Low-income residents stuck in the middle as sale of apartment complex stalls

INDIANAPOLIS, Ind. — All parties involved in the sale of a low-income apartment complex agree that it desperately needs renovation, but construction has been delayed as the sale stalled.

Residents at Stonekey Apartments on the near southeast side say they are living with major health and safety issues in units subsidized by the federal government, through the Department of Housing and Urban Development.

Meriah Flores has kept close track of the problems in her apartment. When she moved in a year and a half ago, the gas company issued a red tag for her furnace, noting it "is leaking carbon monoxide." Managers at Stonekey did fix that issue and others, but some repairs took so long that Marion County health inspectors opened a court case against the complex. The two parties came to an agreement in the case two weeks ago and a re-inspection is scheduled for September 24.

"I hide a lot of it because I don’t want my friends and family, when they do come and see me, to be like, 'Why do you live in this place?'" Flores said.

Flores showed FOX59 some areas of concern. The back kitchen wall has deteriorated to the point where Flores can push her hand into it, and leaks in the kitchen have caused parts of the cabinets to fall apart. Her bathroom sink also leaks, causing mold to grow underneath it.

Another resident, who asked to remain anonymous, also invited FOX59 into her apartment. She showed us issues with both her kitchen and bathroom faucets. In the kitchen, the faucet was continuously dripping and in the bathroom, water leaked out onto the floor and under walls when turned on.

"They said they’re going to get to it, 'We’re going to come in and fix it.' Never did," the resident said.

Last October, inspectors from HUD gave Stonekey a score of 47 out of 100 and noted potentially dangerous health and safety issues. In 2016, investigators also looked into the complex's finances. Shortly after, owner Global Ministries Foundation, or GMF, out of Memphis, decided to sell its Section 8 properties across the country, but FOX59 found that the sale of Stonekey still hasn't gone through.

GMF founder Richard Hamlet spoke to FOX59 and said that HUD forced his company to sell all of the properties together to one entity, making the sale more difficult. The buyer, Millenia Companies out of Cleveland, took over management at Stonekey in January 2018, but sales of individual properties have moved slowly.

"HUD audits show that we put $10 million into these properties collectively, out of our equity money, to make them stay alive until we could sell it, and we should’ve been out a year and a half ago," Hamlet said.

Hamlet blamed political pressure, HUD, and the buyer for slow progress. He said Stonekey has needed renovations for years.

FOX59 also contacted Millennia about the sale. A spokesperson answered written questions about the complex and Flores' case. In regards to the delay in the sale of the property, Millennia said in part:

"Typically, MHM does not manage properties we do not own; the Global Ministries Foundation (GMF) portfolio is unique for the company.

Once the former third-party management company ceased operations at Stonekey, Millennia’s team started to manage the property. Millennia plans to acquire the property, apply for 4% Low-income Housing Tax Credits and secure any additional financing required to implement a comprehensive rehabilitation. Regarding the timeline, as mentioned, the acquisition and preservation process is complex, and we are working through closing each of the 37 properties in the GMF portfolio - all of which need extensive rehabilitation. To date, we have closed on 19.

We expect to close on the acquisition of the property by the end of 2019, and then we will work diligently to put in place the necessary approvals, permits and financing to close on the preservation and rehabilitation transaction on or before the end of the second quarter in 2020.

After the HUD investigation involving GMF in 2016, HUD approached Millennia to acquire the properties because of Millennia’s track-record of acquiring and preserving affordable housing units throughout the country.

We too would have liked for a faster closing process; however, we encountered many obstacles and industry-wide events that affected the housing development community on a macro level. These included such things as tax reform, HUD shutdowns, fluctuating interest rates, and substantial increases to construction costs. All of these events required restructuring of the financial aspects of each individual deal and resulted in substantially lost time. That being said, we believe we have a plan to move forward and anticipate closing this transaction and beginning the transformation of Stonekey Apartments, similar to what we have accomplished at other properties in Indiana such as Villages of Hanna in Fort Wayne, Lakeside Gardens in East Chicago, and Park Shore Commons in Gary. "

While residents wait for the badly needed renovations, some of them told FOX59 that they feared retaliation for speaking out.

Managers have twice tried to evict Flores from her apartment. Most recently, a judge ruled in her favor. Not long after that, Flores received a letter that said her lease would not be renewed in December.

"I don’t want to go back to my car, and I don’t want to go back to a hotel room," Flores said.

In response to questions about Flores' case, a spokesperson for Millennia said in part, "HUD rules and regulations require tenants to comply with the rules and guidelines that pertain to the leasing agreement. Millennia Housing Management, Ltd. also has a set of house rules, which are part of the lease. As a property management company, we have the ability to not renew a lease based on violations of house rules."

As for issues with apartments that residents say are not fixed quickly, if at all, the spokesperson said in part, "As we receive requests, we promptly begin to address the issues, which can entail obtaining bids, engaging vendors and arranging schedules. It is important that residents report any service requests directly to the management office. "

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