York City officials have nearly finalized an agreement with the owners of an affordable-housing complex who borrowed $475,000 from the city in 1995 but never repaid the loan.
Today, with penalties and interest, the Pullman Apartment Limited Partnership owes the city about $700,000, said Kevin Schreiber, the city's economic and community development director.
After a year of negotiation, the partnership has agreed to transfer ownership of the 22-unit complex in the 200 block of North George Street to the city, Schreiber said.
The "amicable" agreement is in lieu of foreclosure, which would have sent the property to sheriff's sale. Neither party wanted that to happen, Schreiber said.
The plan requires the approval of the York City Council, which is expected to introduce the matter at Tuesday's meeting but not vote until its July 17 meeting.
The city would then transfer ownership of the apartments to its Redevelopment Authority, which would be responsible for paying off the partnership's remaining $135,000 in debt to Susquehanna Bank, Schreiber said.
Most likely, Schreiber said, the RDA -- as the property's new landlord -- would contract with a property management company to collect rent and handle maintenance.
For the people who live
at Pullman Apartments, nothing else will change under city ownership, Schreiber said.
Eventually, Schreiber said, the city's goal would be to sell the building. He stopped short of predicting how long that might take.
Back in 1995, the city was one of several sources that funded construction of the housing complex, which caters to senior citizens. The city's loan was supposed to be repaid by 2010, but none of the money ever returned to city coffers, Schreiber said.
Soon after the deadline passed without payment, the city initiated litigation to collect its money. At one point, Schreiber said, the city rejected the partnership's request to forgive the debt.
"We can't forgive a debt that large," he said.
An appraiser determined the building is worth $770,000, Schreiber said.
Today, the complex is fully occupied. Even at 10 percent vacancy, the city can expect to make a modest profit as long as the city remains the apartments' owner, Schreiber said.
"This is making the best situation out of an unfortunate situation," he said.
-- Reach Erin James at 505-5439 or email@example.com, or on Twitter @ydcity.