Center City Apartments officially transfers to Shamokin Housing Authority
SHAMOKIN - A simple three-page "deed in lieu of foreclosure" has ended a nearly four-year legal battle and officially turned Center City Apartments over to the Shamokin Housing Authority.
The deed for the property at Shamokin and Commerce streets was transferred from Red Gold Enterprises Inc. to the authority for $1 at 1:34 p.m. Friday, according to records from the Northumberland County office of Register of Wills and Recorder of Deeds.
Authority board Chairman Raymond G. "Jerry" Splane said it's a relief, even though he never thought the authority would lose its battle to acquire the building, whose owner hadn't paid on the mortgage for 11 years and at one point owed more
than $72,000 in back taxes.
"It was just a waiting game," Splane said Saturday.
Meanwhile, he said tenants have "nothing to worry about."
"I can guarantee their lives will go on the same as they always have," he said.
Tenants will be encouraged to stay and sign new leases with the authority. Even those who don't won't be forced to leave before their current lease expires, he said.
However, he added, there is no official plan of action until the board meets Jan. 10.
Authority members will meet with Red Gold rental agent Susan Good Monday morning to discuss her position with the change.
The authority will now apply for grants to modernize and renovate the building, he said. The five-story property 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 a bankruptcy ruling.
Lawrence G. Frank, the appointed bankruptcy trustee, filed a motion to seek the deed in lieu of foreclosure, and it was granted by a judge Dec. 10.
While the property transfer was completed for $1, personal property and all rentals started after Oct. 1 were to be sold to the authority for $10,000, and that money will be distributed to creditors.
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.