Residents ask court to let them stay in homes

Mitchell Jenkins: A delay in the eviction process would have a devastating cascading effect.

Residents of two low-income housing developments testified March 30 about the harm they say they would experience if they were forced to relocate.

The remarks were made during a temporary injunction hearing held before Judge Joshua Christensen of the 31st Judicial Circuit Court in the lawsuit of Ramona Teeter et al. v. Zimmerman Properties LLC et al.

The tenants – all living under the poverty line while managing disabilities, advanced age or family responsibilities – described communities where neighbors have strong bonds with one another in an environment that is affordable to them and meets their needs.

The plaintiffs, who are tenants in housing developments formerly called Rosewood Estates and Cedarwood Terrace, have demanded a jury trial in a lawsuit against new and former owners and management companies.

Also testifying was Mitchell Jenkins, who, with his wife, Amanda, led the purchase of Rosewood and Cedarwood in February 2024 through the entities Cedarwood Terrace LLC and 604-1120 Sunset LLC, of which Mitchell Jenkins is a managing member, according to his testimony.

The developers aim to convert the properties from the federal Low-Income Housing Tax Credit, or LIHTC, program into upscale senior housing, an investment that is dependent upon evicting the current residents.

The Jenkins entities are joined as defendants in the suit by Zimmerman Properties LLC, a Springfield company that describes itself on its website as an affordable housing development, construction and management company working in multiple states. The suit describes three other defendants, Wilhoit Properties Inc., Cedarwood Terrace Apartments LP and Rosewood Estates LP, as Zimmerman subsidiaries.

The plaintiffs state that Zimmerman, who developed both LIHTC properties in 2002, filed an application to opt out of the program with the intent to sell in January 2022. LIHTC is intended to obligate owners for 30 years, the petition maintains, but owners may opt out through a qualified contract process at the halfway point by requesting an exit with their state tax-credit agency – the Missouri Housing Development Commission in this case – and following a one-year waiting period and a three-year decontrol period.

In Missouri, owners are required to give tenants notice of their intention to leave the LIHTC program when the owners make the decision to leave it.

However, plaintiffs maintain Zimmerman Properties did not follow the program requirement to provide three years’ notice to tenants of the exit from LIHTC. That is a policy that allows residents to try to preserve their communities by seeking alternative buyers while also giving them time to secure new housing.

Zimmerman Properties and its subsidiaries applied to exit the program in January 2022, when the decontrol period started, but did not notify tenants at the time as required, the suit maintains. Notification to residents of the sale came on Jan. 3, 2024, in a letter that did not mention the defendants had opted out of LIHTC.

The properties were sold to Jenkins and the rest of the ownership group on Feb. 21, 2024, and on July 1, 2024, Bryan Properties Management Co. LLC, the property manager at the time, wrote to tenants to say that the decision had been made to convert the properties into 55-plus luxury living rental communities, and that tenants would not be permitted to remain past July 14, 2026.

Other defendants in the suit are Bryan Properties, GPS Property Management LLC and the MHDC.

The lawsuit seeks damages and other relief for breaches of contract, negligence and violations of the Missouri Merchandising Practices Act, according to the class action petition filed with the court. In the March 30 hearing, plaintiffs made a bid to stay in their homes until the lawsuit is adjudicated or beyond.

The lawsuit petition states many residents are seniors who plan to live their final days in the developments, as well as people with disabilities who require the housing to live independently and working mothers who rely on the housing to provide stability for their families.

“Fourteen Rosewood residents live with severe disabilities that require 24-hour care,” the petition states. “Those residents share seven units, pool resources and share caregivers.”

The petition states that the owners opted out of LIHTC quietly without informing residents.

“By the time they learned of the opt-out, the property had been sold and slated to become luxury housing for others,” the petition states. “They come to this court seeking justice.”

Since the purchase, Rosewood Estates is now the Villas on Sunset, 604-1120 E. Sunset St., while Cedarwood Terrace is now Pickwick Place, 2244 N. Cedarwood Lane.

Due diligence
In the hearing, Mitchell Jenkins testified that he performed due diligence – which he described as an extensive checklist – to confirm the status of the properties before making the purchase.

Jenkins said he was advised by the Missouri Housing Development Commission – the state office that administers the federal LIHTC program – of the property’s release from the land use restrictive agreement, which he understood to mean that all program requirements had been met. He described two exhibits, release letters for both properties, sent to him by MHDC, both dated Aug. 31, 2023.

“We relied on information they provided us to make an informed decision,” Jenkins said.

He also testified that the decision to sell, which triggers a three-year transition period, happened years before his involvement with the properties.

That information included documents related to the land-use restriction agreement period for the LIHTC properties as well as rent rolls, historical profit-and-loss statements and tax returns. Jenkins said he did a physical walk-through of both properties, too.

Next in the process comes the structuring of the capital stack, Jenkins said, with the obtaining of term sheets from multiple banks.

Jenkins testified that the Cedarwood property alone cost $4 million.

“We paid a value based upon the information that was represented to us by MHDC and the seller,” Jenkins said. “Real estate’s value is based on the income that it generates. We underwrote this property based upon the income it would generate when it came out of the housing decontrol period in August of 2025. We’d be underwater by millions of dollars; we’d have debt service that we could not fund. We wouldn’t be able to maintain the property because our debt would be much higher than what the low-income rents would be able to sustain.”

He said the loan was structured to sustain the negative cash flow of the property during the decontrol period, which is the three-year period in which the properties transition from LIHTC to market-rate housing.

“Come August of this year, those funds will be exhausted,” he said, adding there would not be funds to draw on to fund maintenance, utilities, lawn care and other general expenses.

Asked by his attorney what the effect would be if the properties were to remain in low-income housing, Jenkins painted a bleak picture.

“Financially, we’d become insolvent and file bankruptcy; reputationally, those companies would never really be able to go get loans from a bank because they weren’t able to fulfill their obligations previously,” Jenkins said. “There’s a whole cascade effect as to what would happen.”

On cross-examination, plaintiff’s attorney Eric Jensen, based in Springfield, questioned those claims by raising the issue of cross-collateralization – loans being tied to other properties owned by Jenkins and other related LLCs.

Jensen showed a loan document tying four other properties to the loan as collateral: Pickwick Place Townhomes, town homes at 437 E. Cherry St/433 E. Madison St., BearTown Townhomes and office space at 228-248 E. Primrose. All of these could be seized with default on the loan, Jensen noted, and they are owned by different entities. The first property is owned by Jenkins, Jensen noted, while the others are owned by others.

Jensen asked to clarify that Jenkins was telling the court he would have to declare bankruptcy for all of those entities and for himself personally for the delay of six months.

“All of the assets owned by those other LLCs, you would put them in default also?” Jensen asked.

“Yes,” Jenkins said.

Among the entities in jeopardy would be Elevation Enterprises LLC, owned by the Jenkinses, according to testimony. That entity made news in 2022 with a citywide vote to quash a residential development it was proposing in Galloway Village.

Tenant concerns
Testifying for the plaintiff group, residents described the sense of community built over years in the housing facilities, as well as features of the units that served them well and would be hard to replace.

One witness was plaintiff Jami Johnson, age 55, who has been dependent upon a wheelchair since she was a teen.

Johnson testified that she brings in $1,274 per month in Social Security to pay for a unit with no stairs, lower countertops, accessible bathrooms with raised toilets, accessible showers, higher electrical outlets and doors she can get through.

Johnson said she felt panic when she first received notice in 2024 that she would have to move following the property sale. She told the court she wondered where she would live and what she would do, as well as whether two years would be enough time to find disabled housing that is affordable.

Another witness was Teresa Myers, 69, a former resident who is fully blind and partially deaf with cochlear implants. Myers, who gets by on $2,223 per month, testified that she moved out when she received the initial notice of upcoming eviction.

At Rosewood Estates, Myers testified that she knew the area well enough to walk her guide dog and to visit friends in the development and the nearby neighborhood.

Myers said that since moving, she has lost the community she built at Rosewood.

“For the first time in my life, I was not the only one like me in my community,” she said. “When you’re the only one who is different, people often don’t know what to say, so they say nothing.”

The plaintiffs’ legal team was working pro bono through the nonprofit Heartland Center for Jobs and Freedom, based in Kansas City.

Expert witness Amy Blansit, affordable housing developer and founder and CEO of the Drew Lewis Foundation Inc. testified for the plaintiffs that Springfield is short about 22,000 housing units of all types and 12,000 short of housing units for people classified as very low income, according to figures from the U.S. Department of Housing and Urban Development. City of Springfield figures place the shortage for very-low-income people at just under 9,000. She said there is generally a 1 1/2- to three-year wait for affordable housing locally.

Christensen is allowing both legal teams to file additional briefings by April 6 with responses due by April 13, according to the hearing’s docket entry. Christensen will deliberate on the injunction request after that date, and a scheduling conference will be set for the jury trial.