LANSING — A federal judge has placed one of Lansing's largest apartment complexes under the control of a receiver who will oversee more than 300 apartment units.
At least two years of negotiations, settlement agreements and lower court actions with the owner failed to get any serious progress in fixing dozens of uninhabitable apartment units at the Woodside Meadows Apartments, previously known as Sycamore Townhomes, said Rawley Van Fossen, who heads the city's Economic Development and Planning Department that manages housing issues. That led to the city asking a federal judge to force a receivership, he added.
"The city tried and the owners failed," he said. "At this point the receiver comes in to ensure the health and safety of the residents and will work hard to bring other vacant units online safely."
U.S. Western District Court Judge Jane Beckering appointed attorney John Polderman, of the Southfield-based Stevenson & Bullock law firm receiver on Sept. 18.
"Our plan is to address the reasons for the receivership: Violations by the city and getting the property compliant," Polderman said. "Our first priority is health and safety."
Polderman will run the apartment complex operations until he or the city opts to end the receivership. The receivership is intended to bring the southwest Lansing apartment complex near Waverly and Jolly roads back into compliance with city codes, and the receiver has a wide berth to change much of the business, short of bankruptcy.
He declined to give time or cost estimates but said the court and city would be getting regular updates with the immediate work likely to be triaging the most urgent problems.
Polderman will now run the operations of the 67-building, 339-unit apartment complex, including rehabilitating 147 units that are now red-tagged, meaning they are unsafe for occupancy and should not be lived in. Many of the other units are pink-tagged, meaning current residents can stay but fixes are necessary before it can be rented to another tenant.
Jacob Carlton and Josh Apel, attorneys with the Grand Rapids-based Miller Johnson firm that represented Woodside owner Berel Farkas in U.S. District Court, did not respond Wednesday morning to phone messages seeking comment. Farkas, who owns the southwest Lansing complex through several companies, also could not be reached. Farkas is a New York state resident.
Van Fossen said the city plans to meet with Polderman this week. The city has worked with receiverships on a smaller scale, typically for a single house or up to a portfolio of a handful of units, but nothing in the past 10 or 15 years that involves dozens of units or a significant chunk of the city's housing stock, he said.
Van Fossen said Woodside is likely the city's largest apartment complex, closely followed by the Evergreen Park Townhomes and Apartments, formerly known as Autumn Ridge Apartments. The city had been involved in litigation with those apartments for years over red tag disputes but that is on track to be history, city officials said.
The complex was sold in May to Beztak of Farmington Hills and is under new management as well.
Van Fossen said the new management has fixed problems, brought units out of red-tag status, outlined their capital investment plans and have productive weekly meetings with the city.
"I imagine in six months to a year, they will have brought all their units into compliance," he said.
For the Woodside apartments, Van Fossen said he couldn't say what to expect in a year's time until after there have been serious talks with the new receiver.
"Hopeful they will be further toward bringing the entire property into compliance, but fully?" he said. "I don't know yet, and that's a question for the receiver. What is the timeline and the capital investment?"
The immediate priority should be the apartments with problems that have been noted by inspectors, but not so many problems that they're uninhabitable, Van Fossen said. Then the priority is to focus on individual buildings to get entire buildings up to code.
It's a strategy that is working for the former Autumn Ridge apartments, Van Fossen said.
The Woodside Meadows lawsuit primarily focused on alleged problems at the 147 red-tagged apartments, which include fire damaged units, damaged roofs, broken or missing windows, gaps or holes under sinks and in exterior walls, missing or damaged exterior doors and a host of other issues, including furnaces and water heaters in poor condition.
In addition to dozens of units needing repairs, the complex also owed tens of thousands of dollars to the city, according to the city's lawsuit.
The complex was at least $84,000 behind on water and electric bills to the city-owned Lansing Board of Water and Light and owed at least $47,750 in fines, according to court documents.
Apartment damage noted in the court documents included repairs after break-ins to vacant units that lead to the city and police boarding up the buildings.
Contact Mike Ellis at mellis@lsj.com or 517-267-0415
This article originally appeared on Lansing State Journal: Federal judge appoints receiver to manage red-tagged Sycamore Townhomes in Lansing
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