VOL. 131 | NO. 99 | Wednesday, May 18, 2016
Receiver Appointed for Warren and Tulane Apartments
By Bill Dries
The Tulane and Warren Apartments are under the control of a court-appointed receiver.
U.S. District Judge Jon P. McCalla appointed Foresite Realty Management LLC of Rosemont, Illinois as the receiver of the two properties Tuesday, May 17, by a consent order.
The order is the first formal response to the court action filed May 6 by Bank of New York against Global Ministries Foundation, the owner of the two apartment complexes.
The bank called for the appointment of the receiver in a complaint citing the “poor condition of the mortgaged property.”
A memorandum filed with the complaint also alleged “an appearance of fraud” by Global Ministries.
GMF CEO and President Richard Hamlet denied any fraud but said he agreed with the call for a receiver “in the best interest of the property and of the residents.”
McCalla’s order notes the agreement on the need for a receiver “but with (GMF) expressly denying all of the allegations contained in the verified complaint and reserving its right to answer the allegations of the verified complaint and assert affirmative defenses for each.”
McCalla holds his first hearing on the matter Thursday afternoon.
McCalla instructed Foresite to “immediately begin marketing the mortgaged property for sale” and says Foresite and Global Ministries are to work cooperatively.
Foresite is a real estate investment firm with a principal acquisition fund. It also provides third party services such as serving as a receiver of real estate properties in cases like the one pending in Memphis federal court.
Warren and Tulane can be sold to new owners who intend to continue renting to those who receive federal rent subsidies or to new owners who don’t want to participate in such a federal program.
Officials with the federal department of Housing and Urban Development cut rent subsidies to both complexes in February after Warren and Tulane each failed a second HUD inspection.
Local code enforcement inspectors also found numerous violations.
Whatever is made from the sale of the complexes goes to pay the fees and expenses of the receiver, the fees and expenses of Bank of New York including legal fees, the money owed on the $11.8 million in bonds through the local Health, Educational and Housing Facility Board that the bank is the trustee of and finally, only if there is no debt, to Global Ministries.
None of the proceeds from a sale can be used to operate or maintain the Warren or Tulane Apartments under terms of the order.