Huntington Meadows is all but abandoned now, an eerie urban ghost town of 58 buildings occupied by only a few dozen families who, as of today, are legally squatters in their own apartments.

Stella Reese, 12, sits on a porch at Huntington Meadows. (Brandi Stafford photo) | ZOOM |

        The owner of the city's largest apartment complex is in bankruptcy, just four years after getting $31.6 million from taxpayers and investors to buy and rehabilitate the 1,169 units in Bond Hill.

        The surprisingly rapid decline of Huntington Meadows has Cincinnati City Council calling for an investigation. A Hamilton County commissioner is asking state and federal prosecutors to determine whether there was criminal wrongdoing. Lawyers are scrapping for what's left of the company in bankruptcy court. Tenants are looking for new places to live.

        “I've lived here for three years. I've never seen them do anything. All they do is paint over stuff,” said Erin Walker, 22, a preschool teacher and mother of four who's buying her mother's house in Roselawn. “My thing is, where did all the money go?”

        It's the same question in Columbus, where a similar complex - bought by the same partnership under an almost identical financing scheme - is also in bankruptcy and foreclosure.

        The answer, many believe, is less sinister than it is unfathomable: Even with $31.6 million, the Huntington Meadows project may have been doomed from the beginning.

        “There are problems with that property that will prevent it from ever being successful in its current configuration,” said Peg Moertl, who directs the city's Department of Community Development. “With that level of density, and with that kind of housing, it's hard to sustain a base of long-term tenants. It begs for transient renters.

        “My question is, I wonder what the developers were thinking,” she said.

WHO OWNS IT?

The Huntington Meadows Limited Partnership consists of the general partner, the P.M. Group of Milford, Mich., and the limited partner, First Partners Investment Corp. of Boston.   P.M. One is the property management subsidiary of the P.M. Group. Founded in 1973, it is one of the largest property management companies in the Midwest, with operations in Michigan, Indiana, Ohio, Illinois and Missouri.   The president of the P.M. Group is John J. Hayes of Okemos, Mich.

        Matthew Wick was the developer, and he wonders the same thing.

        Mr. Wick worked for the Milford, Mich.-based P.M. Group when he put together the deal. He's since left the company after a “difference of opinion” over the management of the projects.

        (He has submitted a $500,000 claim with the bankruptcy court, saying he's still owed a developer's fee. “I refused to take a haircut, and they refused to budge, and that's it,” he said.)

        There's really only one person to blame in the Huntington Meadows debacle, Mr. Wick said.

        Himself.

        “The only villain in this story is the developer's short-sightedness in trying to turn around a property that, in retrospect, was not able to be turned around,” Mr. Wick said. “Developers, by their nature, are optimists. We see things as they could be. We didn't see the pitfalls.

        “I'm still licking my wounds on this Huntington Meadows and Woodland business. I don't believe anyone got in this just to line their pockets and walk away. P.M. is an honorable company. P.M. One (a subsidiary) is a great management company. We're all very sorry we got involved.”

        The P.M. Group got involved in 1997, when it formed a limited partnership to buy the complex for $11.7 million. The Ohio Housing Finance Agency provided tax credits for the banks that financed the project. With the help of $17.5 million in tax-free federal bonds, $7.6 million from private investors and $3.5 million in city money, the P.M. Group promised to give the property a complete upgrade.

        With the renovations, better management and the right marketing, the new partners believed they could turn the struggling complex around. Their marketing plan was painstakingly detailed, even down to how the phones would be answered: “It's a great day at Huntington Meadows.” People who looked at apartments would get thank-you cards.

        After securing state and county support, the P.M. Group hired former mayor and congressman David S. Mann as their lobbyist to help at Cincinnati City Council.

        City Council enthusiastically approved the loan, which would be forgiven after 10 years.

        “There was a real paucity of housing that single mothers could qualify for and could afford in the city,” said Todd Portune, a Hamilton County commissioner who was a city councilman at the time. “The goals were noble and laudable, and it came through with high regard and recommendation from the city administration. It had all the features for a really good thing for the city.”

        The project was a feather in the cap for the city's Rental Rehab Program.

        “There was a desire on the city's part to achieve some numbers,” said Ely Ryder, an assistant city solicitor who worked on the deal. “Many of the projects we had been doing were four- or eight-unit jobs.”

        Peg Moertl, a former banker who took over the city's neighborhood development efforts in 2001, said she suspects some “group think” influenced the city's decision. If the state and the county didn't see a problem with the project, and the limited partner investors were willing to put up $7 million, why should the city say no?

        “We had a proposal on the table to keep 1,200 units on line. What was the alternative? Board it up?” she said. “We try to make smart decisions about what the city's investment should be. But there is an element of risk to almost every project we review.”

        Upgrades began in September 1997. The plan was to spend $592,900 on landscaping and site work, $243,090 on roofs and gutters, $2.7 million on windows, $3 million on doors, $539,170 on exterior improvements, $2.1 million on paint, carpet, tile and cabinets, $568,515 on electrical improvements, $771,500 on appliances, and $948,000 on heating and cooling.

        Nowhere did the budget include money for plumbing or asbestos removal - issues that finally led the Cincinnati Health Department in late July to threaten to condemn the property. A maximum of $150,000 was set aside for “toxin abatement.”

        “I think what we have is a prime example of a (developer) who bought the property, got $20 million in federal money, put a new coat of paint on, cut the grass, but didn't deal with the major environmental problems,” said Vice Mayor Alicia Reece, who lives in Bond Hill.

        Almost immediately after the P.M. Group bought it, the complex ran into cash-flow problems, city records and interviews with people involved with the deal show.

        It was never able to sustain a large enough tenant base to stay afloat. Crime in the neighborhood increased. Environmental problems surfaced. Natural gas prices spiked to all-time highs, leaving the owners with an as-yet-unpaid utility bills of $306,458.

        By May 1998, cost overruns threatened to derail the project's timetable. The city's solution was another $450,000 forgivable loan to help pay for more air conditioning units, landscaping and paving.

        But cash flow problems continued. In a July 1998 report to City Council, then-City Manager John Shirey reported that the P.M. Group was complaining about tenants not paying rent.

        “The previous owners had leased units without effectively screening tenants, so many new residents had moved in with little or no security deposits and had never paid rent,” Mr. Shirey's report said. Huntington Meadows also complained that many appliances had “disappeared” through theft.

        Mr. Wick's business plan had anticipated that the complex would break even at 75 percent occupancy.

        “The problem with a project like that is, you need 90 percent occupancy just to make sure 75 percent are paying the rent,” he said.

        Mr. Lawrence, the painting contractor, said there were signs of problems from the beginning.

        “From the time I worked for them, they never paid me on time,” he said. “They were turning over 10 to 12 units a week. They had such a high rate of evictions, I can remember painting one apartment three times in a nine-month period.”

        And what about the $31.6 million? Where did it all go?

        The partnership spent $11.7 million to buy it from the former owners, Hillcrest Bankshares of Indianapolis. Closing costs, lawyers, architects, engineers, accountants, taxes, interest, contractors' overhead and other costs ate up $6.4 million. After the developer built in a profit of $3 million, the P.M. Group budgeted $10.5 million for construction and $800,000 for furnishings and appliances.

        City officials say they have every reason to believe the money was spent on the property. While there's been no detailed audit, the P.M. Group and its architect submitted detailed construction affidavits certifying the costs. City building inspectors confirmed the work was done.

        But how the money was spent was another matter.

        Skip Lawrence, a painting contractor who got stuck for $7,520 when Huntington Meadows filed for bankruptcy, said much of the work was cosmetic.

        A “facial,” he called it.

        “There were big problems, but they just wanted to make it market-ready. If they could cover it up, they would cover it up,” Mr. Lawrence said. “I used to tell them, "You're putting a Band-Aid on cancer.' ”

        By 2001, the complex was in its death throes. Managers handed out no-deposit rent specials, only to evict the new tenants months later for not paying rent. More than 330 eviction cases were filed in municipal court.

        A report this year from the court-appointed receiver, Habitat America, placed the blame squarely on the P.M. Group and its local management.

        “Unfortunately, the improvements that were made were done in a random fashion, which did not benefit the community as a whole. Nothing was done to curb the crime, improve the living standards or the marketing appeal of the community,” the report said.

        “As a result, the community has deteriorated over the past few years and now has a reputation for being drug-infested and an unsafe place to live. Many residents who took pride in their apartments and paid their rent on time moved to better-managed communities.”

        The bottom line: “Huntington Meadows is too large to manage effectively as one community,” the receiver's report said.

        The failure of Huntington Meadows would be an isolated incident if not for the almost identical collapse of Woodland Meadows, a 1,400-unit complex on the east side of Columbus. That complex, with the same P.M. Group, the same limited investors, and an almost identical financing scheme, is also in bankruptcy and foreclosure.

        City officials there say the P.M. Group had little experience managing large developments, but that they were so desperate for help with the crime-ridden complex once known as “Uzi Alley” that they overlooked shortcomings in the proposal.

        “It was a troubled project when the P.M. Group bought it. They knew what they were getting into. They never reached enough occupancy to get enough revenue,” said Linda Donnelly, housing administrator for the City of Columbus.

        “Look at the city's situation. You have a troubled project with crime issues and drug issues, and it's too dense, and you have a developer come along with 20 years of experience in their portfolio. It may not have been the right experience, but that's hindsight,” she said. “It was hard to say no.”

        A preliminary review in Columbus has found no evidence that any money was misappropriated.

        In the end, the same problems doomed both properties, Mr. Wick said. Poorly lit dead-end streets became havens for drug dealers, scaring away the families and seniors who tend to make the most stable, reliable renters.

        “What I've learned about rehab projects, and I've learned this the hard way, is that you can't pick up the building and move it to a new location,” he said. “There isn't any amount of money you can put into those projects and make them work.”

        Fannie Mae, which holds the $17.5 million in housing bonds for Huntington Meadows, apparently agrees. It has moved to foreclose on the property, and its handpicked receiver, Habitat America, has won a court order to close the property, effective today.

        Most of the 600 families who remained in the complex two months ago have left, helped on their way by revelations of environmental problems and the promise of $500 in relocation subsidies from Fannie Mae. A few, like Mrs. Walker, have become success stories of the working poor, buying their own homes. Others have ended up in other housing projects or with relatives.

        Perhaps a few dozen remain, destitute and defiant.

        “I'm not moving. I don't have anywhere to go,” said Tracy Harris, who lives in a two-bedroom apartment on Langdon Farm Road with her three children.

        On the front window of her Langdon Farm Road apartment, she's made a sign with black tape: “Homeless. Help.”

        Many have answered her call. In her half-packed living room last week were a Baptist minister, two social workers and another tenant.

        Ms. Harris isn't convinced that there are health problems at the complex. She feels betrayed by her landlord. And she suspects that some other developer - the city, perhaps - wants to clear the property to make way for upscale development.

        “Yes, I'm angry,” she said. “We're supposed to be happy? Thank you for putting us out of our homes? What is the city doing for us?”

Here's where the $31.6 million went
Complex was troubled from beginning
Hopes to resurrect site will confront harsh realities

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