Photo by Dani Fresh
While the owners of a blighted, bankrupt affordable housing development in Harrisburg zero in on a buyer, the potential sale is facing friction and delays.
On Wednesday, the city filed an objection in court against Uptown Partners’ proposed sale of the Residences at Governor’s Square, totaling more than 200 affordable rental units, to a New Jersey-based real estate company.
Additionally, the final court hearing on the sale, which was due to take place in a matter of days, has been continued to Feb. 29.
Uptown Partners filed for Chapter 11 bankruptcy in May and has since sought a buyer for its properties, which have received hundreds of city code citations and condemnations.
Earlier this week, Uptown Partners filed a motion to sell their properties to Mount Holly, N.J.-based ANCDI, which made an offer of $9.6 million at a Jan. 10 auction. The company also identified 2087 Market Street LLC, which offered $9.5 million, as a backup buyer.
However, the city and the Harrisburg Redevelopment Authority, in a joint filing, have objected, questioning whether ANCDI would be able to take on the purchase and needed rehabilitation.
The city and HRA’s document states that the purchase of Governor’s Square will require significant renovations and relocation of residents during renovations. And because Governor’s Square has a multi-million-dollar U.S. Department of Housing and Urban Development (HUD) loan tied to it—awarded to fund past renovations—and relies on federally funded Section 8 housing vouchers, a buyer must operate under HUD guidelines and comply with federal procurement practices when issuing contracts.
According to a statement in the city’s objection, “Neither the ‘Winning Bidder’ or the ‘Backup Bidder’ demonstrated any ability to successfully operate in the mandatory federal framework at play here.”
On Tuesday, community members Monique Bryant, Anita Hall and Deborah Taylor also filed an objection to the sale motion through their attorney, a lawyer with the Community Justice Project, a nonprofit legal assistance firm for low-income residents. Two of those objectors hold tenant leases at Governor’s Square.
Similar to the city, their filing stated that ANCDI “has no HUD property subsidized housing experience whatsoever.”
Additionally, they objected to the language in the motion stating that Governor’s Square should be sold “free and clear of all liens, claims, encumbrances and other interests.” The objectors stated that the wording may allow the property to be sold free of and violate restrictive covenants that currently require the units to remain affordable and may allow Governor’s Square to be sold free of current tenant leases.
According to the sale motion filed by Uptown Partners, ANCDI provided proof of funds to close and renovate the properties.
Also, in a narrative by ANCDI owner Charles Howard, which was attached to the objection documents, the company has “decades of experience” working with tenants with housing choice vouchers.
Prior to the auction, city and HRA staff and officials interviewed both ANCDI and Woda Cooper Companies, an Ohio-based affordable housing provider that also bid on Governor’s Square, according to court documents. Both companies had made offers before the auction.
In December, the city and HRA told Uptown Partners that they would approve of Woda Cooper as the buyer, according to the filing. Woda Cooper made an offer of $9.1 million but was not selected by the owner.
The city is now asking that the court “conduct a rigorous examination of the buyer’s finances, operational experience, and future intention to comply with the myriad of laws that affect low income housing,” according to its filing.
Harrisburg also requested to see a proposed deed showing HUD approval, a commitment that the buyer will maintain Governor’s Square as affordable housing and a proposed agreement of sale, among other documents.
A final bankruptcy court hearing to approve a buyer is now slated for Feb. 29 in the in U.S. Bankruptcy Court for the Middle District of Pennsylvania.
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