Federal housing officials are objecting to the proposed sale of Governor’s Square, a beleaguered Harrisburg apartment complex whose owner declared bankruptcy last year.
In a court filing this week, the U.S. Department of Housing and Urban Development argues there are not enough guarantees that the potential deal will preserve the complex’s status as affordable housing.
HUD also claims the deal fails to compensate the agency as called for under deed restrictions attached to the property when the agency sold it for a nominal price in 2003 to Harrisburg’s redevelopment authority.
Those restrictions entitle HUD to 50% of the proposed sale’s proceeds.
In the filing, HUD said it shelled out more than $21 million in grants over the years to upgrade the property, which the city authority sold to the current owner, Uptown Partners LLC.
Why is this happening: HUD’s filing is the latest twist in Uptown Partners’ bankruptcy case.
Uptown Partners has been looking to sell the 222-unit Governor’s Square complex through the bankruptcy process.
A court-sanctioned auction last month yielded a potential buyer, New Jersey-based ANCDI Properties, which bid just over $9.6 million.
However, creditors, including the city and some tenants, have raised concerns about what the deal will mean for the complex’s status as affordable housing.
They also want to ensure the buyer commits enough money to fix it up.
Harrisburg city has hit Governor’s Square with numerous code violations, and repairs are estimated to cost millions of dollars.
What about HUD: It raised several issues in addition to its concerns about the sale proceeds and the future of affordable housing at the site.
The agency claims, for instance, that its requests for information about the potential buyer have gone unanswered.
The agency also said it objects because no sales agreement has been filed despite earlier court orders requiring one.
“The debtor must file the proposed sales agreement and parties in interest must have an opportunity to object before a sale can be approved,” the agency wrote.
What’s next: A hearing on the sale is scheduled for Feb. 29 in U.S. Bankruptcy Court for the Middle District of Pennsylvania.
Charles Howard, owner of ANCDI, said in an email that he plans to comment at the hearing.
Efforts to reach an attorney for Uptown Partners were not successful.
