Dte Detroit
Ressco Steps Up For Detroit Tenants
Progress takes the determination to set things right and a good dose of intestinal fortitude.
Earlier this year, one of the apartment complexes Real Estate Services Solution Company, Incorporated (RESSCO) manages, the 44-unit Casamira Apartments on Delaware in Detroit, experienced a loss of electrical service and damages to the property due to a transformer DTE admitted was faulty. Residents were displaced to temporary lodgings at RESSCO's expense for two weeks while service was fully and safely restored. At the time, this incident received considerable, and, some believe, misleading media attention.
On January 15, a DTE transformer malfunctioned. RESSCO provided a generator to provide some heat and light in common areas of our building. As a result of the transformer malfunction, on January 19, RESSCO became aware that internal wiring required repair. On January 20, realizing that full power could not be restored as quickly as hoped, the building was evacuated and 25 residents moved to the nearby Hotel St. Regis Detroit on West Grand Boulevard. On January 27, we retained contractors to make the necessary repairs. By February 5, DTE had fixed the transformer, the work inside Casamira was completed, and residents were able to return home.
"I would like this opportunity to present the facts," said Joshua White, Senior Vice President at RESSCO. "This discussion bears directly on the challenges of business development in distressed urban areas and the real gains in tax base and livability being made in difficult times by persistent, credible organizations like ours."
White said the company regretted the inconvenience to residents. However, despite reports to the contrary, RESSCO covered all lodging expenses for the residents, even though they had no legal obligation to do so. Additionally, no rent was charged for any missed days. The organization incurred $20,000 in temporary lodging expenses, $18,000 in building repair expenses, and $12,500 in lost rent.
"We also wish repairs could have been effected sooner, but we had to work through several issues common to older urban properties," White explained. "First was determining the full extent of damages. Next, there were delays getting damage evaluation, notice of required repairs and upgrades, and, then, work permits from City of Detroit officials. Lastly, we experienced challenges finding an electrical contractor willing to work through the permitting, permissions and inspection procedures. Three refused us before we found the contractor that completed the work."
A typical multi-family housing redevelopment might include new windows, siding, fencing, flooring and doors and updated kitchens, bathrooms and hallways. Others might require extensive upgrades to mechanical systems, parking lots, roofs or other common areas.
"We understand and accept these challenges of working in economically distressed areas. These are not quick fixes," said White. "RESSCO remains committed to help revitalize areas by providing quality, affordable housing."
There are additional issues beyond rebuilding a physical plant. One is the difficulty in collecting rent from residents in distressed areas. In the case of Casamira, the property is nearly half-empty because RESSCO strictly enforces a policy to refuse to rent to applicants with a criminal or eviction history. The company spends money for evictions and bad debt collections at a rate three times higher than with most of our other properties. With the cost of redevelopment, incomplete occupancy, uncollected rent and vandalism, Casamira's owners have yet to turn a profit on their investment in six years of ownership.
Despite these challenges, in just seven years, the RESSCO organization has grown in total assets through responsible redevelopment of multi-family housing. Working with distressed (foreclosed) and under-managed properties in Detroit they have created more than 1,000 new residences. This reflects the commitment to create and rebuild neighborhoods and try and work through the myriad of hurdles that are placed in front of the company's efforts.
RESSCO believes such redevelopment efforts across metro Detroit should be encouraged through streamlined, not weakened, procedures for taxation, financing, inspection and permitting. With many of their properties, they are challenged by the system to enforce the law in landlord-tenant court. Additionally, RESSCO works cooperatively with local governments and authorities to try and ensure increased police response time, surveillance and protection in these neighborhoods. Despite all of this, the company continues to engage in new investment where many "fear to tread" or don't know how to tread. RESSCO enhances property tax bases and provides affordable, comfortable housing for those who otherwise may go without.
About the Author
Real Estate Services Solution Company (RESSCO) is a Midwestreal estate service company offering a variety of services including property management, development and appraisals. More information can be found online: www.ressco.com
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