HUD ASSUMES OWNERSHIP OF TWO CLEVELAND APARTMENT COMPLEXES NEGLECTED FOR YEARS BY OWNERS

WASHINGTON - The U.S. Department of Housing and Urban Development today assumed ownership of two HUD-subsidized apartment complexes in Cleveland that failed to meet HUD's minimum health and safety standards.

The Rainbow Terrace and Park Village apartments are both in poor condition, and problems at the complexes have been documented by inspectors for the City of Cleveland and for HUD.

The apartments have been owned since the 1980s by a group of companies controlled by Associated Estates Realty Corp., a real estate development and management company based in Richmond Heights, OH. The owners received HUD rental assistance subsidies under the Project- Based Section 8 Program and Federal Housing Administration mortgage insurance to provide affordable housing for people with low incomes.

HUD demanded and received title to the apartments because the companies controlled by Associated Estates Realty Corp. failed to find acceptable replacement owners that could afford to make needed repairs to the properties. A settlement agreement reached in March gave HUD the right to take possession of the apartments if the owners did not find replacement owners.

American Management, Inc. - a HUD contractor - took over management of both properties for HUD today. The first order of business will be correcting emergency health and safety problems.

HUD will conduct a unit-by-unit inspection of the facilities to determine physical needs for a longer term repair plan and will work in close consultation with the City of Cleveland to determine the issues that need to be addressed.

HUD officials in Cleveland will meet with residents of the apartments to reassure them that the Department's top priority is to provide affordable, decent, safe, and sanitary housing.

HUD will continue to work with the City to find suitable ownership for both properties.

Content Archived: January 20, 2009