U.S. asks audit of rundown apartment complex Agency wants any money made off units backed by government mortgage

November 22, 1995|By Larry Carson | Larry Carson,SUN STAFF

Federal housing officials have requested an audit to determine whether the owner of the rundown Riverdale Village Apartments in Essex-Middle River has been profiting from the operation -- while leaving the government to pay off a $5.4 million mortgage.

Ina B. Singer of the U.S. Department of Housing and Urban Development said yesterday that the agency wants any money Richard Schlesinger is making from a government-backed portion of Riverdale Village, especially because he hasn't made a mortgage payment since January 1993, and is $2 million behind.

In June, HUD paid off the government-backed mortgage covering nearly half of the 1,200-unit complex, and is foreclosing on that property.

But Mr. Schlesinger, a New York-based developer, portrayed himself as a well-intentioned investor who is the victim of government bureaucrats and changes in the real estate market. He even offered to consider donating half of the complex to Baltimore County without waiting for foreclosure.

"I'm willing to cooperate," he said. "Somebody call me."

County officials see the apartments as a major roadblock to a campaign to stem urban blight in the eastern county. Once HUD forecloses on its portion of Riverdale Village -- 543 apartments and a small strip shopping center facing Eastern Avenue -- the county hopes to acquire the housing for a token fee and demolish it.

The rest of the complex's apartments, which Mr. Schlesinger financed with a separate mortgage, would not be affected.

Mr. Schlesinger, who obtained the $5.4 million mortgage in a 1985 refinancing deal, has stonewalled HUD, said Ms. Singer, director of multifamily housing in the agency's Baltimore-area office.

He has failed to submit audited annual financial statements to HUD since 1991, and hasn't replied to letters requesting them, agency officials said.

Asset management chief Robert B. Iber also took issue with Mr. Schlesinger's offer to give away half of Riverdale Village. If HUD accepted the deed to the property without foreclosure, Mr. Iber said, the government would be liable for any outstanding liens or debts.

Ms. Singer said she asked the inspector general in HUD's regional office in Philadelphia for an administrative audit, which should be completed in six months.

Because many of Riverdale Village's buildings are boarded up or vandalized, maintenance is minimal at best, she said. The audit should show if there's been any "income diversion" from the development, and whether the owner can support costs he may claim.

"It's convenient to use us as a scapegoat," Mr. Schlesinger said from his West Palm Beach, Fla., office. "The area changed. There was a total lack of demand for housing of that nature. It's absolute nonsense to say that we're responsible for anything."

He said he has not submitted an audited financial statement because he could not afford to hire an auditor, and added that he has submitted other detailed financial data to HUD.

Decay on the HUD-insured portion of the complex, he said, is due to the agency's decision not to lend $44.7 million for his 1992 renovation plan.

"Of course conditions are horrendous," he said, adding that any income has been spent on maintenance. "I have not taken a dime from that property for years."

HUD officials have said that the agency rejected the renovation plan because Riverdale Village was too old, and the rooms were too small and lacked modern amenities. The area's rental market was also depressed.

Since HUD's rejected the renovation plan, federal and county officials say maintenance has virtually stopped on the HUD-mortgaged side of the complex, and residents are moving out. The county's area coordinator, Mary Emerick, estimates that 85 percent of the units on that side are vacant.

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