HomeMy WebLinkAboutIR 8027 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 6o27
610-
r To the Mayor and Members of the City Council September 24, 1996
rtxM Subject: BANKRUPTCY FILINGS ON SPRINGCHASE
1873
APARTMENTS AND TRINIDAD APARTMENTS
In 1988, the City of Fort Worth awarded rental rehabilitation loans to the
Springchase Apartments Limited Partnership for the Springchase
Apartments (164 units), located at 2201 E. Berry and to the Trinidad
Apartments Limited Partnership for Trinidad Apartments (123 units),
located at 2900 South Freeway. The loans were for $205,000.00 and
$147,500.00 respectively. Each loan was 5% for twenty years with a ten
year deferred payback with no interest accrual. The repayment of each
loan is scheduled to begin in January, 1998.
The Managing General Partner in each of these ventures is NHT, Inc., a
501(c)(3) not-far-profit corporation dedicated to the preservation and
creation of quality affordable housing throughout the United States for
elderly persons, families, persons with disabilities and all others in need.
The sole member of NHT, Inc. is the National Affordable Housing Trust,
Inc., a Maryland Section 501(c)(3) nonprofit corporation.
The City is in a second lien position on each loan behind Beal Bank.
Beal Bank purchased the two notes last October at a HUD auction at
favorable discounts. The HUD note for Springchase was purchased for
42.49% of the remaining balance or $564,121.00. The HUD note for
Trinidad Apartments was purchased for 39.17% of the remaining balance
or $553,297.00.
Both of these properties have been losing propositions for NHT over the
last four or five years. Beal Bank has been extremely displeased with the
performance of the owner since they acquired the notes and as a result
filed for the appointment of a receiver. In a defensive maneuver, NHT
filed for protection under Chapter 11 of the Bankruptcy Code in the
United States Bankruptcy Court for the Northern District of Texas Fort
Worth Division. NHT has filed their reorganization plan and the court is
scheduled to rule on the plan September 26, 1996. Under the plan the
City is classified as a class four impaired debtor on each project. Each
plan calls for the City being paid at the end of ten years (balloon
payment) or upon the sale or refinancing of the projects. Beal Bank is a
class one impaired debtor and is scheduled to receive interest only
payments for ten years with a balloon payment at the end. w°°
RECORD
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INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 8027
rq To the Mayor and Members of the City Council September 24, 1996 100�1
Page 2 of 2
Subject: BANKRUPTCY FILINGS ON SPRINGCHASE
APARTMENTS AND TRINIDAD APARTMENTS
Each impaired debtor was asked to cast its ballot by September 20,
1996, either accepting or rejecting the plan. Staff cast a ballot rejecting
the plan. Based on discussions with Beal Bank's attorney, it appears
they will also reject the plan. Staff will continue discussions with Beal
Bank with the objectives being the continued provision of quality
affordable housing and recouping the City's investment in the projects.
B 4ob e 19
�-�City Manager
ISSUED BY THE CITY MANAGER FORT WORTH,TEXAS