Is a Portland Company a True Guardian of Two Low-Income Dallas Complexes?
Two issues ago we spotlighted the efforts of a Portland, Oregon-based property management company that's attempting to turn around one of the worst apartment complexes in Dallas. To date, the company has spent more than $13 million on two Pleasant Grove area apartment complexes, and when all is said and done will have spent $21 million on renovations. Suffice it to say the work is far from over.
On Thursday, four sprinkler installers were robbed at gun point at Grove Village, 7203 S. Loop 12, according to Mona Hall, who owns a company doing renovation work at the complex. The next day Hall says four men held up her construction crew, also at gun point. “It seems to me that crime and violence has not stopped and security was nowhere to be found either day,” she wrote in an e-mail. “Dallas Police were contacted and it was said that this is a daily occurrence in this complex.”
Michael Davis, the blogger behind Dallas Progress, also says we missed part of the story.
“In August 2007, Guardian's management was not responsive to the failure of air conditioning in the Grove Village apartment complex,” Davis wrote on Sept. 19. “After being without air conditioning for weeks, some residents were told to buy their own units and that management ‘had done all they could do.’ My understanding is that the air was fixed only after contact/threat of citation was made to management by the City of Dallas officials and the airing of an unflattering news story by a local news station.” (To see the story, go here.)
Davis is right that I should have done a better job reporting the story, but I also think he’s failing to see the larger picture. Perhaps I’ve been seduced by the PR machine of Guardian Management, but from what I saw walking the property and talking to residents, the company is committed to making lasting changes at both properties, which isn’t going to be easy.
Obviously there’s a lot of money to be made in building and rehabbing low-income housing (as the Brian Potashnik case has shown us), but when I walked the property, the thought that kept going through my head was: “Why the hell would anyone want to take on this mess?” Because here’s the thing with low-income housing tax credits and tax-exempt bonds (which is what Guardian used to finance the project): There are all kinds of stipulations. Like, 30-year stipulations. Meaning that if Guardian doesn’t keep things up to snuff for the next 30 years, they’ll be on the hook for the $18 million or so in tax credits and bonds that they’ve sold to investors.
And there are layers upon layers of regulatory agencies who will be randomly inspecting the properties to make sure that Guardian isn’t letting them devolve into the shit slums they had become. That means the City of Dallas will be doing inspections, as will HUD, as will the Texas Department of Housing and Urban Affairs, among others. “These tax credits have huge regulatory requirements,” says Guardian’s Dan Steffey. “If we screw up all of those tax credits, will be subject to recapture.”
Which is why it was so hard to convince anyone to buy the credits and the bonds from Guardian in the first place: Investors didn’t believe Guardian could make changes stick. “If U.S. Bank buys the bonds from us and we fall on our nose, then they’re left with that property,” Steffey says. "They have to repossess it and sell it to recoup their investment, which is not the kind of business they want to get into.”
All of which is to say, Guardian is fully invested in this project. They have to turn it around. They have to put a stop to subcontractors getting robbed. They have to get air-conditioning systems up and running. Because if they lose their status as government-approved low-income housing, the whole thing falls apart.
Obviously the system isn’t perfect. All the aforementioned regulatory agencies were supposed to be checking the complexes out before Guardian came along, and yet there was mold growing on the walls and ceilings caving in and crack being dealt right in front of the management office. But if done correctly, this is a private sector/government partnership that can work. And frankly, without some kind of government-sponsored incentive, there is no for-profit developer out there who would take on what Guardian faces at Pleasant Village and Grove Village.
“We’re absolutely not perfect, we don’t pretend to be, and we don’t say we are,” Steffey told me when I called him yesterday. “But we are intent upon doing as good as we can do, and when it’s.pointed out to us that we’ve made a mistake we try to correct our behavior so it doesn’t happen again. We make mistakes and if people were uncomfortable as a result we deeply regret that.”
He said the air-conditioning problem has been fixed. The problem, he said, was that when contractors shut down part of the system for repairs, it shut down the system for the entire property, and it wouldn’t come back up for 24 hours. Once management realized this, he said all the repairs were coordinated to take place on the same day.
On another occasion in August, he said there was a system failure that impacted 15 units. Other apartment complexes throughout the city suffered the same problem that day due to high temperatures, he said.
“We learned the first thing in the morning that the system was down and would be down all day, so we offered residents free admission to a water park that day,” Steffey said. “Even if we went out and bought units that day we weren’t going to get it done that day.”
As for safety, Steffey said he hasn’t heard from police that contractors are getting held up every day. “As far as I know [the September. 27 and 28 instances] are the only instances we know of. I don’t know that you can put that on the complex; I think that’s more of a neighborhood thing. We do not have security at day time, we have it at night. We expect that like any other place we’d have police response during the day.
“The only way we can ultimately solve the problem is by having good quality residents and good support from police department. Our staff is very involved with larger community to come up with plans to improve safety of the whole area.”
Perhaps the most impressive thing Guardian has done at Pleasant Village and Grove Village is the partnerships they have brokered with local community organizations. They put on a job fair at one of the complexes, they sponsored a seminar on eating right, and they have hosted several events for kids -- including an easter egg hunt and a Cinco de Mayo celebration. And they say they are building long-term relationships with groups like the Boys and Girls Clubs and other organizations dedicated to literacy efforts and after-school activities.
Only time will tell what kind of landlord Guardian is. Maybe Michael Davis is right -- maybe the City of Dallas should never do business with them again. But Guardian is spending $21 million to prove otherwise, in a part of town most developers couldn’t give a rip about.But one can't forget that there is bound to be resistance in a place where “anarchy reigned,” as Steffey put it, and there are bound to be hiccups in rebuilding a place that had gone to hell. --Jesse Hyde
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