Tuesday, August 14, 2001
Landlord's money woes affect OTR
Hart Realty files for Chapter 11 bankruptcy
By Ken Alltucker and Cliff Peale
The Cincinnati Enquirer
Over-the-Rhine's largest apartment owner and low-income landlord filed for Chapter 11 bankruptcy on Monday, a move that could profoundly change the future of one of Cincinnati's poorest neighborhoods.
Hart Realty and several affiliates cited a reduction in federal funding for Section 8-based housing as the chief reason for seeking bankruptcy protection. But the company also said it has had trouble keeping tenants in the wake of April's riots.
Hart Realty said it owed $8.3 million in debt on 25 properties named in the filing as of Aug. 1.
There's a real bite on the cash flow, said Tim Miller, the lawyer at Taft, Stettinius & Hollister representing Hart Realty.
News of the filing rippled through City Hall and Over-the-Rhine as city officials and low-income housing advocacy groups considered what the filing could mean for the neighborhood.
The city's immediate concern is to make sure the tenants aren't displaced.
Peg Moertl, director of Cincinnati's Department of Neighborhood Services, said the city will closely monitor the filing's impact on tenants.
It's a huge impact on the individual tenants, Ms. Moertl said. Yet she added the bankruptcy could be an opportunity to encourage development of market-rate housing to offset the neighborhood's large number of subsidized low-income units.
It also could create an opportunity to move forward with some revitalization, she said.
Several planning staffers have been working on a comprehensive plan to chart the neighborhood's future in the wake of April's riots and subsequent rash of shootings.
Hart Realty and its affiliates are the largest Section 8 landlord in Cincinnati with about 1,600 units, most of them in Over-the-Rhine and the West End. The bankruptcy doesn't include all of Hart's units.
Hart Realty largely depends on federal subsidies to provide low-income housing for Cincinnati residents. But Hart's revenues face a cut of up to two-thirds under a
change in Department of Housing and Urban Development policy.
The policy, started during the Clinton administration, requires Section 8 property owners to justify federal rent subsidies by comparing rents fetched at other neighborhood properties.
HUD's lower subsidy has crimped Hart's ability to pay its debt. A double whammy for Hart is HUD's policy of giving low-income residents vouchers they can redeem at other properties.
The idea behind the vouchers is to give low-income people more choices of where to live, not huddle them in a single neighborhood.
Since April's riots, Hart Realty has had trouble keeping tenants at its Over-the-Rhine properties.
Jennifer Summers, director of ReStoc, the nonprofit low-income advocacy group, said she was unaware of the filing but wasn't surprised.
It's a major concern, Ms. Summers said. We've known for years that this was going to be a problem.
ReStoc fears additional market-rate housing in Over-the-Rhine will effectively push out the neighborhood's poorest residents.
Developers argue there's enough property in Over-the-Rhine to allow a mix of all income levels. Census figures show the neighborhood has a 3.9 percent home ownership rate one of the lowest in a city that has one of the lowest ownership rates in the nation and 1,667 vacant housing units.
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