HUD suspends affordable housing apartment firm
The Department of Housing and Urban Development suspended James Grier and Philadelphia-based Mantua Gardens East Inc., a Section 8 apartment complex, from doing business with the government, alleging the company improperly threatened tenants with eviction and withdrew thousands of dollars from reserves without permission. HUD also proposed their debarments to prevent Grier and the company from participating in government-related business for five years. Grier could not be reached for comment. A phone number for Mantua Gardens East was disconnected and a management firm connected with the apartment complex was closed Wednesday evening when a reporter called. HUD said Grier and MGE improperly withdrew $325,000 from reserves without HUD approval and submitted false and misleading financial reports to HUD. MGE also failed to provide sufficient notice to tenants of its intention to opt out of the Section 8 project-based program, denying them adequate time to make housing arrangements and threatening them with eviction. Section 8 is a HUD affordable housing program. It includes housing vouchers for low-income residents as well as project-based financing such as that provided to MGE. MGE agreed to a $720,000 mortgage loan in 1970 insured by the Federal Housing Administration. As an FHA mortgagor, MGE is required to establish and maintain a reserve account to meet emergency needs at the apartment complex, which comprises 10 buildings in Philadelphia’s University City neighborhood. In 2008, Grier and MGE improperly withdrew reserves without HUD approval and then refused to restore the funds, HUD said. Grier and MGE pledged the funds, along with one of the development’s buildings and future rent payments, as collateral for a separate loan from a lending institution, according to HUD. MGE received project-based Section 8 subsidies for nearly 30 years. Under the terms of the contract, MGE was entitled to opt out of the contract, but was first required to provide one year’s notice to the tenants. In October 2011, MGE notified HUD that it was opting out of the program but failed to properly notify tenants, HUD said. Write to Kerry Curry. Follow her on Twitter @communicatorKLC.