Dear Mayor Coleman

December 1, 2006

Dear Mayor Coleman,

“Woodland Meadows is cleaner, safer, and better managed in the 10 months since Newbery bought it. There’s been a 38.7% decrease in crime. We think Mr. Newbery has made great improvements.” – Bruce Miller, President of North Harding Road Block Watch in November 2003 Columbus Dispatch article

“Many people did not feel how a low-income neighborhood besieged by drugs and gang violence could turn itself around. But I have seen it with my own eyes: thanks to you, Woodland Meadows is a changed community. The changes occurring at Woodland Meadows are impressive! I commend you for providing employment to over 200 African American men…The renovation efforts represent a community where jobs are created, families have safe, decent, and affordable housing, and lives are better. Woodland Meadows represents hope…winning efforts such as yours are what makes the City Columbus and State of Ohio one of the best places to live…” State Representative Larry Price in February 2004 letter

“There exists a gathering storm that could represent the largest concentration of privately-owned vacant and abandoned buildings in our City’s history. I am speaking of Woodland Meadows, the future of this Eastside complex is in doubt…I am here to say to the current owner and any future owner of the property that we are willing to work with you to turn this property into an asset” – you in February 2006 State of City address

When I read your State of the City address, I was warmed by your words. You see, I have been renovating properties for twelve years, starting with a fourplex in South Central Los Angeles in 1992 and progressively building up to larger and more challenging buildings. By the time I purchased Woodland Meadows on the last day of 2002, I had successfully renovated hundreds of buildings and had amassed an impressive track record. My confidence was strong, as I had taken on problem housing where everyone else had failed and became the one who finally got it right: to wit, in 1998 when I bought the 298-unit Ford Hotel on Los Angeles’ Skid Row, the four prior owners had all gone to jail for slum violations at the property. Of course, no one else wanted to buy it as it represented a sure ticket to jail, so I bought the Ford at a great discount and was able to finally be the one to satisfy the City and clear all the violations.

Thus, when I bought Woodland Meadows, I believed that my formula of being hands-on, employing the community as part of the turnaround, and good old-fashioned hard work would succeed. Remember, I moved into an apartment at Woodland Meadows just above the office and was there to witness the problems first-hand and solve situations first-hand.
This work paid off, as crime plummeted at the complex and in the surrounding neighborhoods, physical conditions improved drastically, and occupancy and collections soared. I even generated some rare positive press for Woodland Meadows in the local media.

Not everything was perfect, though. The costs of the renovations exceeded my projections, and the property was so big that by the time we had renovated all 122-buildings, it seemed unanticipated new problems kept popping up. For instance, the city sewer system on our part of the Eastside had not yet been enlarged, so our basement units (as well as the basements of nearby homeowners) fell victim to backups during heavy rains, which was certainly not something I had expected. Although the property’s financial performance had improved significantly and we had 7-figure reserves, the additional cash needs required that I infuse significant personal cash into the project, as well as borrow heavily. In the end, this kind of felt like when you are at a blackjack table and you end up putting all your chips on one bet, and in this case my bet was on Woodland Meadows.

Nevertheless, income was increasing, we succeeded in obtaining the bond issue to replace our higher-rate construction financing, and we syndicated our tax credits, which were to provide me over a million a year for eight years provided the property was maintained as affordable housing. This million a year was to go towards repaying the money I had borrowed as well as my personal capital, and the property’s cash flow would represent my earnings.

When the ice storm occurred in December 2004, I was confronted with a situation unlike any I had ever faced before. We allowed tenants to break leases and move off the property, but hundreds of families stayed. I gave my credit card out to buy temporary heaters, rent dozens of hotel rooms, and try to accommodate the displaced families. You and the City also came to the aid of the hundreds of families who likewise were confronted with an extraordinary situation. In retrospect, I should have made the decision to close the complex then until the buildings could be restored. Even if I did, though, where would all the hundreds of remaining families go in the middle of winter? Also, my million a year from the tax credit syndicator was to be paid only if I reached and maintained 80% occupancy, and we had just reached that figure shortly before the storm. So, financial reality dictated that Woodland Meadows be restored as promptly as possible. Besides, we were sufficiently insured.

We contracted with Belfor, an international disaster remediation contractor, and truckloads of equipment and armies of workers soon arrived at Woodland Meadows. Rows of generators, temporary heaters, and drying equipment hummed 24/7 as we tried to make the conditions as good as possible. We pulled out all the damaged drywall to prevent the spread of mold, and started a conversion to electric heat to replace the cracked boilers, amongst hundreds of other restoration improvements. I think even Belfor underestimated the magnitude of the damage, and the insurer certainly had great challenges assessing all the wounds that had been inflicted on Woodland Meadows. Finally, the claim well exceeded the insurer’s $5,000,000 threshold, resulting in reinsurance kicking in. This represented great delays in paying the claim, which spooked Belfor and our bondholders Allstate, who got skittish and held back the insurance funds. When Allstate held the funds, Belfor abandoned the project and I scrambled to try to keep all the pieces together. About the same time, your building inspectors increased their inspections, and discovered some structural shortcuts done by former owners PM Group, which only became evident because we had removed all the drywall in the basement units. Soon, even though I was meeting weekly with Trudy Bartley, Dana Rose and others on your team, the 3-day evacuation orders were issued.

By this time, my head is spinning, income is shrinking, my reserves are drained. and everyone is looking to me to solve what was spiraling into an impossible predicament. I am always one to try to work things out amicably, but I had to go to court to get those Temporary Restraining Orders if I had any hope of salvaging what by this point had become everything I had earned over the prior twelve years. I apologize if you felt that this action was disharmonious, but I could not let Woodland Meadows be vacated and be financially wiped out. When we reached the Settlement Agreement, our investors felt somewhat reassured, and we were able to fund and make significant progress towards addressing the City’s concerns. However, then HUD terminated our contract, and the impossible predicament became even more unimaginable. My investors started cutting me off, all the money I had borrowed on my other properties for the benefit of Woodland Meadows came due, and 2006 has sunk into a crushing year.

Nevertheless, I have kept my head up and somehow have managed to stay operational as a developer, although I have almost no staff anymore. I tried to take you up on your State of the City offer, and retained Matt Kallner and John Kennedy, both well-credentialed attorneys with good City track records, to help facilitate a redevelopment plan. We had several meetings with Mark Barbash, Trudy Bartley. Boyce Safford, representatives of Ohio Housing Finance Agency, and others in a quest to find the ideal redevelopment plan. Your team advised me to be cooperative with the relocation, and I did so, going as far as moving the relocation office into the Woodland Meadows Leasing Office. Your team wanted rent rolls and reports on existing tenants, and we provided these. Your team suggested that support would be easier if I obtained partners and other participants in the project, and I brought in Columbus Housing Partners, Gorsuch Management, Rockford Homes, Beacon Management, Kimco Development, Atlantic Coast Developers, Eddie George’s EDGE Group, and Meacham & Appel Architects. Your team recommended that a mixed use project would be received most favorably, and we crafted a plan with single family homes, both rental and for sale, elderly housing and commercial. Your team suggested possible financing tools from the City and others, and we incorporated these into our proformas. Your team suggested that I get community support, so we met with community leaders and our neighbors, and received their input and generated a number of calls to your offices in support of our redevelopment plans. Your team wanted me to meet with your Planning Department, and we did this. Your team wanted detailed financial projections, and these were provided. By June, we had furnished everything your team had requested, including copies of signed purchase offers from a bevy of top-quality partners and participants. In addition, I had regular meetings with your Code Enforcement, Building, and City Attorney staff, and responded to all of their requests, and maintained the property as best I could. We allowed your Fire Department and Police Department, as well as all Central Ohio law enforcement and fire agencies, to use the vacant Woodland Meadows for training.

Thus, I believe that I have demonstrated a willingness to work with the City to craft the best possible redevelopment of Woodland Meadows. Likewise, true to the words in your State of the City address, the City demonstrated your willingness to work with me. However, sometime after the last meeting in late June, your team stopped responding and I heard feedback that the City would not support a redevelopment plan in which I was involved. This was abit shocking, as I had expended precious resources on architects and land use planners as we all appeared to have been making great progress. Oddly, all the momentum we were collectively generating seemed to terminate about the same time the last tenant moved out of Woodland Meadows.

This brings us to the present. I have written this letter to give you some background and answer the question many people ask of me: why don’t you just walk away from Woodland Meadows? I hope you see now that I can’t, as this represents everything I have: my personal future is tied to the fate of Woodland Meadows. Thus, I will continue to fight if I have to. However, I believe that we both have the same goal, which is to “turn this property into an asset”.

Thus, I propose that we meet and try to take steps towards this common goal. I am available at your convenience – please contact me at (213) 494-2471.

Sincerely,

Jorge Newbery
Managing Member, Woodland Meadows Partners LLC

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