Photo by Dani Fresh
The sale of a blighted, bankrupt affordable housing development in Harrisburg has been postponed and is facing significant resistance.
On Tuesday, this week’s scheduled bankruptcy court hearing to finalize the sale of the Residences at Governor’s Square was continued until April. Additionally, the U.S. Department of Housing and Urban Development (HUD) recently joined Harrisburg and several Governor’s Square tenants in objecting to the proposed sale.
Uptown Partners, the owners of Governor’s Square, filed for bankruptcy in May. For years, tenants dealt with quality-of-life issues in the units, and the property has received hundreds of city code citations and condemnations.
The final hearing to determine a buyer has been continued from Feb. 29 to April 2 at 10:30 a.m. in the U.S. Bankruptcy Court for the Middle District of Pennsylvania.
In January, the owner identified a potential buyer for the development, New Jersey-based real estate company ANCDI, according to court documents. The company made an offer of $9.6 million at a Jan. 10 auction.
Last week, HUD filed an objection to the sale, stating that the proposed buyer has failed to agree to HUD’s conditions for their approval. According to HUD, it has a right to approve the sale of Governor’s Square because of its ties to the development. Years ago, HUD sold the property to Uptown Partners in exchange for deed restrictions and covenants to keep the housing affordable, in addition to providing the owner with multi-million-dollar loans to aid in redevelopment.
In the court documents, HUD also states that it has a right to receive a portion of the proceeds from the sale of Governor’s Square, but that the proposed owner has not made it clear whether they would honor that.
Additionally, HUD objected to the uncertainty of the language in the proposed sale order, which says that Governor’s Square must be sold “free and clear of any liens, claims, interest and encumbrances of every kind or nature whatsoever.” HUD’s objection said that the buyer must make it clear that they intend to maintain the property as affordable housing in keeping with the restrictive covenants.
Last month, Harrisburg also objected to the sale, in addition to three people, two of whom hold tenant leases at Governor’s Square.
Both objectors also expressed concern about keeping Governor’s Square affordable and stated, in court documents, that they didn’t believe ANCDI had adequate experience with low-income housing development.
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