New receiver will have to decide whether to fix the apartment units or to declare them uninhabitable.
A Ramsey County judge will order a receiver to take over management of crime-ridden east St. Paul apartment buildings that are infested with roaches and in violation of hundreds of city codes.
Judge John Guthmann said on Wednesday that he will grant the request from Wells Fargo bank. Lawyer Andrew Holly said the bank would then move to foreclose on owners Peggy and Randall Chun of St. Paul.
The Chuns own two apartment buildings on Westminster Street just off the Maryland Avenue exit on Interstate 35E. Some 60 low-income families in those buildings fear losing their homes if the financial and code issues cannot be resolved.
An inspection late last year found hundreds of code violations at the apartment buildings. Tenants have pleaded with City Hall for help with problems that include mold, rodents, broken locks, nonfunctioning kitchens, crime and unplowed parking areas.
The judge also said he will allow a group of tenants at the apartments to formally participate in the dispute and monitor the receiver's actions. "We're in a whole lot better position than we were yesterday," said Peter Brown, representing the tenants. Many of the buildings' tenants receive public assistance and English isn't their first language.
The lawyer for the Chuns argued that the couple haven't made mortgage payments since February because they couldn't get a clear understanding of what they owed. The judge said to the Chuns' lawyer, "If I'm to believe the affidavit, your clients have collected a lot of money and let the buildings go to heck."
The judge asked whether the Chuns had put mortgage payments into escrow pending resolution of their dispute with the bank, but their lawyer said he didn't know.
What happens next isn't certain. "The receiver hasn't had a chance to look at it," Holly said of the apartments. "We want to do the right thing, but the receiver may find it's uninhabitable."
Guthmann noted, and Holly agreed, that the buildings are more valuable on the foreclosure market if they are repaired and have tenants rather than demolished.
The City Council is expected to discuss the apartments at a meeting on Jan. 18.
Rochelle Olson • 651-925-5035 Twitter: @rochelleolson