and some trash sit in a stairwell in Entowne Manor (Phil Didion for WCPO).

WCPO spent months in 2015 covering the impact of problem properties on tenants, neighborhoods and the regulators who are struggling to keep track of them. This story is part of that series. Read the entire eight-part series here.

The court’s receivership decision on Monday marks what hundreds of residents hope will be “a new day, a new chapter toward the preservation and improvement of their homes,” said Virgina Tallent, an attorney with Legal Aid Society of Greater Cincinnati.

Legal Aid represents resident associations at each of the five communities, which include Entowne Apartments at 3652 Reading Road in Avondale, Burton Apartments at 1000 Burton St. in Avondale, The Alms apartments at 2525 Victory Parkway in Walnut Hills, Shelton Gardens at 2000 Westwood Northern Boulevard in Millvale and Reids Valley apartments at 1990 Westwood Northern Boulevard in English Woods.

Court records indicate nearly $3 million in deferred maintenance and major repairs are needed across the five communities.

The troubled buildings are among nearly a dozen properties purchased by PF Holdings LLC across the city in 2013.

The deal ensures the out-of-state landlord gets more than $5.3 million annually from the U.S. Department of Housing and Urban Development to offset the costs of rents for nearly 600 apartments. Additionally, each tenant pays at least 30 percent of their income toward rent.

PF Holdings' attorney Steven Rothstein has contended the property owners have invested "hundreds of thousands of dollars" to repair a host of issues they inherited when they purchased the properties more than two years ago.

"Every spare dollar that the ownership has over and above the mortgage, taxes and insurance is being devoted to maintenance," Rothstein told WCPO late last year.

But attorneys with PF Holdings’ lender argued otherwise.

“These properties are in terrible shape,” said Christopher Cathey, an attorney for U.S. Bank Wilmington Trust, a lender on the mortgage for the properties.

“It’s not every day that HUD shows up at a receivership hearing," he said. "It’s very clear that the properties are not in a safe, decent and sanitary condition because the defendants have not done what they needed to.”

Under a plan submitted to the court, Ridings’ first 45 days on the job would include a “comprehensive due diligence inspection” of each property. At the same time, she is expected to tackle all “urgent” repairs within 30 days, which include fixing a broken elevator at the Alms, broken sewer lines at Burton and Reids Valley and repairing fire escapes at most of the properties.

Longer term, the lender estimates that more than $2.8 million in repairs and upgrades are needed across all of the properties to bring them in line with HUD’s standards, according to the court documents.

Money for the upgrades will come from the roughly $253,573 paid out monthly by HUD to cover rents for the properties as well as advances from U.S. Bank of up to $1 million, according to the documents.

Ridings firm will be paid at least $2,000 monthly for its management services, according to court papers. Based in Indianapolis, Milhaus is the developer behind the Gantry in Northside, a $13 million remake of a former lumberyard into new apartments and street-level retail space. Court records show the firm also has experience managing the low-income properties, including the local Asmen and Westwood Apartments.

The firm is expected to file detailed financial reports monthly the court that indicate what repairs have been completed and what’s still ahead.

“The residents are looking forward to working with the receiver to see this through, and they’re optimistic that there are going to be some significant, quick changes,” Tallent said.