Eutaw apartments headed for demolition HUD begins foreclosure on complex

September 19, 1995|By Edward Gunts | Edward Gunts,SUN STAFF

One of Baltimore's most troubled and rundown private apartment complexes is headed for demolition, after its takeover by the federal government.

In a move that signals a get-tough stance against negligent landlords, the U.S. Department of Housing and Urban Development (HUD) has begun foreclosure proceedings against the owner of the 268-unit Eutaw Gardens apartment complex in north Baltimore and is relocating all of the tenants so the buildings can be torn down to make way for a development.

Once it takes title from the owner, Eutaw Redevelopment Associates of Marina del Rey, Calif., HUD is expected to sell the 19-building complex at Eutaw Place and North Avenue to the city for $1.

Baltimore housing commissioner Daniel P. Henson III said the city most likely would tear down the complex, because the three- and four-story apartment buildings are poorly configured and not cost effective to renovate.

"The only way you can deal with Eutaw Gardens is to take it down and start all over again," Mr. Henson said.

The city will then ask developers to make proposals for the 4.5 acre parcel, which occupies a prime site between Bolton Hill and Reservoir Hill.

"If I were looking at it as a developer, I would look at it as some form of for-sale housing," Mr. Henson said.

Community residents say Eutaw Gardens has been hazardous to the surrounding area because criminals burglarize houses or mug pedestrians in Bolton Hill and Reservoir Hill and run into Eutaw Gardens to hide, since its interior courtyards can't be seen from the street.

HUD's action at Eutaw Gardens comes one month after Baltimore's housing authority blew up six apartment towers within the crime-ridden Lafayette Courts complex in east Baltimore, after relocating the residents there to make way for a low-rise development.

One key difference between Eutaw Gardens and Lafayette Courts is that the high rises were publicly owned, whereas Eutaw Gardens was privately owned.

"This is the first time that the local HUD office has gone to this extreme, and it's one of only about 10 times nationally" since Henry Cisneros became HUD secretary, said Ina Singer, director of the multi-family housing division of HUD's Maryland office.

It is a sign that HUD will not tolerate property owners who default on mortgage payments or keep properties in substandard condition, Ms. Singer said.

Last month, HUD's Maryland office began foreclosure proceedings against a second Baltimore area property, the mostly vacant Riverdale Village apartments in Baltimore County. HUD gains control of it, the 543-unit complex would be sold to the county for $1 and most likely razed. Those foreclosure proceedings are about six months behind the ones involving Eutaw Gardens.

"This has been the thrust of the Cisneros administration -- that we will not continue subsidizing apartment complexes that are not habitable," Ms. Singer said. "And if the owner will not submit an action plan to remedy the problems at a property, we will foreclose."

Ms. Singer said the owners "virtually abandoned" Eutaw Gardens in 1994, leaving many apartments in "deplorable" condition. "This is one of the worst properties we have ever had in terms of uncooperativeness of the owner and condition of the property," she said.

Byron Lasky, head of the ownership group, could not be reached.

He has no other subsidized apartments in Maryland.

HUD has the authority to foreclose because the federal government insured a mortgage from Riggs National Bank. According to HUD documents, Eutaw Redevelopment Associates defaulted on its $4.3 million loan from Riggs in September 1994, when it missed a monthly payment of $16,411.15, and it has not made any payments since then.

Because HUD guaranteed to pay the loan if the borrower defaulted, the agency has become the "mortgagee in possession" of the property.

HUD brought in its own private management company this summer and engaged two local groups to provide relocation counseling for tenants. HUD is paying the moving costs, and the city's housing authority is issuing rent vouchers good for replacement housing.

"It's positive because residents will have the opportunity to choose where they want to live, and a blight will be removed from the community," Ms. Singer said.

Eutaw Gardens was built in 1972 by the Prince Hall Masons Development Corp., a nonprofit group, at a cost of $4.3 million. It was sold several years after it opened to Eutaw Redevelopment, which assumed the original mortgage and mortgage insurance.

Ms. Singer said 167 units were occupied when HUD took control in June and the number has since dropped to 162. HUD's foreclosure is expected to be final by early 1996, she added.

HUD's action drew praise during a recent meeting of the Mount Royal Improvement Association, whose members live just south of Eutaw Gardens.

"It's a very encouraging development for anybody who lives in that corner of the world," said association vice president Richards Badmington. "It's a nasty place."

The relocation came as a shock to some Eutaw Gardens residents.

Rhonda Harper, resident of a four-bedroom unit, said she was given a voucher for a three-bedroom apartment and fears that won't be large enough for herself, her three daughters, and her grandson. If she can obtain a voucher for a four-bedroom unit, she said, she'd be happy.

Angela Ibisi, who also rents a four-bedroom unit, said the relocation is more of a hardship for tenants with large apartments because they're less plentiful than small ones. She said she has been looking for weeks for a four-bedroom apartment and "I haven't found anything yet."

HUD and its counselors will work closely with the tenants, Ms. Singer said. "We're trying to provide as much support as possible."

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