'Gateway to Ypsilanti': Settlement reached to renovate Parkview Apartments

Those who have stayed - living in an otherwise boarded up and abandoned complex - are the last holdouts since conditions began seriously deteriorating in the early 2000s under the management of the Parkview Non-Profit Association. Residents past and present have similar complaints - sewage back-ups, plumbing problems, mice, animals in the ceilings, holes in the walls and ceilings, flooding and mold.

But Parkview's days as a rundown housing complex are likely nearing an end. U.S. District Judge Victoria Roberts approved a settlement this month between the Parkview Tenant’s Association and the U.S. Department of Housing and Urban Development, allowing an ambitious renovation plan to move forward.

HUD will transfer ownership of the property to the Ypsilanti Housing Commission under the agreement, which brings to a close six years of litigation over the complex’s fate. Baltimore-based Chesapeake Community Advisors Inc. will invest an estimated $12 million to renovate the complex into a mixed low- and middle-income community.

Chesapeake will receive $2.7 million - approximately $40,000 per unit - in immediate HUD grant money and a matching Federal Housing Authority loan to renovate half of the 144 units. The company is seeking federal low income housing tax credits and private investments to help renovate the second half.

HUD agreed to pay $700,000 in back taxes, and the city housing commission will pay the taxes from 2005. In addition, HUD agreed to pay all outstanding utility bills and other costs associated with the property.

The City Council must now vote to approve the housing commission's acquisition of the property.

“We have a real need for affordable housing, to fix up blighted properties and to improve our image, and renovating Parkview will do all three,” Ypsilanti Mayor Paul Schreiber said. “And anytime we get $6 (million) to $12 million invested in Ypsilanti, I’m all for it.”

Residents will be relocated beginning this summer, and Chesapeake hopes to begin renovations sometime this fall. The first 68 units are expected to be ready for occupancy by fall 2011.

HUD will provide the housing commission with 144 Section 8 housing vouchers to assist current or future Parkview residents, or to place those in its voucher inventory. Residents who have lived in Parkview on or after July 30, 2007, will receive the first housing vouchers and relocation assistance and will have the option to move back into the complex following renovation.

The current management company, which is sub-contracted by HUD, will no longer run Parkview. Instead, the city housing commission will form a new non-profit to oversee the complex, and officials have said there will be a tighter screening process to curb crime issues that have been prevalent in the community.

A long litigation history

The origins of the deterioration and litigation process lie in the Parkview Non-Profit Association's failure to meet a number of HUD requirements and codes leading up to 2004, officials say. That year, the Ypsilanti Community Utilities Authority threatened to shut off water for non-payment.

HUD paid enough of the bill to keep the water on and began the foreclosure process on Parkview Apartments. HUD began soliciting offers through a program in which low-income properties are offered to local entities at a reduced rate.

The Ypsilanti Housing Commission and Ypsilanti City Council both submitted plans for the property. Bob Gillett, director of Legal Services of South Central Michigan, the legal team representing the Parkview Tenant’s Association, said the housing commission's proposal went further to provide assurances it would accommodate low-income residents.

The commission proposed using The Chesapeake Community Advisors.

“From the beginning, our legal team was impressed with the quality of development plan they proposed and the quality of dialogue they had with the commission and tenants,” Gillett said.

Schreiber, then chairman of the housing commission, said the commission attempted to acquire the apartments because the Parkview Non-Profit Association was doing a poor job of managing the property.

“We could see it was not being run well,” he said. “It was a blight on the community, there were crime problems and there were image problems for the city.”

But the association sued to stop the foreclosure. The association denied any wrongdoing in its suit and placed the blame on HUD. A judge dismissed the case in February 2005.

HUD then began the process of transferring the property to the city housing commission, but several disputes arose between that board and the City Council. The commission’s board is appointed by the mayor and is approved by the City Council.

Schreiber said the City Council proposed building condominiums as it pushed for greater homeownership in the city and filed a formal objection to HUD choosing the city housing commission's plan.

HUD reconsidered and again chose the commission, but the city - which must approve any Ypsilanti Housing Commission land acquisition - delayed action past a HUD-imposed deadline. Schreiber said the disputes prompted HUD to give up selling locally.

The 'Daredevil Landlord'

Nervous over the City Council and housing commission’s inability to cooperate, HUD opted to sell the property at a public auction to the highest bidder, Gillett said.

That bidder turned to be New York City-based developer Emmanuel Ku, a self-described “daredevil landlord.”

Gillett said the tenant’s association sued to block the sale after researching Ku and discovering a lengthy history of code violations and tenant issues, and reports alleged he had 1,400 outstanding code violations from his New York City properties alone. The suit, filed in fall 2005, stayed in the legal system until March 2006 when HUD offered to cancel the sale if the tenants canceled the suit.

Concurrently, the Parkview Non-Profit Association, which still owned the property, filed for bankruptcy.

Once the bankruptcy proceedings came to a close, HUD became the mortgagee in possession.

HUD began preparing to publicly auction the property instead of selling it to the housing commission. The agency contended it was unable to transfer the property to the commission because the Deficit Reduction Act of 2005 prevented it from transferring the property for below market value.

The tenant's association sued to block the auction, taking the position that the Parkview case began in 2004 and could be grandfathered. That set up the case that would ultimately lead to this month's settlement.

“There was suddenly a ‘get as much money as possible out of the sale,’ approach and HUD said they no longer had authority to make the sale,” Gillett said. “Then things just kind of laid there for a while.”

By early 2007, Rep. John Dingell’s office got involved, contacting HUD nearly weekly in an effort to have the property transferred to the Ypsilanti Housing Commission.

Dingell said he intervened because the project is one of the few sources of low-income housing in Ypsilanti.

“Now, more than ever, the residents of southeast Michigan need an affordable housing resource,” Dingell said. “People have left Parkview because HUD, up until now, did little or nothing to keep it in habitable condition. I believe that once the complex is refurbished, which will require a bit of work, it will attract new residents.”

The 2008 Foreclosure Protection Act included language freeing HUD from having to seek market value in the Parkview Apartments case.

Gillett said the legislation was “tremendously important” - but still didn’t bring the swift resolution that local officials hoped for in the case.

During the six years of litigation, occupancy fell from roughly 125 to under 30. Tenants also started receiving multiple notices that they must move and could lose their Section 8 assistance if they didn't.

The tenant’s association filed a motion last September asking HUD to fill the apartments that could still be occupied. Roberts ordered HUD to do that and to meet with the tenants to negotiate.

‘Light at the end of the tunnel’

On May 20, a more promising chapter in Parkview’s story began when Roberts signed the approval of a settlement.

“Obviously this is not your average landlord-tenant suit,” Gillett said. “I think overall we’re sorry that this took six years, but in terms of benefits of this settlement to the tenants and city, it’s great and is everything that we hoped for.”

Tenants say it's been a frustrating situation - but they're hopeful things will soon change.

Wallace, who has lupus, said the constant stress only worsens her health.

“I am so tired of the constant harassment from the management and not knowing if I’m going to be evicted,” she said. “I’m at the end of my rope. We’ve suffered long enough over here.”

Last Thursday, a copy of the settlement agreement arrived in resident Denzil Morris’s mailbox. Morris said she's frustrated after constantly hearing new stories over the last six years, but is becoming more confident she'll receive her Section 8 voucher this time.

Morris said a pipe inside her apartment burst over the winter and flooded her basement. She now owes more than $1,000 for the repair bill.

“I can see the light at the end of the tunnel, and it’s a big, old bright number eight,” she said.