Jandina Park Apartments facing foreclosure
The federal government’s Rural Housing Service is foreclosing on the Jandina Park Apartments, a 36-unit Sesame Street complex backing up to Southwest McMinnville’s Cozine Creek Greenway.
The complex is technically owned by North McMinnville Associates, a limited liability partnership based in Gig Harbor, Wash. The original general partner was Michael A. McKean, who has since been disbarred, convicted of bank fraud and incarcerated at FCI Sheridan for 21 months.
The LLP has been inactive for more than 15 years. It is currently in receivership, with the Rural Housing Service winning court appointment to act as trustee.
Financed in January 1989, the complex currently carries a market value of $1.7 million on Yamhill County Assessor’s Office tax rolls. The foreclosure alleges an unpaid balance of almost $1.1 million as of March 1, plus liens, assessments, interest, late fees, legal fees, trustee’s fees, taxes, insurance, upkeep and other costs occurred by the beneficiary or its assigns.
McKean, who practiced law in Washington prior to his disbarment, pleaded guilty in 1998 to bank fraud, false request for a loan advance, false cost certification, unlawful payment from a bank, false entry and filing of a false tax return. The charges stemmed from his involvement in a web of limited liability partnerships engaging in fraudulent Section 8 housing projects in Oregon, Washington and other states.
Federal prosecutors said McKean had engaged in numerous of abuses, even siphoning loan money to remodel his own home.
Rod Hansen, an official with the U.S. Department of Agriculture’s Rural Development arm, said the McMinnville complex has remained in a state of limbo for more than a decade.
Initially, he said, an attempt was made to work out a deal under which the remaining partners would assume financial responsibility. However, “We couldn’t find a feasible deal that would work,” he said.
He said the Rural Housing Service assumed a receivership role “to keep the lights on and utilities paid” while a buyer was sought. But he said potential transactions were complicated by the fact the original borrower was based in Washington and so was the receivership, while the property is located in Oregon.
“There’s been quite a bit of dialogue on if we’re doing the right processes,” Hansen said. “At this point, we can’t find another solution. We need to close out the borrowers’ right with a foreclosure.”
He said the Rural Housing Service may end up with the title, but he is still holding out hope a private buyer will surface eventually.
Jill Rees, public affairs specialist with the USDA’s Rural Development office, said 24 of the complex’s 36 units are federally subsidized. She said the charge to renters is limited to 30 percent of take home pay and the government makes up the rest.
She said the USDA subsidizes units in about 200 such complexes in Oregon. And she said no one currently employed in her office can remember having to foreclose on one.
Rees said the fundamental issue with Jandina Park is that it isn’t generating enough rental revenue to cover the cost of management, maintenance and upkeep. “It’s become a facility that’s not self-sustaining,” she said.
Given that, she said, “It’s in the best interests of the USDA, and taxpayers to foreclose.”
The foreclosure petition lists failure to maintain adequate reserves or keep the property in good repair in addition to failure to make timely loan payments. The petition has been approved and the property set for auction at 11 a.m. Thursday, Sept. 5.
Residents have been notified of the pending auction.
If it produces a new owner, they have been warned, they face the potential for eviction on 90 days notice. They have been advised to request in writing that any security deposit or pre-paid rent be subtracted from their final pre-action rent payment, as a new owner would not be responsible for either.
Residents are hoping the auction won’t force them from their homes. Josephine Scott is a recent resident and said she loves living there.
“The landlord’s really nice, really friendly,” said resident Josephine Scott. She said she loves Jandina Park, and there aren’t many viable low-income alternatives.
Mary Foster, an eight-year resident, had nothing but good things to say either.
“Nice landlord,” she said. “Never had any problems.”
The notice caught residents off guard and many found it confusing.
“I was surprised by it,” said Nicole Santome, a tenant of three years. “I thought, ‘What does this mean for me?’”
“Some people are saying we should ask for our deposit back, otherwise we’ll lose it,” said Jennifer Junkins, a resident of nine years, adding, “We don’t want to get kicked out. People have a lot of unanswered questions and we’re not sure who we’re supposed to talk to.”
However, Junkins acknowledged the complex has fallen into disrepair over the years.
Taking a stroll along the paved greenway path in back, it’s hard to miss the various shades of paint, some of which is peeling, and the cracked, uneven siding.
“There’s been some new landscaping recently,” Junkins said, “but there are boards falling off in the back.”
Several tenants also raised mold issues.
“There’s a lot of mold going on around here and a lot of people with respiratory problems,” Junkins said. “I don’t think they did everything they should have with the black mold.”
Santome agreed, saying, “A lot of people complain about the mold. I’m surprised it hasn’t been taken care of.”