Foreclosure on 2 Privately Run Projects Sought
Citing mismanagement and unpaid debts, the Department of Housing and Urban Development’s regional director is recommending that the government repossess two of California’s most troubled housing projects from their private owners.
Robert J. De Monte, Western regional administrator of HUD, sent letters earlier this month to Washington requesting authority to foreclose on Ujima Village in Los Angeles and Geneva Towers in San Francisco. HUD would take over the poorly maintained projects and eventually resell them to other private owners if foreclosure goes through.
Foreclosure would not result in eviction of the 1,000 residents of Ujima Village and the 1,500 people who live at Geneva Towers.
But if HUD takes over the projects, several private investors who put money into them seeking tax shelters could be forced to pay millions in taxes, HUD officials and syndicators who assembled the investors say.
However, executives of the corporations that control the 300-unit Ujima Village and the 576-unit Geneva Towers say De Monte’s action is merely a tactic aimed at pressuring them into cleaning up the problem-plagued projects.
“He (De Monte) is not the last word. He’s hardly even the first word,” said Eugene Burger of Greenbrae in Marin County. Burger’s company, a co-owner of Geneva Towers, has managed the project for nearly 20 years.
Such comments underscore the difficulty HUD has in forcing private owners of government-subsidized rental property to clean up the projects.
Still, De Monte insisted that he is “serious about it if they (Ujima’s owner) don’t perform.” Ujima is $2.2 million in arrears on its mortgage and is in need of $2 million or more in renovations.
De Monte said foreclosure is farther along at Geneva than at Ujima. “There is no posturing at all. We’re going forward,” he added, because of persistent management problems and tax debts.
Geneva’s problems date to the 1970s but have worsened in recent years as drug dealing and usage has increased. A bleak, graffiti-scarred project, Geneva Towers is a target of a suit by San Francisco City Atty. Louise Renne, who cited numerous fire code violations. The suit alleged that hallway doors were bolted shut, fire extinguishers were missing and steps in emergency escapes were broken. Elevators often do not work in the twin 20-story towers.
With its open townhouse design, Ujima Village does not appear to be as bad as Geneva. But gunfire is so common at the complex in the Willowbrook area of Los Angeles County that children play a game in which they try to be the first to identify the various sounds from automatic weapons, shotguns and .45s.
“You can get mugged in the alley because the lights are broken or so dim they don’t help, and the gangs come right in,” said Shandra Smith, 19, a mother who has lived in the complex most of her life.
Associated Financial Corp., which controls more than 44,000 government-subsidized housing units, formed the syndicate that bought Ujima in 1986 and is the property manager. The Santa Monica-based firm also is a general partner in the ownership of Geneva Towers in San Francisco. Eugene Burger Management Co. is in charge of daily operations of Geneva Towers and was one of its syndicators, along with Century Pacific Investment Fund of Los Angeles.
Although De Monte maintains that he is serious about the moves, he also acknowledged that foreclosure is a drastic step rarely taken by HUD and entails a laborious process.
At Ujima, for example, if HUD forecloses, the agency’s obligations will jump by an estimated $720,000 per year in operating costs and additional rent subsidies. HUD has not foreclosed on any privately owned project in recent years where it would be assuming additional rent subsidy costs.
Associated Financial executives maintain that the $2.2-million mortgage delinquency dates from Ujima’s previous owners, a nonprofit corporation that sold out in the 1970s. Having failed to collect, HUD is now trying to pass that unpaid debt off to AFC, AFC executives said. AFC says it has met its $30,000-a-month payments since taking over the project three years ago.
Additionally, AFC Chairman A. Bruce Rozet said in an interview, De Monte’s request to foreclose is inconsistent with an earlier agreement. Rozet said HUD had approved an AFC plan to renovate Ujima Village and turn over control of the project to a nonprofit corporation.
De Monte denied the assertion. “There is no approval” of any such plan, he told The Times.
Tenant Support Sought
Rozet, meanwhile, has sought tenant support of his plan to revitalize Ujima and recently hosted a community appreciation day. Two days before the visit, his company renovated Ujima’s dilapidated community meeting room and kitchen.
Tenant leader Charlene David, among those who met with Rozet, said residents view such overtures “cautiously.”
“I’ve been trying to get a kitchen counter in my apartment for four years, so I’m going to need proof that things are really changing before I put in my support,” David said.
The company did comply with directions from HUD that it fill numerous empty apartments which had attracted troublemakers, and caused Ujima to fall further into financial trouble, according to HUD officials.
At Geneva Towers in San Francisco, De Monte received approval to foreclose last year but delayed the action when Burger and the owners agreed to come up with $163,680 to pay back taxes--plus a promise to raise more than $2 million for repairs by Sept. 1.
When the parties failed to produce the money by the deadline, De Monte reopened the foreclosure and asked HUD headquarters to “expedite” the process, he said.
Negotiations among the parties--Burger, AFC, Century Pacific, the investors and HUD--were continuing as recently as last week. But De Monte said he told Burger: “If you want to come to the table with some money--now--we can reconsider, which is the same thing I said to Rozet. Neither one of them has come up with any money. We will proceed with foreclosure.”
