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.
