A series of troubled buildings placed in receivership two years ago are under contract to be purchased by new owners pending federal approval, according to Cincinnati City Council documents.
Those buildings formerly owned by New Jersey-based PE Holdings include the Alms Hill Apartments in Walnut Hills, a 200-unit building home to a number of long-term residents who wish to stay there despite years of neglect by its former owners.
Related Affordable Housing, a New York-based affordable housing provider, has entered into a contract to buy the Alms as well as Entowne Manor and the Burton Apartments in Avondale. Another buyer, American Community Developers, wants to purchase other buildings formerly owned by PE Holdings, including Reids Valley View Manor and Shelton Gardens Apartments.
Seven buildings owned by PE Holdings, including the Alms, the Burton Apartments in Avondale and others in North Avondale and Westwood, were placed in receivership by Hamilton County Common Pleas Court Judge Beth Myers in 2016 after horrific conditions including leaks, non-functioning heat, insect infestations and other problems came to light at the buildings. In one case, at the Burton in Avondale, a roof collapsed after a heavy rain. Those conditions moved the City of Cincinnati to ask a court to strip control of the buildings, and their U.S. Department of Housing and Urban Development rent subsidy payments, from PE Holdings.
Indianapolis developer Milhaus, the court-appointed receiver, wrote in a letter earlier this year to Cincinnati City Councilman Christopher Smitherman, the chairman of the Law and Public Safety Committee that pushed for the receivership, that the buildings are close to being purchased by companies that look likely to continue their use as affordable housing.
According to City Council documents, Milhaus has spent more than $5 million from federal rent subsidies to repair the properties. Last year, a legal battle erupted over the Alms after HUD attempted to pull its rent subsidies from the property over its condition, despite the fact that Milhaus had spent more than $700,000 on repairs at the 200-unit apartment building.
There were warning signs that there could be trouble at the buildings when PE bought the Alms in 2013. That year, then-Cincinnati Community and Economic Development Director Michael Cervay met with other city officials and representatives from the company. After the meeting, Cervay fired off a letter to HUD asking the federal government to keep the company from buying the properties.
“It was made clear to the participants in that meeting that the new owners have no intention of investing in our neighborhoods through the purchase of this portfolio,” Cervay wrote to HUD in April that year. “(PE Holding’s representative) stated that there are no plans for capital improvements or rehabilitation, a dialogue with the neighborhoods, nor their own new residents regarding what is needed to preserve these buildings.”
That red flag proved both prescient and ineffective. HUD gave the purchase the green light, and two years later, city code inspectors found horrendous conditions in the Alms and several other buildings PE Holdings had purchased.