City reaches settlement with JPC landlord as tenants' fears mount over water shutoff

Like many of her neighbors, Resheante Crider, 30, is fed up. She is scared of losing water. She is terrified of losing her home. She is angered by what she sees as a failure by the city and state to protect its residents.

Her family is one of the 1,400 households at four Indianapolis properties, owned by the notorious apartment owners JPC Affordable Housing Foundation, that were threatened in July by Citizens Energy Group, the utility company for water and gas in Indianapolis, with water disconnection after the landlord failed to pay more than $1.9 million water bills.

More: This landlord did not pay $1.7M in water bills. Residents at 1,400 homes may lose water.

“This is madness,” she told IndyStar at an Aug. 24 town hall hosted for residents by local church, the Purpose of Life Ministries, in a parking lot across the street from her apartment, Woods at Oak Crossing, which is one of those affected.

JPC owed $850K to Indianapolis for covering unpaid utility bills

In the latest turn of events in a months-long battle with the apartment owners, the city has reached a settlement agreement with JPC over an $850,000 debt owed by the company to the city.

The debt arose in February when Citizens Energy Group shut off water to nearly 900 units owned by JPC for more than 21 hours, because the landlord had failed to pay $1.3 million in utility bills. The city stepped up to restore water to the residents by covering $850,000 of the landlord's unpaid bill. To recoup the money, the city sued JPC in April. As part of the agreement, the city and JPC agreed to suspend the lawsuit.

The agreement is not a done deal. It is conditional upon Citizens Energy Group agreeing to withdraw the pending water disconnection notices and to agree not to shut off water services before Dec. 31 of this year.

To some, the agreement will come as a surprise.

When she spoke to IndyStar at an Aug. 24 town hall hosted by a local church for residents at Woods at Oak Crossing apartment complex, Crider said she did not trust that the city, state, and water company would find a solution for their predicament.

“I got a 9-month old son and a mother living with me. I’m a veteran. And this is how I'm getting treated in this city?” Crider said at the town hall, where the Deputy Mayor Jeff Bennett and a representative from Citizens Energy Group, the utility company threatening disconnection, were also present.

“This is unacceptable….At what point am I gonna feel like I matter? I'm paying my rent. Y’all have failed your city. You have failed us.” Many of her neighbors have already started looking for elsewhere to live, an uphill challenge at a time when rent inflation reaches historic highs.

But, now wheels are turning.

Attorney General, utility also sued JPC Affordable Housing

The Attorney General’s Office and the utility company, who also sued JPC in April, are in back room negotiations with the apartment owners to reach a solution.

The city’s settlement agreement, obtained by IndyStar through a public records request, outlines a plan for the city to recoup the $850,000 through a sale of the two south side apartment complexes that had their water shut off in February, Capital Place and Berkley Commons.

The agreement is also conditional upon JPC and Berkley Commons LLC, which is part of the same corporate superstructure behind JPC, selling the four remaining properties they own in Indianapolis − Capital Place and Berkley Commons on the south side, and Woods at Oak Crossing and Covington Square on the wests ide − by Dec. 31 of this year.

The city said that its goal is for the beleaguered apartment complexes to be sold to new, responsible owners who will manage the homes better than JPC, which has incurred thousands of housing violations and several lawsuits over uninhabitable conditions at the apartments.

Citizens Energy Group trying to recoup $1.9 million

When asked if Citizens plans to withdraw the water disconnection notice, spokesperson Dan Considine wrote in an email to IndyStar that the company is actively negotiating with JPC, in hopes of reaching a settlement agreement regarding their more than $1.9 million of past due utility debt that has been accumulating at about $100,000 per month over the past 18 months.

“Our goal throughout this period has been to secure an agreement with JPC that ensures continued utility service to their four apartment properties while protecting Citizens’ customer base from the full cost of JPC’s past due utility debt,” he wrote. He declined to comment further about what the settlement would look like, since they are still in active negotiations.

The Attorney General’s office, which sued JPC in April as part of a coordinated legal strategy with the city and Citizens Energy Group, sought to dissolve JPC and ban its officers from serving on nonprofit boards in the state.

When asked about the progress of the negotiations, spokesperson Katlyn Milligan told IndyStar in an email that any agreement reached with the defendants will have to eliminate the risk of utility disconnection and ensure that the residents are adequately protected. Selling the property to a new owner is a possible result, Milligan added.

Residents are demanding more action than just a settlement agreement − at the townhall, they called for more robust legislation and tenants rights to hold the landlords accountable and prevent such a situation from arising again.

“Can you consider looking at the legislation that allowed this in the first place?” resident Robin Young, who has lived at Woods at Oak Crossing for 12 years, said at the town hall. “Letting these out of state companies purchase up these properties, and have zero accountability…This went on for a long, long time.”

Lenders have filed for foreclosure at the apartment complexes

The respective lenders for the four apartment complexes have filed for foreclosure in the past two months, which the city and advocates said could pave the way for a solution.

Fannie Mae is the lender for three of the properties, Capital Place Apartments, Covington Square Apartments and The Woods at Oak Crossing Projects, through bond-financed mortgages dating back to 2008. They filed for foreclosure on Aug. 5, citing breach of the mortgage agreement because of the landlords' failure to pay water bills as well as the Attorney General's lawsuit against the properties, among other things. Fannie Mae did not immediately respond to a request for comment on this story.

Wells Fargo is the lender for the remaining one, Berkley Commons. When asked whether they plan to seek receivership for the property, a spokesperson for the company declined to comment for this story. They filed for foreclosure on July 7, citing in the complaint, among other things, the terrible maintenance of the property that "could endanger the health and safety of tenants."

If the foreclosure action continues, the lenders could seek a court-appointed receiver who will ensure rents paid by tenants go to paying off the unpaid bills or could seek to sell the property, the city said.

Even in the event that the apartments are sold, lawyers said, tenants are still protected by their existing lease agreements based on Indiana Supreme Court precedent that holds that unless tenants are parties to the foreclosure, their leases are in effect even after foreclosure. The new owner cannot evict them or raise their rents in violation of their existing leases.

“Don't be afraid of the foreclosure because honestly, it might be the best thing to get the landlord that’s here now out and a better owner in,” said Tracy Pappas, a lawyer for Indiana Legal Services that is providing legal advice to affected tenants, at the town hall.

Contact IndyStar reporter Ko Lyn Cheang at kcheang@indystar.com or 317-903-7071. Follow her on Twitter: @kolyn_cheang.

This article originally appeared on Indianapolis Star: Indianapolis pushes deal to keep water running for JPC tenants