The lingering legal battle between the city of Atlanta and Millennia Housing Management over the long-condemned Forest Cove Apartments has complicated the Ohio-based mega-landlord’s plan to sell the complex, a company attorney said Wednesday at a hearing over a settlement agreement with the city that’s in limbo.
Millennia bought Forest Cove from Global Ministries Foundation in April 2021—after the U.S. Department of Housing and Urban Development (HUD) ordered the latter to offload its national Section 8 portfolio due to mismanagement. The new owner promised to spend upwards of $56 million to renovate the complex’s 396 dilapidated and dangerous units.
But in December 2021, an Atlanta judge deemed the complex a public nuisance and ordered it demolished by the following fall. Millennia appealed the ruling in Fulton County Superior Court, and subsequently drafted a settlement agreement with the city—but the condemnation ultimately cost the property its HUD subsidies and any chance of securing tax credits to help finance the rehabilitation.
Millennia’s lawyer, Kurt Lentz of Baker Hostetler, told Fulton Superior Judge Eric Dunaway during a Sept. 27 hearing over the settlement agreement that losing the HUD Section 8 rent subsidies for Forest Cove and being knocked out of contention for the Georgia Department of Community Affairs’ competitive Low Income Housing Tax Credit program “affects the saleability of the property.”
That also makes refurbishing the property—or even maintaining it—a financial challenge, he added.
“The client is working toward the sale of the property but is currently looking at a multi-million-dollar loss,” Lentz said at the hearing.
As part of Millennia’s proposed settlement with the city to avoid razing Forest Cove, it owes $9.7 million to cover the costs the city incurred to relocate the complex’s nearly 200 Section 8 renters. But Millennia doesn’t have to pay that off until Forest Cove is renovated, rebuilt, or sold.
When Dunaway on Aug. 22 ruled in favor of Millennia’s bid to renovate instead of demolish the complex, he gave the property owner and the city of Atlanta 10 days to propose a consent order that finalizes their March 2022 settlement agreement.
But weeks later, the two parties are still at odds over the terms of a final settlement.
The Sept. 27 hearing made clear that who should clean up Forest Cove is a chief point of contention. In a separate legal action, the city is taking Millennia back to municipal court on Oct. 4 over a slate of code enforcement citations for “unsecured” vacant units, trash strewn about the complex, standing water, overgrowth, and other unsafe conditions. That case could potentially yield another demolition order against Forest Cove.
Lentz said Millennia, which owns Forest Cove under the name Phoenix Ridge, can’t afford to repair the complex, thanks to the legal imbroglio.
“The owner of this property is underwater on this property right now, in large part because of the position it’s been placed in [by the city’s lawsuits],” he said, adding, “The concern is that Phoenix Ridge could end up in a constant cycle of being hauled into court for citations.”
Lentz contended that the city is legally able to “secure” Forest Cove on its own, according to its March 2022 settlement agreement with Millennia.
Millennia and the city did not say at the hearing when they will submit the overdue consent order outlining final settlement terms to the judge. If Millennia and the city can’t come to an agreement, Dunaway said, “I don’t know where that leaves us then—[perhaps] going forward with the appeal [over the demolition]. We could do that.”
One way or another, the judge said, he wants to resolve the Forest Cove situation. “I do need to finish this case and move on to some of the rape, murder, and mayhem that we have before the court,” Dunaway said.