Photo by Dani Fresh
A bankrupt affordable housing development in Harrisburg will continue the process of determining a buyer to purchase the beleaguered properties.
On Tuesday, representatives for Uptown Partners, owner of the Residences at Governor’s Square, sat for hearings before judges in federal bankruptcy court and the Dauphin County Court of Common Pleas, to discuss their efforts to sell the properties, as well as address hundreds of unresolved city code violations.
Uptown Partners filed for Chapter 11 bankruptcy and, for months, looked for a buyer for the properties in the area near Maclay Street and N. 5th Street, which have received hundreds of city code citations and condemnations over the past several years.
During Tuesday’s hearing in the U.S. Bankruptcy Court for the Middle District of Pennsylvania, attorneys for Uptown Partners said that, while they have a few potential buyers for their about 200 rental units, none have yet met all requirements to move forward. As a result, the final decision on the sale was continued to June 25.
In January, the owner identified New Jersey-based real estate company ANCDI as the proposed buyer. The company made an offer of $9.6 million at a Jan. 10 auction. Additionally, 2087 Market Street LLC offered $9.5 million for Governor’s Square and Woda Cooper Companies, an Ohio-based affordable housing provider, offered $9.1 million.
Since then, Uptown Partners’ attorney Robert Chernicoff explained that 2087 Market Street LLC has now moved into that top position as a buyer, as they are the only company working actively with Uptown Partners and the U.S. Department of Housing and Urban Development (HUD), which needs to approve of the final sale. HUD has the right to approve of the buyer because of a multi-million-dollar loan that it issued Uptown Partners years ago to renovate Governor’s Square.
Harrisburg filed an objection to the sale of the properties when Uptown Partners initially made its proposal in January, stating that neither the selected bidder nor the backup bidder were qualified to take on a project of this scope.
Attorneys for the city, on Tuesday, explained that they believed Woda Cooper Companies, the lowest bidder, was the most experienced bidder for the job.
“The two buyers in this case have no experience, that’s the problem,” said attorney Clayton Davidson, representing the city.
Chernicoff said that they’d be open to considering Woda, but that the company has not been willing to negotiate with them and has asked for a several-month-long contingency period before closing.
Bankruptcy Chief Judge Henry Van Eck expressed concern over the long time period that Woda would have to pull out of a sale.
According to Harrisburg city Solicitor Neil Grover, Woda has already been pre-qualified by HUD, and the lengthy contingency period is normal when it comes to HUD housing. And while Woda offered less money for the purchase of the property, the company ultimately has the most capital to complete renovations, Grover said.
Chernicoff also accused the city of not providing information requested by the top two bidders about code violations and other property details.
“It almost overall has the appearance that the city is trying to chill these bids,” Chernicoff said. “We don’t know that [Woda] is the city’s favorite bidder, but this is what we’ve been told. This is not right.”
As the court proceedings continue, Chernicoff said that Uptown Partners is running out of money and the longer it takes to find a buyer, the more tenants may be affected.
“If we don’t get something soon, properties are going to become more and more vacant,” Chernicoff said.
Later in the afternoon, Uptown Partners representatives were at the county courthouse, facing criminal sentencing for over 90 unaddressed city code violations. In January 2023, Uptown Partners pled guilty to the charges.
Tuesday’s sentencing only addressed a portion of the hundreds of city code violations against Uptown Partners.
Judge Richard Lewis ordered that Uptown Partners pay the fines already assigned at the magisterial district judge level, which Lewis estimated will total anywhere from $75,000 to $100,000. Half of the total amount must be paid by Uptown Partners within six months from today, he said. If fees are paid and units are brought into compliance, Uptown Partners may receive a 25% discount on its remaining fine balance, he added.
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