Financial questions loom over Lincoln Apartments

| October 10, 2012
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Nearly three weeks after residents of Lincoln Apartments learned they would be forced out of their homes on Halloween, there is a lot that doesn't add up: Residents who say they paid their rent in cash but only occasionally got a receipt. Leases that were written and then, just weeks later, rewritten under different and less favorable terms. Residents who were allowed to move in just days before eviction notices were delivered.

What we do know is that the Lincoln Hospital Foundation, which owns the property, and Southern Real Estate Management & Consultants, which oversees it, still plan to close the apartment complex and evict the tenants on Oct. 31. Both foundation and management officials say they can no longer afford to keep the complex open because rent payments are insufficient to cover the utility bills.

Lincoln Apartments, which caters to low-income residents, is privately owned and receives no subsidies.

At least 200 people in about 50 households are losing their homes. Meanwhile, city and county officials are trying to determine how to grapple with a housing emergency.

This week the situation became more complicated. Given the volume of complaints about management, the apparent financial irregularities and the high stakes for the tenants, many residents are asking public officials to intervene: Delay the evictions and examine Southern Real Estate's business practices. However, this may not be possible because the company is private.

"The city is taking the management's word," says Sendolo Diaminah of People's Durham, who is helping to organize the tenants. "One of our demands is that we want an investigation of the management company."

Bernadette Toomer pays $450 a month for her two-bedroom apartment on Wabash Street. She says she regularly pays her rent in cash to property manager Leila James. Toomer says that sometimes James has given her a receipt, but other times she has not. This and other unusual business practices have led residents to question the management company's contention that the rents have failed to cover the building expenses.

"Where is the money going?" Toomer says.

James did not return calls to her home, which is not in the Lincoln Apartments complex. A person who answered the phone at Southern Real Estate said company president Howard Williams would not be in the office until Thursday.

Larry Suitt, chairman of the Lincoln Hospital Foundation board, said he had not heard about the allegations of financial improprieties. "We have no knowledge of it, but I'll contact members of the board and discuss it," he said. "We would be glad to cooperate with any investigation."

Durham Deputy City Manager Keith Chadwell said the city has spoken with Southern Real Estate and the foundation. "They are operationally challenged," Chadwell said. "Ultimately, it's a private company choosing to close."

He added that the city has been given access to rental information but has not seen the company's books. Nor is the city entitled to review them, since Southern Real Estate is a private company.

"We have no evidence that anything unscrupulous is going on," Chadwell said. "We don't have cause to pursue it."

The timing of several lease agreements is also curious. Toomer says that three weeks ago, shortly before the eviction notices went out, James gave Toomer a rewritten lease indicating that Toomer had not paid a $450 security deposit. However, a previous lease Toomer showed to the Indy confirmed she had paid the deposit. The rental period on the lease was also different.

Shirekia Shackleford told Durham Commissioners during a public hearing Monday night that she moved into her apartment on Sept. 17, only to receive an eviction notice 11 days later. Her appliances were also broken, she said. "We don't have money laying around to move every 30 days," said Shackleford, who is unemployed. "I'm trying to live within my means."

Asked if James knew the eviction notices were imminent when she placed Shackleford in an apartment, Suitt says James was not at the September meeting during which the foundation and the management company decided to close the complex. Suitt could not recall the date of the meeting.

There has also been a lack of uniformity in leasing agreements. Some people pay $400 a month for a one-bedroom apartment; others pay $360 for two bedrooms. "It's clear there's not an explicit system for the rents," Diaminah said. "There's no transparency."

Questions have also emerged about the foundation's tax status. According to documents filed with the N.C. Secretary of State, the foundation dissolved in August 2010. In addition to Lincoln Apartments, it still owns the two acres under the buildings. As a nonprofit the foundation is exempt from paying property taxes, but in the state's view the nonprofit doesn't exist.

Suitt said after a corporation dissolves, time is allotted for it to work out the details of the dissolution, such as selling assets. "We believe we are still in that time period," he said, thus exempting the foundation from paying taxes on the property assessed at $4.5 million.

The deed is still in the foundation's name, according to county tax assessor Kimberly Simpson. Changing the deed would alert the tax office to possibly change an exemption, she said. In addition, taxpayers are obligated to notify her office if they no longer qualify for an exemption. After the Indy told her of the foundation's dissolution, Simpson said she would investigate whether the foundation is still exempt.

Regardless of the foundation's and Southern Real Estate's troubles, residents want to—and need to—stay in their homes. With few affordable housing options—no space is available in public housing, nor are there any Section 8 vouchers—many tenants could wind up living in their cars or in homeless shelters.

The situation is critical, said Michael Becketts, director of Durham County Social Services. "Evictions happen every day, but evictions en masse in one community don't, not like this," he said. "The pool of available homes is small and they're all competing for low-income housing."

County staff is meeting with Lincoln residents this week to determine their eligibility for services, some of which could be paid for with emergency assistance funds.

With just three weeks until eviction date, the influx of soon-to-be displaced residents will likely tax an already overworked social services staff. "This is a critical time. We could look at this as a natural disaster," Becketts said. "I have to provide services to other people. I can't overburden the staff because I don't want people to be in the waiting room for hours and hours. But we're going to provide some level of certainty for the Lincoln residents."

The certainty residents want is that when they wake up Nov. 1, they will be in their homes at Lincoln Apartments.

"We're not here to hand over our community," Toomer, who has lived at Lincoln nearly four months, told the Durham County Commissioners. "We're here to fight. I say to you, don't look at this as an eviction, but a crisis."

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Durham Deputy City Manager Keith Chadwell said the city has spoken with Southern Real Estate and the foundation. "They are operationally challenged," Chadwell said. "Ultimately, it's a private company choosing to close."

He added that the city has been given access to rental information but has not seen the company's books. Nor is the city entitled to review them, since Southern Real Estate is a private company.

"We have no evidence that anything unscrupulous is going on," Chadwell said. "We don't have cause to pursue it."

Would the city have cause (or reason) to pursue it if Bill Bell was living there?

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Posted by VirgilCane on 10/10/2012 at 4:43 PM
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