Providence, R.I. — Turning around a troubled project starts with good management, according to John Bentz, president of the Property Advisory Group, Inc. (PAG), based in Providence, R.I.
PAG is now completing its five-year plan to turn around the Lexington Green Apartments, an extremely troubled project in Newark, Del.
The developer took over the management of the property in January 2002 after the residents demanded change from the project’s owner, Narragansett Housing Associates, LLP, in the wake of a fatal gang attack and arson that destroyed one of the project’s 12-unit buildings.
“When we took over the development, the property had just been on the show ‘COPS’ twice,” Bentz said. Worse from a financial perspective, 24 of the units at the property were vacant, in addition to the units taken offline by the fire. Today, the complex is fully occupied.
Lexington Green was originally built in 1981 under the Department of Housing and Urban Development’s (HUD) Sec. 221(d)(4) program. The very low income residents receive rental subsidies from a project-based Sec. 8 contract with HUD.
All but one of the 127 households at Lexington Green are single-parent families, according to Bentz. There are a total of 349 children living at the property, which is made up of 11 two-story buildings with 12 apartments each spread over a 10-acre site.
The first step in bringing order to the property was working directly with the residents. Since there was no common room at the property, the new managers called the residents to a meeting at the common room of Liberty Terrace, a seniors housing complex across the street also managed by PAG.
While the children went upstairs to be watched by seniors volunteers, the adults held their meeting. “We had everyone that we could get who was an authority in any form: The Delaware State Housing Authority (DSHA), cops, political people and the owner of the development, Frank Esposito,” Bentz remembered.
He took a hard line with the tenants.
“We told them that this is a new regime,” Bentz said. “The prostitution is going to stop. The dealing is going to stop. If you don’t like it, get out.” In February, a police sweep on the property arrested 11 men that did not live at Lexington Green.
Most of the crime at the property came from nonresidents staying as guests with several tenants. So PAG built a fence around the property, creating a gated community. PAG also brought in Innovative Management Solutions, a local company, to provide security at the complex.
The owners paid for the extra security, services to the residents and other improvements to Lexington Gardens with just a $100,000 soft loan provided by DSHA.
Criminal activity has dropped sharply at the project, though safety is going to be an ongoing problem, Bentz said. “It’s just a matter of paying attention.”
PAG also worked with Child Inc., a family-services nonprofit based in Wilmington, Del., and state Rep. Melanie George Marshall, to create a suite of 97 social and economic programs all designed to assist and empower residents, including a resource center to help tenants with problems paying rent. The resource center provides budgetary and employment counseling. Only one household has been evicted since PAG took over management of the project.
““We are in the business of housing, we are not in the business of making people homeless,” Bentz said.
At first, residents were skeptical and only a handful participated in the programs. “Now we have hundreds involved,” Bentz said.
Partnerships for progress
The project has also created a partnership with the seniors living in Liberty Terrace, which includes both assisted-living and independent-living units. The two populations used to avoid one another. Now older adults volunteer to help the children in Lexington Green with their homework.
“We’ve created a number of programs where we have interchanges between the children and the grandparents,” Bentz said.
In 2005, PAG began to make physical improvements to the property, including the new fencing. The company also added cameras, intercom systems and exterior lighting.
PAG has also done work to stop the physical decay of the buildings. But the repairs are far from finished.
“I don’t even want to guesstimate,” Bentz said. “We need siding, roofs, windows. …”
The company hopes to buy and fully rehabilitate Lexington Green and has contacted the owner in an attempt to begin negotiations, according to Bentz.
PAG had similar success at the Huntington Tower Apartments, a project targeted toward seniors and tenants with disabilities in a blighted neighborhood of Providence.
In the summer of 2005, workers finished a light rehabilitation of the property. They improved the public areas of the complex, installed new awnings and hallway carpets and made the entrances to the buildings more accessible for disabled residents.
PAG also repaired the project’s cracked foundations. “The building was built on an old tire dump and it was sinking into the ground,” Bentz said.
PAG raised $4.1 million to pay for these fixes, pay down the project’s $1.7 million existing mortgage and replenish its reserves by restructuring the building’s Sec. 236 financing through HUD’s Mark-to-Market program. The deal closed in the summer of 2004.
The developer had already spent $2,200 per unit from the project’s reserves to fix 106 studio and one-bedroom apartments as they became vacant. Twenty of those apartments were empty when PAG took over the management of the property in 2003, after owning the project for years as a limited partner. Over the next year and a half, PAG evicted about 40 tenants, usually for nonpayment of rent, though drug addiction was high at the project, Bentz said.
“At Lexington Green, a lot of the problems were guests that were invited onto the property. At Huntington Tower, a lot of the problems were people that were living there,” Bentz said. Today the project is fully occupied and carries a waiting list.