Tenants Living in South Side Affordable Apartments Continue their Fight for Receivership

by Wendy Rosen

Nadrea Satchell speaking at the Ellis Lakeview Tenant Association press conference on Dec. 29, 2021.

Wendy Rosen photo

Tenants of an affordable Kenwood apartment tower continue to battle owners for decent housing after years of suffering squalid conditions, irresponsible management, and the slow repair of more than 100 building code violations.

Residents of Ellis Lakeview Apartments formed the Ellis Lakeview Tenants Association (ELTA) in fall 2020 to pressure city and federal authorities to file lawsuits that demand property owner Apex Chicago IL LLC resolve plumbing, electrical, elevator, pest, and safety breaches. They coordinated 311 calls starting in 2020 to trigger city inspections, and sent a 47-page letter with photos and videos to the U.S. Department of Housing and Urban Development (HUD) and the City of Chicago Department of Buildings.

The ELTA, housing activists, HUD, and the City of Chicago have doggedly pressed the Cook County Circuit Court to remove the owner and appoint a receiver to take control of their federally subsidized 11-story, 105-unit building located at 4624 S. Ellis.

But Judge Lisa Marino has denied two separate emergency receivership motions since May 2022. Instead, Marino ordered Apex to replace its property manager, Integra Affordable Management, with 5T Management, a company known for successfully turning around troubled subsidized buildings.

While tenants, HUD, the city, and Apex agree that 5T has made significant improvements since it assumed management in June 2022, 5T has had to stop work twice because Apex ignored court orders keep a $350,000 minimum balance in the repair funds.

5T President Steve Thomas alerted the city in early January that the repair fund had dropped to $1,500, and their six-month management contract was about to expire. He also told the city that he stopped repairs because there were no funds to pay contractors. That news prompted city attorney Steven McKenzie to file an emergency motion to appoint a receiver to make repairs the owners failed to accomplish, and to make the premises safe for residents.

Despite the slow repair and legal process, tenants remain vigilant. Many have logged into monthly Zoom court hearings for the past six months along with 30-40 others, including city inspectors, housing activists, and attorneys for HUD, the city, the mortgage holder, 5T, and Apex. Tenants describe hazards such as gaping drywall, broken elevators, and standing water while Apex collects approximately $120,000 per month under its Ellis Lakeview Housing Assistance Payment contract with HUD. Additionally, residents are expected to pay 30 percent of their incomes to cover their share of the rent.

“For the last couple of years we’ve been waiting on Apex to get something done,” resident Nadrea Satchell told the court during the January 18 emergency hearing for a receiver. “They’ll start, they’ll stop, which is torture for most tenants because a lot of us have very, very bad conditions in our apartments.”

McKenzie told the judge, “these are people living with open walls in their apartments...it’s the middle of winter, it’s a place for vermin to go in and a place for cold wind to come through... if this was a receivership this wouldn’t be an issue. This would just get funded. We wouldn’t be waiting. The receiver would be doing the work.”

Apex has repeatedly ignored orders to pay for repairs until summoned to court. After they wired funds just hours before the January hearing, the city agreed to put a hold on its receivership request. Judge Marino told Apex, “we’re always at the 11th hour and here we are again.”

The judge ordered the parties back to court on February 1 for a status update. At that hearing, the city withdrew its receivership request after Apex counsel Joshua Kahane confirmed that his client signed another six-month contract with 5T, and fully funded the repair reserves.

But tenants, HUD, and elected officials, including state Sen. Robert Peters (D-13th) and Ald. Sophia King (4th), continue to call for a court-appointed receiver because of Apex’s ongoing mismanagement of the property.

“This is destabilizing to the tenants, and we’re very concerned about that,” said HUD attorney Erin Gard at the January hearing. During a court appearance in June 2022, Gard said that of over 6,000 properties in HUD’s Midwest Multifamily Region, Ellis Lakeview is “the only property that’s been assessed a civil money penalty greater than $100,000.”

Resident Tammi Brown said she’d like a receiver to take over. “We’re tired of the funding stopping. We’ve been at this for over a year.”

Kahane vehemently defends his client’s actions and ownership rights in court. He insists that management has never left tenants without essential services and a receiver is not warranted. At the January hearing, he said, “this is not where we were six months ago where, literally, there were health and safety issues in every unit on the property. And these owners have put in $1.3 million plus $363,000 and are operating in good faith.”

Apex manager Oron Zarum has never appeared in court, nor has he visited the property since Apex purchased it in August 2019 for $10.75 million, according to housing activists. A Google search for Apex Chicago IL LLC does not surface a company website or contact information.

Satchell is tired of broken promises and wants new ownership. “Move to receivership,” she told the court. “That’s it.”

The exterior of Ellis Lakeview Apartments, 4624 S. Ellis

Wendy Rosen photo

The Emergency Motion for Receivership

Zarum, Integra, and Apex are linked to troubled low-income buildings in at least eight states according to government, tax and court records, and local news reports. They are connected to a web of for-profit and non-profit companies that have different names but share addresses and principal officers. Their tenants across the country report similar issues: utility shut-offs, plumbing, electrical, safety, mold, rodents, and pest infestation. These companies have defaulted on mortgages and have lost several properties to court-ordered receivership. In one case, a 62-year-old Georgia man died in a 98-degree apartment with a broken air conditioner. A jury awarded his family $125 million in 2019.

Examples:

The city of Waukegan, Illinois, filed an emergency motion in August 2022 against Apex Waukegan IL LLC and Integra Affordable Management to appoint a receiver due to numerous dangerous and hazardous conditions at Lakeside Towers. The court motion reads, “defendants Apex and Integra have a history and reputation for their failure to maintain large, residential buildings.”

Attorney Joshua Kahane represented Apex and Integra, and helped negotiate a settlement to avoid court-ordered receivership.

Sherman, Texas tenants at several Apex properties in November 2022 had their water shut off and were on the verge of losing power because owner Apex was late paying bills. The city of Sherman reported that Apex was more than $20,000 behind in its water bills. Oron Zarum signed corporate documents for Apex Sherman TX LP, according to a report by KXII.com.

Indiana Attorney General Todd Rokita filed an emergency motion in July 2021 to appoint a receiver for Lakeside Pointe apartments in Indianapolis. The motion notes, “despite having received hundreds of health code violations over the years ... defendants in this matter have allowed conditions at Lakeside Pointe apartments to deteriorate and result in conditions that are unsafe, unsanitary and uninhabitable.” The nonprofit owner, Fox Lake AHF, lists Oron Zarum as principal officer on its 2019 990 tax form.