Governor’s Square update: Real estate broker on board but no sale offer yet for bankrupt
Stakeholders in the fate of the Residences at Governor’s Square, a sprawling and beleaguered affordable housing complex in Harrisburg, say several prospective buyers have in recent months shown an interest in the complex but have for the most part walked away.
Uptown Partners, the owners of Governor’s Square, which is in bankruptcy, earlier this month hired Hilco Real Estate Sales as a broker. The Baltimore-based company’s bankruptcy filing was recently approved for a status change to Chapter 11.
The sprawling 222-unit complex currently has no asking price, but it carries an outstanding $9 million federal loan.
Court documents show that the parties involved — which include the Harrisburg Redevelopment Authority and the City of Harrisburg — reached agreement on the terms of the retention of Hilco as broker.
The conditions essentially safeguard the property’s affordable housing designation. The terms of the agreement ensure that no governmental agency seeking to buy the property and preserve it as affordable housing would need to pay commission to Hilco.
“My clients’ goal is to preserve the property as affordable housing. That’s what we are working to protect,” said Marielle Macher, an attorney representing some of the residents of the complex. “To ensure the property isn’t just sold off to the highest bidder but that it is purchased by an entity that will preserve it as affordable housing and also do the right thing and maintain the property and make repairs that need to be done, which are very extensive.”
The carve-out agreement mentions Woda Cooper, a Columbus, Ohio-based company that specializes in affordable housing and has reportedly been in talks with Uptown Partners.
The May 8 bankruptcy filing in the U.S. Middle District Court of Pennsylvania placed an automatic stay on collection activities against the owners of the Residences at Governor’s Square.
The sprawling 222-unit apartment/townhouse development has been plagued with myriad problems, including dilapidated units that have been condemned. Residents have for years voiced growing grievances and concerns about conditions in the complex as well as safety issues.
The City of Harrisburg and the Harrisburg Redevelopment Authority say the right offer to acquire Governor’s Square is at least $22 million – the amount officials say is needed to make all the necessary repairs and refurbishment.
The property is owned by Uptown Partners, an urban redevelopment corporation, and is under the auspices of the Harrisburg Redevelopment Authority, a state agency and conduit to a $9 million federal grant provided to the owners of Governor’s Square by the U.S. Department of Housing and Urban Development.
Bryan Davis, the executive director of the Harrisburg Redevelopment Authority, said his agency is not a part of the sales review process, although it would sign off to ensure the conditions for the HUD loan were in order.
“This filing of bankruptcy was really a shock to us,” Davis told PennLive. “It threw it into a whole different arena. It needs to follow the prescribed steps of bankruptcy and also be able to hopefully find a prospective buyer that would be responsible and be able to take over and be able to do it within the greater context of bankruptcy, the tax credits as well as HUD is concerned. It’s very complicated.”
Even so, Davis said there are highly qualified development companies that understand those complications.
“That’s the kind of buyer that is really needed here,” he said.
Davis said the stakeholders in Governor’s Square can preserve the affordable housing designation — however, complicated and complex the process.
“It’s going to take repositioning of the property with a qualified owner that understands affordable housing,” he said. “That’s what it takes. I’m absolutely confident there are several of those entities in the redevelopment world. They specialize in nothing but affordable housing.”