LSSCM engineers long-sought settlement of Parkview Apartments litigation that will allow redevelopment

The long wait for low income tenants in Ypsilanti is over.

On May 20, 2010 federal judge Victoria Roberts approved and entered a settlement agreement in Cheatham et al. vs. Donovan, et al., ending six years of litigation and paving the way for the redevelopment of Parkview Apartments, a 144-unit HUD-subsidized project in Ypsilanti.

Under the terms of the agreement, the property is being transferred to the Ypsilanti Housing Commission ("YHC").

The YHC will be issued 144 new section 8 vouchers. Section 8 vouchers are in high demand--they provide monthly rent subsidies that help families obtain affordable housing.

These vouchers will provide rent subsidies to current and recently displaced Parkview tenants and also will be used for the redevelopment of Parkview Apartments.

Pursuant to the agreement, HUD will assist the YHC redevelopment efforts with grants of up to $5.76 million.

"We are delighted with this agreement," said Min Kim, a staff attorney at Legal Services of South Central Michigan, and one of the team of lawyers who represented the tenants.

"The agreement represents a significant reinvestment in this property by HUD and will benefit the tenants who have continued to believe in Parkview."

Kim estimates the value of the settlement to be about $13 million in HUD payments to the Ypsilanti community. In addition, the private matching funds for the renovations will bring another $6 to $8 million into the community.

The Parkview project has had a long and tortured litigation history.

In 2004, HUD began foreclosure proceedings against the prior owner, the Parkview Non-Profit Housing Corporation. HUD approved a redevelopment plan submitted by the YHC and was prepared to transfer the property to the commission.

However, late in 2004, the prior owner sued HUD to prevent the foreclosure. That suit was dismissed early in 2005, but HUD decided to cancel the sale to the YHC.

In June 2005, HUD auctioned the property. Emmanuel Ku, a New York based investor, was the high bidder.

The Parkview Tenants Association was concerned about Ku's record managing other HUD properties and sued HUD to prevent the sale to Ku. HUD agreed to settle the tenants' suit in March 2006 by cancelling the sale to Ku.

Meanwhile, the prior Parkview owners had filed bankruptcy in an attempt to sell the property directly. Weeks after HUD cancelled the sale to Ku, the Parkview owners asked the bankruptcy court to approve a sale to him.

The Parkview Tenants intervened in the bankruptcy suit and objected to the sale. That sale was rejected by Judge Philip Shefferly of the Bankruptcy Court.

In the summer of 2006, HUD took over day-to-day management of the property. HUD scheduled a sale of the property in August 2007--but under the terms of the sale, the Ypsilanti Housing Commission was not permitted to bid and many low income housing protections were not preserved.

The Parkview Tenants Association again sued to prevent the sale. The sale was cancelled. But instead of moving to redevelop the property, HUD developed a plan to relocate all the tenants and demolish Parkview.

In September 2009, Judge Roberts enjoined HUD from relocating the tenants and ordered HUD to bring the property up to code and to bring the property back to full occupancy.

That order also required HUD to meet with community stakeholders to discuss the redevelopment of Parkview. That order led to the settlement that was entered last week.

"This community owes a debt of gratitude to Legal Services" said Ypsilanti Mayor Paul Schreiber.

"Without their persistence and their creative legal work, we wouldn't be here today and we wouldn't have this opportunity."

The Housing Commission will redevelop the property with Chesapeake Community Advisors, an experienced low income housing developer from Baltimore, Maryland.

Chesapeake was part of the commission's original 2004 proposal and has remained involved with the project ever since.

"We were able to obtain this result because the community worked together to save Parkview," said Kim.

She applauded "...the courage and perseverance of the tenants, who made everything possible," and noted the untiring support of Mayor Schreiber, State Representative Alma Wheeler Smith, and U.S. Rep. John Dingell.

Published: Thu, Jun 10, 2010