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Who’s buying 417 Rentals’ homes?

Local developer plans renovations after investing $5 million in foreclosed property acquisitions

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A local developer has made the move to upgrade rental properties once owned by 417 Rentals LLC and the embattled landlord Chris Gatley.

Titus Williams, president of Prosperiti Partners LLC – formerly Enterprise Commercial Group LLC [see story on Page 20] – and principal of NAI Enterprises LLC, said the company has purchased 144 properties in the Springfield area, including residences in Republic, Shell Knob, Willard and Marionville, and is looking to acquire another 25.

Most of the homes, he said, are in various forms of dilapidation. The cost of acquiring the properties was around $5 million – but Williams said the planned investment doesn’t stop there.

“We have been walking properties to assess the conditions and determine what the costs of renovation are, and you’ll see that over the next few months,” Williams said. “We are working with not-for-profits for the people living in those situations to get support.”

Michelle Garand, vice president of affordable housing and homeless prevention for Community Partnership of the Ozarks, said the foundation has worked closely with those living in low-income housing, such as the 417 Rentals properties.

“It’s been a challenge to bring people out of housing that is unhealthy. Some of the homes are in such disrepair that they aren’t meant for human habitation,” Garand said, citing homes without electricity or water and with holes in the floor.

Williams said homes with safety issues will receive immediate attention and those that need new carpet or paint will be put on the backburner. Tenants will stay in their current homes, if possible, he said.

Officials say the homes will be managed by Prosperiti Properties, and the construction work will be completed by Prosperiti Construction.

Mounting foreclosures
417 Rentals filed for Chapter 11 bankruptcy reorganization in August 2017.

In January, a judge denied the company’s bankruptcy petition over allegations that it didn’t abide by claims to maintain its properties, respond to ordinance violations and complete necessary repairs.

The combined fair market value of the properties is more than $32 million, according to past Springfield Business Journal reporting. Hundreds of homes have since been foreclosed on.

Garand said there were 385 units on the foreclosure list, though it’s unclear how many have been sold. Several properties owned by Gatley or his company have been scheduled for foreclosure in June, amassing a total debt of $2.1 million, according to the Daily Events, a legal-notices publication.

Gatley said he still manages properties in Springfield, though he was unable to recount the number.

“I was in growth mode – so fast I never really knew that number, and I didn’t want to think about it after a while because it was more stress,” Gatley said. “I was managing like a race car.”

Williams said Gatley had informed him the number of properties owned by 417 Rentals and Gatley reached 800 at one point and that over 90% of them were in Springfield.

417 Rentals still owns 186 properties, according to Greene County assessor records as of June 20.

“Unfortunately, how (Gatley) operated his properties was not in the best interest of his tenants, and ultimately not in the best interest of himself,” Williams said. “I don’t know what his heart told him, but how we want to treat them is different than my perception of how he treated them.”

In January, Gatley was shot by his girlfriend and sustained life-threatening injuries, according to past SBJ reporting. Gatley confirmed he was paralyzed from the waist down and said his health was improving.

“The people (at Cox South) saved my life, and it’s just a bunch of things that happened that were maybe God-sent,” Gatley said. “I really like Titus, and I’m glad he’s taking over those properties.”

Nonprofit partnering
Williams said he plans to renovate the properties and sell them to nonprofits that can help tenants become homeowners. Among those on his list are Springfield Community Land Trust, The Kitchen Inc., Springfield Victory Mission Inc. and Harmony House.

“My preference would be to see people get into home ownership because I believe that creates a stable, vibrant community,” Williams said. “We want a stable community. We want to see the community prosper.”

He said if tenants do not qualify with Prosperiti Partners’ credit and criminal background checks, then he’s hoping to connect those individuals to a nonprofit that can assist them. He recognizes they may need help balancing a checkbook or finding an avenue to continue their education.

“If they are wanting to have a different situation, we want to help them with changing it and improving that situation,” Williams said.

LeeAnn Camey, coordinator for the Springfield Community Land Trust, said the organization is the first responder to the people living in houses like the 417 Rentals’ properties. The trust is part of the Community Partnership of the Ozarks’ housing division.

Camey said the trust is interested in buying some 14 properties from Williams over the next year to offer a stepping stone into home ownership for qualifying individuals, especially those living in northwest Springfield.

“We’re trying to put homeowners in some of those in Zone 1,” Camey said, “which has been a focus for our city for several years.”

To purchase the homes from Williams, Camey said the trust is awaiting a $1 million grant through Multipli Credit Union. The federal Community Development Financial Institutions Fund money is expected to arrive by December.

“It would take several years and more than one grant, but our focus was to get 50 homes over time,” Camey said. “That would make a huge impact for that Zone 1 area if we could do that.”

Phyllis Ferguson, the Springfield City Council member representing Zone 1, said she’s seen the deterioration of the homes firsthand in her neighborhood. On council since 2015, she said the 417 Rentals’ homes have negatively impacted northwest Springfield, citing stories of cockroach and flea infestations.

“If we can turn that around – I never give up hope – but it’ll make the sun shine,” Ferguson said.

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