HAWS to request city funds to acquire troubled apartment complex

A struggling low-income housing complex honors Mayor Pro Tem Vivian Burke. The housing authority is seeking financial assistance from the city to acquire it. The deal could erase the financial liability of its owners, two men who are active in Republican politics.

The Housing Authority of Winston-Salem plans to request financial assistance from the city to pay for the acquisition of a blighted complex known as New Hope Manor Apartments that is wedged between Cleveland Avenue Homes and Fairview Park — potentially a key aspect of an ambitious plan to transform the neighborhood.

The anticipated request comes on the heels of a unanimous vote by city council on June 20 to the join the housing authority as a co-applicant for a federal Choice Neighborhoods grant as part of an ambitious plan to transform the area surrounding the Cleveland Avenue Homes public-housing community.

The city’s participation includes a pledge of $4.5 million to pay for business façade improvements, neighborhood broadband, a revolving loan for businesses, streetscaping and land for new parks and other public spaces in the area.

Ritchie Brooks, the city’s director of community & business development, indicated in a May 24 memo to members of city council that the housing authority is seeking $1.7 million in assistance from the city “to acquire, demolish, abate, rehab and operate the property in a sustainable manner.”

Based on information provided by the housing authority, Brooks’ memo expresses concern that the property could be sold at a loss, perpetuating a downward cycle of divestment with negative repercussions for the neighborhood.

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“HAWS has recently communicated with the lender, who is willing to dispose of the property at a significant loss, potentially allowing acquisition of the property for as little as $1.5 million,” Brooks wrote. “HAWS believes this could provide an appealing opportunity for an absentee investor to purchase the property, do some minimal rehab, and then continue to operate the property as untenable multifamily housing, perpetuating the blight and inhibiting the development of the surrounding area.”

The memo indicates that the owners currently owe $2.5 million on the property.

If the city agrees to finance the revitalization of the apartment complex, it wouldn’t be the first time the community formerly known as Burke Village — a spartan collection of brick buildings with minimal landscaping and parking lots littered with broken glass — has been the focus of hopes for renewal. A granite slab set in the gatepost at the entrance of the complex dated May 1996 dedicates the property to Mayor Pro Tem Vivian Burke, who has represented the Northwest Ward on city council since 1977. The inscription expresses appreciation to Burke “for her extraordinary leadership in the revitalization of this development,” adding that “the selfless devotion of Ms. Burke to this project exemplifies her commitment to quality, affordable housing for all citizens of the city of Winston-Salem.”

“That property was a project that was very rundown, where people had a lot of drugs and crime and young children unsupervised,” Burke recalled. “A lot of work was put in it with the group of people to come up with very nice housing for people. It was very well supervised.”

Gordon L. Blackwell, a Raleigh investor, owned the property at the time. The city of Winston-Salem loaned Blackwell’s company $1.4 million through federal Community Development Block Grant and Home Loan funds, according to city officials. Blackwell’s company paid back $431,967, according to city records. In 2005, the city wrote off $658,033 after the borrower made an additional payment of $300,000 to settle the debt. Property records show that Pinnacle Properties of Randolph Co. LLC, a company owned by Bob Crumley and others, purchased the property from lender Community Investment Corp. of North Carolina in November 2005. Crumley is the founder of Crumley Roberts law firm in Asheboro and was the Republican nominee for state attorney general in 2008.

Burke blamed the influence of the residents at the neighboring Cleveland Avenue Homes public housing project for the decline of what was then Burke Village.

“We had such a challenge with the Cleveland Avenue Homes public housing residents,” she said. “They just couldn’t stay away from that Burke Village. The rules were probably more strict with Cleveland Avenue Homes.”

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In 2012, the 4.1-acre complex — now valued at $2.9 million — was transferred from Pinnacle Properties LLC to a new company jointly owned by Crumley and Nathan Tabor, a former chairman of the Forsyth County Republican Party.

Tabor said the apartment complex’s decline is “not for lack of trying” on the part of its owners, adding that just in the time he’s been involved there has been a turnover of four different property management companies.

Brooks’ memo to city council states “there is an increase in crime in the area and the current owner has expressed an unwillingness to continue to ‘throw good money after bad’ in the form of lease enforcement, maintenance and/or rehab.”

While declining to give a specific number, Crumley disputed a reference in Brooks’ memo to a 70 percent vacancy rate.

“We have several units that need repair and maintenance,” he said. “It’s been a very challenging project.”

Crumley said he couldn’t speak to the $1.5 million figure cited in the Brooks memo, noting that he hasn’t necessarily been privy to all the discussions between the housing authority and Carolina Bank, the lender.

“From our standpoint as original borrowers and owners of the property, if the bank reaches an agreement and says, ‘We can do part of it in cash and part of it through Community Reinvestment Act credits,’ that’s wonderful — God bless America,” Crumley said. “All I need to know is the bank says, ‘Mr. Crumley, we’re paid. Go ahead and transfer the property.’”

Crumley said discussions have been taking place for about a year among the property owners, the bank, the housing authority, city officials, Winston-Salem/Forsyth County Schools and Forsyth County about a potential deal.

Last November, school officials told a group of urban community advocates that they were considering closing Ashley Academy, an elementary school about five blocks east of New Hope Manor Apartments, and rebuilding in a new location.

“We’re working on a redevelopment plan that the city is looking at as a part of putting a new Ashley into that, that would also include daycare, pre-K, K-5 and a health center,” Assistant Superintendent Darrell Walker said at the time.

But by February, when school officials held a series of community meetings to get input on a proposed $325.8 million bond, replacement of Ashley Academy had been dropped from the list, despite being rated as one of the most overcrowded schools in the district.

“I think the schools are on record as saying they need another elementary school in the area,” Crumley said.

“The school district can’t come in and buy the apartment complex and rent it out,” he added, explaining that the county could conceivably play some role in making sure that a potential property transfer met statutory guidelines.

Theo Helm, chief of staff for Winston-Salem/Forsyth County Schools, said the district generally doesn’t comment on specific properties under consideration for purchase.

“We’re continuously looking for sites and locations that might be suitable for schools, and we’re open to partnerships that would be good for students,” he said.

In April, the school board approved at $350 million bond proposal — an increase from the $325.8 million package previously presented to the community.

“The package that our board approved is very similar to the $325 million that we presented to the community, with a couple additions,” Helm said. “One of those is $900,000 for design fees for a future Ashley [school]. The idea there is our board felt that by the time this cycle goes through we have a design for a future Ashley so it would be one of the first things that would be done with a future bond referendum.”

CEO Larry Woods, confirmed that the Housing Authority of Winston-Salem, plans to continue to use the New Hope Manor Apartments property for housing.

“Our goal is to save as many of the units as we can,” he said. “Our goal is to consolidate it. No one will be moved off site. If there’s only one person in a building we might move them into another building. Our goal is to retain the property and let HUD know we have the site under control to support the transformation plan.”

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