Alms, Burton, other PE Holdings buildings close to sale

Court-appointed receiver Milhaus says they are close to locking down new owners for the Alms, the Burton and other buildings containing affordable housing that were in danger of closure due to neglect

Feb 20, 2018 at 9:14 am

click to enlarge The Alms Hill Apartments in Walnut Hills - Nick Swartsell
Nick Swartsell
The Alms Hill Apartments in Walnut Hills

A series of apartment complexes offering hundreds of units of affordable housing that were in danger of closure due to neglect could have new owners very soon, according to City of Cincinnati documents.

Seven buildings owned by New Jersey-based PE Holdings, including the Alms Hill Apartments in Walnut Hills, the Burton Apartments in Avondale and others in North Avondale and Westwood, were placed in receivership by Hamilton County Common Pleas Court Judge Beth Meyer 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 this month 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.

New York-based Related Affordable LLC is interested in purchasing the Alms, Burton, Entowne Manor, Founders Home and Georgia Morris Apartments. Another purchaser, American Community Developers, is considering the purchase of the remaining properties, Reids Valley View Manor and Shelton Gardens Apartments.

The deals aren’t finalized, and are subject to court approval. The buyers would also need to get the U.S. Department of Housing and Urban Development to transfer contracts for rent subsidies to them from the previous owners.

However, Milhaus expressed optimism that the sales are on the right track and wrote that they expect the deals to be complete by the end of February.

“It is certainly possible that we will be unable to negotiate the terms of a final agreement with one or both of the buyers, or that one or both of the buyers might elect not to go forward after completing their due diligence, but we are working expeditiously toward the goal of selling the properties and are optimistic that the buyers will sign acceptable agreements and proceed to closing,” Milhaus President Alexandra Jackiw wrote in the letter. “Both Related Affordable and ACD have excellent reputations as developers of affordable housing.”

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.

PE bought the building 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.