Buyer wants senior housing units, but HUD won't budge

By Jennifer Emmons

El Defensor Chieftain Reporter

jemmons@dchieftain.com

   A low-income housing company in Albuquerque has been trying to acquire senior housing projects in several New Mexico cities, including Socorro, from the U.S. Department of Housing and Urban Development in lieu of foreclosure of the property.

   The directors of Encino Development Corp. have been trying to forestall the HUD from foreclosing on low-income senior housing in Socorro, Carlsbad and Española. Property in Truth or Consequences might also be foreclosed.

   Robert McNeill, an Encino Development board member, said that the non-profit corporation has proposed to take over the nearly 250 units of subsidized senior housing before HUD forecloses on the property.

   "We want to stop the foreclosure process, for it will benefit future low-income seniors who want to rent the property and it will save on tax dollars," McNeill said, "but for some reason or another, HUD does not seem willing to work with us."

   Officials from the Department of Housing and Urban Development, however, claim that foreclosure is unavoidable because the company that formerly operated the properties, Rural Housing Inc., mismanaged the properties, putting them in default.

   Residents of the subsidized senior housing, including those in Socorro, will not have to move or be affected in any way as the result of foreclosure actions on the properties, said Patricia Campbell, HUD public information officer for Region VI, which covers New Mexico.

   In a letter sent earlier this month, Sen. Pete Domenici, R-N.M., said he was urging the U.S. Department of Housing and Urban Development to continue to support more than 250 units of subsidized senior housing until the department works out a solution to poor management of the housing. He expressed concern the seniors would lose their houses if HUD foreclosed.

   Campbell, however, said that while some properties in four New Mexico communities will be foreclosed due to financial default, residents will not be affected.

   In an effort to intervene before foreclosure becomes the final solution, McNeill said, Encino Development Corp. hopes to acquire the property and manage it properly.

   "HUD is ignoring our proposals to take the property and they have not been responsive to our requests," McNeill said. "HUD is pressing forward with foreclosure and they are ignoring the financial loss that will result and the fact that foreclosure would exclude future resident eligibility for low-income senior housing."

   McNeill said he feels Campbell is making misleading statements about the affects of foreclosure.

   The senior housing in Socorro that will be affected by the foreclosures includes the Vista Montaño Apartments, at 301 Otero Ave.

   "The properties will be foreclosed due to financial default. There are some property defaults, too, in terms that some of the properties are in bad condition," Campbell said.

   "The residents will not be affected because when properties are sold, it will be required that housing assistance payment contracts will remain in place. In addition, there will be repair survey conducted on the properties as condition of purchases," she said.

   McNeill, though, says the repercussions of foreclosure are not good for the government or for future senior residents.

   With the support of Domenici and Gov. Bill Richardson, McNeill said he, representing Encino Development Corporation, plans to continue to acquire the properties in the four communities.

   "I've met with Gov. Richardson twice about the issue and he has pledged his support to help our group get the property before it forecloses," he said.

   McNeill said that while it is true that current residents of these housing properties will not be affected, it is future residents and tax increases that are the issue.

   Campbell said it is most likely that the residents won't even know the difference (after foreclosure).

   Domenici wrote a letter to A. Cynthia Leon, director of HUD Region VI, who administers the federal Section 202 Housing program that subsidizes the 250 units in the four communities, including the 56 units in Socorro, all formerly managed by Rural Housing Inc. of Albuquerque.

   "These residential properties serve very low income, frail elderly residents in these New Mexico communities," McNeill said. "There are 185 seniors now living in these properties and they average 72 years of age and receive an average of $685 per month in Social Security income. This housing represents as much as 50 percent of the available housing for very low-income seniors living in these communities."

   The HUD Section 202 program was created by Congress to assist very low-income senior citizens secure affordable housing.

   "There are several reason why a foreclosure sale of these properties is a bad idea," McNeill said. "First, a foreclosure sale will exclude many future residents who are in the eligibility categories of tenants now served. Once the existing residents in the properties pass away or move, the criteria for eligibility will no longer allow the properties to serve very low and extremely low-income tenants."

   If these properties are excluded, then future elderly residents might not have a place to live, being that there are not a lot of senior housing available for the low-income residents in communities such as Socorro.

   The need for low-income housing in smaller, rural communities, he said, are necessary and that needs to be realized.

   "It is important that we preserve the housing now in place in these New Mexico communities," he said.

   Another reason Encino Development Corp. wants to take over the property is that a foreclosure by HUD will cost the government a substantial loss of about $3 million. Also, a foreclosure sale will produce only a fraction of the appraised value of the properties.

   McNeill said that HUD policy requires the department to attempt to work out a solution that avoids foreclosure and a loss of the properties for the residential use of very low- and extremely low-income residents.

   "Finally, a foreclosure in this case is unnecessary because an option is available that is much more desirable to all parties," he said.

   The relationship between HUD and Rural Housing Inc. has deteriorated since the financial difficulty occurred and HUD had to declare default on the properties. The soured relationship between the two, he said, is perhaps the reason why HUD is not willing to work with any other rural, low-income housing group like Encino Development.

   "Encino Development has a long history of successful operation of two large HUD assisted, low-income residential properties in Albuquerque and proposed to acquire the Socorro, Carlsbad and Española properties and retain their use."

   These three properties, he said, are nearly fully occupied and are completely viable. The property in T or C, however, has been in financial difficulty for some time, and its state of disrepair makes its acquisition difficult to justify, he said.

   McNeill, on behalf of Encino Development, has requested the assistance of Sen. Domenici to intervene in the foreclosure.

   "Encino Development stands ready to acquire the three properties and ensure their continued use for the population they now serve," he said.