Battle for Red Gold finally nears end
SHAMOKIN - The battle for control of Center City Apartments may be over after nearly four years of legal wrangling.
The Shamokin Housing Authority is in position to acquire the property "very soon" from Red Gold Enterprises, which fought to maintain ownership despite years of financial trouble and missed tax payments.
A Dec. 10 order made by U.S. Bankruptcy Judge John J. Thomas allows the former James Madison Hotel to be either given to or sold to the authority.
"An order was entered allowing the trustee to sell the personal property to the housing authority and transfer the real property," said Clayton Davidson, the authority's attorney for the Red Gold case. "We are in the process of scheduling closing with the trustee in the near future."
"We are waiting for the proper paperwork," authority director Ronald Miller added Tuesday. "We expect the building will be under our control very soon."
The four-story property at the corner of Shamokin and Independence streets was scheduled for a Sept. 27 sheriff's sale, but one day prior, Red Gold filed for Chapter 7 bankruptcy. That gave the company, owned by Eugene Picarella, protection from creditors and forced what was the second stay of the sheriff sale, but it also put in motion the opportunity for Thomas to make his bankruptcy ruling.
Tenants, including some who qualify for government-subsidized housing, have remained in the building throughout the ordeal.
Sold for $10,000
Lawrence G. Frank, the appointed bankruptcy trustee, filed a motion Nov. 9 with Thomas, reporting Red Gold's assets.
"The real estate that is part of this motion is encumbered by the Housing Authority of the City of Shamokin on account of a judgment or judgments that have been upheld by the Court of Common Pleas of Northumberland County and the Superior and Supreme Courts of Pennsylvania and are evidenced by a mortgage," Frank wrote in the motion, alluding to mortgages the authority acquired in 2009. "The funds held in escrow and accounts receivable as set forth above are either owned by (the authority) or are subject to a lien in favor of (the authority.)"
The proposal, with which Jones agreed, says Frank will give a deed in lieu of foreclosure for Center City Apartments, and transfer a petty cash account, funds held in escrow and the security deposits to the authority.
The personal property and all rentals started after Oct. 1 will be sold to the authority for $10,000, and that money will be distributed to creditors.
Previously listed as creditors were Red Gold's attorney Robert M. Cravitz, Seliinsgrove, listed as being owed $11,477.60 for legal services from July 2011 to June; Shamokin accountant Francis Sobotor for accounting services rendered from January to July, $1,860; Shamokin-Coal Township Joint Sewer Authority, owed $4,139.62 for sewer services from January to July, and Waste Management of Pennsylvania, owed $406.27 for trash services from November 2011 through July.
Center city's future
The state Supreme Court issued a decision on June 13 not to reconsider its affirmation of a ruling in 2010 by Northumberland County Judge Charles Saylor. Saylor had ruled that the primary and support mortgages for the property that the authority had acquired were valid. Red Gold, which had not made a payment on the mortgages for more than 11 years, had argued the mortgages were invalid because a 2000 foreclosure action by the Pennsylvania Housing Finance Agency (PHFA), the loans' underwriter, was dismissed with prejudice in county court in 2004. PHFA had brought the foreclosure action because of a lack of payment, but the dismissal with prejudice meant the action could not be revived in court.
Prior to that ruling, in 2009, PHFA had turned the mortgages over to the authority as that entity pursued acquiring Center City.
Red Gold appealed Saylor's ruling to the Pennsylvania Superior Court, to no avail. Red Gold filed a subsequent appeal with the state Supreme Court, which denied a Feb. 23, 2012, motion to hear that appeal. The company appealed again March 7 and the court again refused.
With the mortgage in its possession, the authority was set to foreclose on the property and have the sheriff's sale, at which it could sell the property to recoup the mortgage or acquire it outright. The authority would have had first bid.
But with the deed presented in lieu of foreclosure, the sale is not necessary, and Miller is looking to the future.
"We have expended a lot of time and energy to get this job done, and now we going to expend some more, in order to take this property to the high standards of the Shamokin Housing Authority," he said.
He said authority and city officials will meet after the holidays to discuss how the property can benefit both entities.
He said if the authority board follows through with plans to rehabilitate the building, local people will be hired to do the work, which he expects would take two to three years.
Miller was matter of fact about the authority's pursuit of the building.
"This thing should have been solved years ago," but wasn't because of "all the appeals and courtroom nonsense," he said.
"It's plain and simple: if you buy something and don't pay for it, you give it back, and it is coming back to benefit the community," he said.