Another Landlord Using 'Friendly Foreclosure' In Federally Subsidized Apartment Complex To Ditch Obligation To Provide Low Income Housing? 33-Unit Complex Facing Forced Sale Over Unpaid $10K Real Estate Taxes Leaves Residents Facing Possible Boot

In Heflin, Alabama, The Anniston Star reports:

• Some 33 tenants who reside at Woodland View apartments in Heflin will soon have to look for another place to call home, as the property’s owners face auction for failure to pay taxes.
  
  According to a legal notice published by the county on Thursday [March 23], the owners owe just over $10,000 in delinquent taxes. The property will therefore be sold at auction at the Cleburne County Courthouse on May 2, 2017, to the highest bidder for cash according to the published notice.
  
  Woodland View Apartments participates in the Section 515 Rural Rental Housing program,(1) which provides financial aid for the very low income, elderly and the disabled. The complex is divided into two sections: one for residents with income assistance and the other for those whose rents are fixed with no financial assistance, according to site manager Kelly Haskell.
  
  The tax records state the owners as Woodland View Apartments LTD for one section and Cleburne County Associates LTD for another section. Attempts last week to reach representatives of the companies were unsuccessful.(2)
  
  Residents received letters two weeks ago from the USDA informing them that the property might change hands and they need to be prepared to move, according to Haskell.
  
  For the displaced residents on financial aid there is a safety net. They can relocate to other section 515 apartments once they apply and receive what’s called a “letter of priority entitlement.” Such a letter puts a resident at the top of a waiting list at other 515 properties. Another option tenants can use is the Rural Development Voucher Program, Haskell added.
  
  The tenants have 4 months after the sale of the property to use their vouchers.
  
  ***
  Haskell worries about her tenants; one is on dialysis and another one has terminal cancer. One tenant known as “Granny” has lived at Woodland View for more than 12 years and can’t fully understand what is going on.
  
  Haskell is still processing applications, which can take up to two weeks as a lease is often 20 pages long and requires income verification, employment verification and a litany of other qualifications. She said she has two available units with four pending applications.
  
  “There’s no housing here, even for those that don’t need rental assistance,” Haskell said as she stared at a 3-inch stack of application documents in her office.
  
  “I don’t want to move, I want to stay here,” said tenant Melinda Hudgins. Hudgins and her husband, Johnny, have lived at Woodland View for more than a year and have formed a bond with Haskell.
  
  Resident Patricia Houston has lived at Woodland View Apartments for more than 15 years and feels connected to the town.
  
  “I was born here, raised here, I really like Heflin, I like Kelly and ‘em,” said Houston, who said she doesn’t know what she will do if forced to move.
  
  As for Haskell, she worries about her own job. Hired last December she says her job is like her old job as a schoolteacher. The tenants are her kids and there is a copious amount of paperwork to keep her busy.

Source: Their apartments up for auction, Heflin tenants face eviction.

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(1) The Section 515 Rural Rental Housing program makes direct mortgage loans to developers and landlords to provide affordable multifamily rental housing for very low-, low-, and moderate-income families, elderly persons, and persons with disabilities. Loans are for up to 30 years at an effective 1 percent interest rate and are amortized over 50 years. Tenants pay basic rent or 30 percent of adjusted income, whichever is greater. RHS rental assistance subsidy can be used to limit tenant payments to 30 percent of their income. Loans made through contracts entered into on or after December 15, 1989 cannot be prepaid. Owners may obtain guaranteed equity loans after 20 years as an incentive for participation.

(2) Reportedly, there is a growing number of landlords being accused of allowing their federally-subsidized complexes fall into foreclosure, with the intention of having an affiliated company buy the property at auction, and using the foreclosure action as a way rid themselves of the obligation to provide low-income housing which was agreed to at the time of obtaining the favorable federal financing. I wonder if this is one more case of that.

See, generally:

• Is prominent landlord using foreclosure loophole to ditch low income tenants?,
• Lawsuit: Midwest Landlord Of Complexes Built & Financed With Affordable Housing Tax Credits Is Using 'Friendly Foreclosures' To Foreclose On Himself To Weasel Out Of 30-Year Gov't Commitments To Offer Reduced Rents To Low-Income Tenants; Concerns Raised That Legal Maneuver May Be Growing Business Model To Improperly Jack Up Rents.