The Uptown Arts Apartments building on 14th street in Uptown Toledo.
Toledo city councilmen say they need more information about the Uptown Arts Apartments’ financials before they vote on whether to forgive a $500,000 loan so that the property can be sold.
The current owner, Bruce Douglas, said he needs to be able to sell the property to avoid declaring bankruptcy on the 52-unit affordable housing development.
“It doesn’t work. We’re going broke on that deal,” Mr. Douglas said.
Real estate investors Watermark Partners, which owns about 1,000 multifamily units in the Toledo area, wants to buy the Uptown Arts Apartments at 336 14th St. from Mr. Douglas’ Adams Street Limited Partnership LLC. The firm in a letter to council said it intends to modernize the property and increase safety, and all units will remain low or moderate-income housing through 2022 per an agreement with the state.
Before any transfer in ownership can take place, city council must first agree to forgive a half-million dollar loan originally granted in 2002 to help get the affordable housing complex built.
The city’s loan, which came from federal HOME investment funds awarded each year, was part of a $5.9 million mortgage package from banks and local and state agencies that allowed Mr. Douglas to develop the property. Mr. Douglas said he never expected to have to pay the loan back because the development did not turn a profit.
Amy Sackman Odum, Toledo’s new director of neighborhoods and business development, said this month that so long as the project was meeting its affordable housing requirements, which it was, the city did not seek to collect HOME loan payments because the development didn’t make any money.
Mr. Douglas also benefited from community reinvestment tax abatements, Lucas County property tax records show. He did not have to pay taxes on the new construction for 15 years. His annual property taxes on the site shot up from about $5,000 to about $50,000 when the tax abatement expired in 2017, records show.
“It’s killing us, the real estate taxes, but the project doesn’t work anyway,” Mr. Douglas said.
Mr. Douglas is a former chairman of the University of Toledo’s board of trustees and served on the Toledo-Lucas County Port Authority. He was briefly a Democratic candidate for Ohio governor in 1998 and was in the mix of superintendent candidates for Toledo Public Schools in 2000.
He is a longtime Toledo developer who has since retired and moved to Florida. He spoke of the Uptown Arts Apartments with fondness.
“We wanted to provide housing for people who need help,” he said.
Toledo Councilman Rob Ludeman said he doesn’t want to see the company declare bankruptcy and the affordable housing fall into disrepair, but he did express concerns with the city’s HOME loan agreement with Mr. Douglas’ company.
“The original structure of the contract was awful. It’s not the kind of structure for a contract that we’d have today,” he said.
City documents show there was more than $500,000 in city funding invested in the project, including capital improvement funds, though just how much in total is unclear.
Mr. Ludeman asked the Kapszukiewicz administration to provide him with a breakdown of how much city money was allocated and from what funds, but he had not received a response as of Monday.
“Show me the money. Show me where it went and where it didn’t go, and then maybe we can get on to transferring ownership,” he said.
Councilman Tyrone Riley said he has questions about the initial HOME loan agreement and the proposed sale to Watermark Partners.
“I don’t really understand, in the present transaction, how the city of Toledo benefits,” he said. “Are we going to be able to recoup any money from this transaction, or are we just taking a loss?”
Councilman Tom Waniewski expressed similar concerns over whether the city will lose money by forgiving the loan, but he said he is more concerned about losing vital affordable housing in the city.
“It’s not the best of circumstances, but I think the alternative is much worse,” he said.