Monday, August 29, 2011


Lawsuit over promised $1 houses in Camden's Lanning Square could drag on another year

August 25, 2011By Claudia Vargas, Inquirer Staff Writer

  • Former tenant Shelley McCullough said a Camden Townhouses manager told her if she stayed in her Royden Street home (second from corner) for at least 10 years, she could buy it for $1.

After seven months of meetings and at least two settlement conferences with a judge, lawyers involved in a federal lawsuit in Camden over promised $1 homes are still at odds, leaving prospective homeowners to wait what could be another year for a resolution.
What started as an effort by local leaders, including the Rev. Al Stewart and Cooper University Hospital board chairman George E. Norcross III, to foster an amicable solution instead led to a squabble behind closed doors.
The lawsuit alleges that the developer of Camden Townhouses II, Israel Roizman, deceived low-income tenants and denied them their right to homeownership.
Roizman, of Lafayette Hill, signed agreements with the city and state in 1992 to buy and rehabilitate 91 units - including 41 single-family houses - in the Lanning Square area for $175,000.
Under the plan, Roizman was to collect subsidized rent from the tenants and, 15 years later, the tenants would have the option to buy the units for $1 each.
It has been 19 years, and the prospective homeowners are still waiting for their promised $1 homes. Some are still in the units, others have moved out, and at least one has bought a house elsewhere.
Last week, U.S. Magistrate Judge Joel Schneider held a three-hour settlement conference with about 10 lawyers representing the 15 tenant-plaintiffs - all women - and some of the 23 defendants, including state and city agencies, named in the suit.
But the meeting did not provide any answers for the tenants, three of whom sat outside the judge's chambers while the lawyers conferred.
The conference was closed to reporters. None of the lawyers could discuss it because the judge had all parties sign a confidentiality agreement.
One of the complexities in the case, according to Roizman's attorney, Leon J. Sokol, is that the developer owes $7 million in mortgage loans on the properties. The tenants, he said, would have to pay that off if they acquired the properties.
Attorneys for the tenants dispute that.
If a settlement is not reached, the judge could send the case to trial, stretching the outcome to more than a year from now, said Geoffrey V. Seay, one of the lawyers representing the tenants.
"They were promised to purchase their home for $1 after 15 years. That's what they want," Seay said.
After a Jan. 2 Inquirer article highlighting the delay in transferring the houses, Norcross, the influential Democratic leader, organized a meeting involving Roizman, city and state officials, and community leaders.
Norcross proposed that the Cooper Foundation, the hospital's charitable arm, work with the St. Joseph's Carpenter Society, an East Camden nonprofit redevelopment group, to help gain the transfer of properties to the tenants.
Cooper's stake in the deal is that homeownership brings stability to the hospital's neighborhood, said Cooper Foundation president Susan Bass Levin, a former mayor of Cherry Hill. Bass Levin, as a former commissioner of the New Jersey Department of Community Affairs, is named as a defendant in the tenants' lawsuit.
A week after the Jan. 11 meeting at Cooper, Seay and fellow Philadelphia lawyer Joseph Green II filed a lawsuit in U.S. District Court on behalf of the 15 women.
Among the group's claims in the suit are breach of contract, unjust enrichment, fraud and deceptive practices, and intentional infliction of emotional distress.
Sokol said last week that Roizman was willing to keep his promise of $1 homes, but that the legal complications beyond his client's control needed to be sorted out first.
Officials at the New Jersey Housing Mortgage Financing Agency, which issued several of the mortgage loans to Roizman and which is named as a defendant in the lawsuit, declined to comment for this article, citing the pending litigation.
"We're happy to go forward with the $1 deal," Sokol said. Roizman "doesn't have the legal ability to determine who qualifies."
Sokol said the "most sensible approach" would be to turn over the project to St. Joseph's.
"They have experience in qualifying first-time homeowners, counseling people in homeownership," he said.
But St. Joseph's executive director Pilar Hogan Closkey said the society would not get involved until the lawsuit was resolved.
Sokol said the lawsuit had frozen the transfer process. Seay disagreed.
"They have a history of playing that game, of saying, 'We just need something else,' " Seay said.
He said it was discriminatory to suggest that a nonprofit agency was needed to provide homeownership counseling to the women, who are single, low-income African Americans and Latinas.
The women are already used to paying rent and utility bills, he said.
Sokol warned that the prospective homeowners would also have to assume rising property-tax bills.
"Whether or not they can [pay taxes], that's not our issue," Seay said. "That doesn't preclude them from owning."
Hogan Closkey said she understood that the state was not willing to forgive the mortgages.
Roizman still owns the development and still receives monthly subsidies from the U.S. Department of Housing and Urban Development to supplement the rent he receives from tenants.
The area has risen in value tremendously since Roizman acquired the properties. One of the corner units at Broadway and Line Street is valued at $125,000, compared with $19,000 two years ago. The Cooper Rowan Medical School is being built a few blocks away.
In 1993, Shelley McCullough, 42, became the first tenant in one of the houses, in the 500 block of Royden Street.
She recalled that during her pre-move-in orientation, the Camden Townhouses housing manager told her and other new tenants what a great deal they had, that if they remained in their units for at least 10 years they would be able to buy them for $1.
In 2003, she moved out because her salary as a clerk for the state Division of Youth and Family Services was not enough to pay the rent of more than $700.
McCullough was able to get a loan and bought a house in Cramer Hill. Even if she does not end up qualifying for her $1 home, she hopes that Roizman keeps his promise and that the lawsuit sets an example.

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