Oakland buys affordable apartment complex to prevent foreclosure

Oakland is purchasing an affordable housing apartment complex to prevent it from going into foreclosure.

The City Council has approved buying the E.C. Reems Gardens Apartments from the federal Department of Housing and Urban Development for $3.8 million. HUD had indicated it would otherwise foreclose on the property July 31.

“We are simply trying to keep this project affordable. If we do not go through with this and have an approval by July 31, HUD will put this on the open market,” Michele Byrd, director of the city’s housing and community development department, told the council before its vote July 24.

“We could lose 126 units of affordable housing. Those individuals who are there now will be displaced,” she said.

Oakland has loaned a total of $4.1 million to the apartment complex’s owners and received no repayments, according to a staff report. Both the city and HUD had put the owner in default, with the city’s lien in second position behind feds’.

A foreclosure sale would have cost the city a $4.1 million loss, Byrd said. The city plans to find an interim property management company to operate the apartments until they can be sold, according to the staff report.

The apartment complex at 2600-2795 Alvingroom Court in East Oakland has had a troubled past.

“Back in the ’80s and ’90s, it was not a safe place to raise a family,” Councilman Larry Reid said in an interview. It had a reputation for drug traffic and violence, according to the report.

In 1995, the bank foreclosed on the privately owned property, and the city helped a Southern California nonprofit, Corporation for Better Housing, acquire the buildings and convert them to affordable housing. Then-Mayor Elihu Harris had the developer reach out to the Reems, an Oakland family that has a church, shelter, senior complex and other buildings near the site, offering them a 1 percent share, Reid said.

The Reems do not operate the apartments, said John Guillory, a real estate broker who is working with the family. “It’s the CBH people who run everything,” he said in an interview.

The property has not been maintained and has a high vacancy rate despite an affordable housing shortage in Oakland, the report said. There have been frequent management turnovers and cash-flow problems.

“They basically bled the project dry,” Reid said of Corporation for Better Housing. Guillory agreed with that assessment.

Corporation for Better Housing could not be reached for comment.

The city was alerted to some of the problems when apartment residents approached it to ask for help moving, saying they felt threatened by the property’s manager and that the mold in their units was making their children sick, Reid said.

Oakland sent out an inspection team, which found missing or damaged fire extinguishers, broken or missing hand rails, and broken, missing or damaged appliances.

“It’s not a place where you or I would want to raise our families,” Reid said of what inspectors found.

A city crew also had to make emergency repairs to stop raw sewage from leaking into a nearby creek, he said. The developer has not been willing to meet with city officials or respond to correspondence despite repeated attempts, Reid said.

“It’s deplorable,” with mold, broken stairs and poor light, one resident who asked not to be identified said of the apartments. “The police are called all the time. It’s pretty scary.”

The mailboxes were broken into six months ago and still haven’t been fixed, the resident said. As a result, tenants have to go the post office to get their mail, the resident said.

Councilwoman Desley Brooks objected to the city not recognizing the Reems family’s equity share as part of the council’s resolution authorizing the purchase.

“They should get something for putting their name up and taking all the hits over the years,” she said.

“There is no equity in this project,” Byrd said. “This project is underwater.”

The motion to buy the property passed 5-3, with Brooks, Rebecca Kaplan and Noel Gallo voting no. The city will now find an interim property management company to handle the site, with the goal of seeing it sold, according to the staff report.

“We’re hoping an affordable housing developer will acquire the site and either bring the units up to standard, or tear it down and build new affordable housing,” Reid said.

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