Robert Gehrke explains how developers left hundreds of USU students without housing in their second year

Last year I wrote about a student at Utah State University. With Block 800, a complex that was promised to be completed and signed leases with students, still unfinished, she was forced to look for a home a few days before the semester began.

Now it’s happening again.

The building is a year behind its original completion date, and developer Nelson Partners notified students last week that it would not be completed before classes began on August 29. In the letter, they blamed supply chain problems and labor shortages for the delay.

Students are once again desperately trying to find a home in an incredibly tight market.

“This letter completely turned our heads,” KC Carlson, whose son had planned to move to 800 Block, told me this week.

With almost all other housing around campus already booked, Carlson jumped to lease the complex early in the summer. The building wasn’t finished and he was looking at my report on delays last year, but the sales team promised it would either be finished or find a unit in one of Nelson Partners’ other buildings near campus. did.

It wasn’t.

So Carlson hurriedly came up with a backup plan. In some cases, the units they were touring were put under contract while they were still visiting. They put their names on the waiting list for an apartment with 100 people already in front of them.

“It was a fight for a place,” he said.

Eventually, they found an apartment in Providence, about four miles away.

It’s not far, but it’s farther from the school than the advertised 800 blocks, which is only 27 feet closer to campus. It also promised students sparkling new apartments, rooftop views, hot tubs, and garage parking.

Nelson Partners tried to persuade the city to issue temporary occupancy permits for parts of the building that might be ready, but the city refused.

In a letter sent to prospective tenants, 800 Block cited correspondence with the city:

“After assessing this project in its current state and considering the amount of outstanding issues to be resolved, the City decided to encourage students to move on to potentially dangerous and unfinished projects, especially projects of this magnitude. We accept no liability that may arise from allowing us to scale.”

Ben Anderson, Logan’s chief architectural officer, said this week that he “didn’t feel good” about granting temporary permits. “It’s hard to give an answer at this point because it’s still far from finished.”

The swayed students posted a series of negative reviews for 800 Block online.

It’s unclear how many students have signed leases on the 800 block and are currently stuck, but it’s likely in the hundreds. It’s intended to house 374 students, and a few weeks ago her Facebook page on the building urged students to rush to seize one of her last remaining spots.

The idea that the building could be over a year late and students could be in trouble again seems implausible. But it could have as much to do with Nelson Partners’ financial troubles as it does with his chain of supply and his workforce.

Built-in demand for housing near college campuses usually provides reliable returns and guaranteed profits. In recent years, Nelson Partners has expanded aggressively to operate 20 investor-owned properties in his 13 states, including Washington, Oregon, Arizona, Indiana and West Virginia.

In Utah, we operate a complex near USU, the Utah Institute of Technology, and the University Gardens of the University of Utah.

But when COVID-19 halted in-person learning, it took its toll on the company, USU alumnus founder Patrick Nelson wrote in an essay posted on the company’s website in May. . Rent dried up, the federal government banned eviction for unpaid rent, and the company lost a total of $12 million.

Nelson also said the government had forced the campus to close, preventing landlords from evicting tenants who weren’t paying rent, but he was still expected to pay the loan.

Nationwide news stories report dire living conditions at several Nelson partner facilities, including an air conditioner that was shut down at an Arizona complex last year. It reflects what we are striving for.

Last month, a federal judge in Arizona awarded a default judgment of about $511,000 to the unpaid architectural firm responsible for two of Nelson’s projects.

Auraria Student Lofts, a high-rise residential project in Denver, has been in the hands of trustees since Nelson Partners filed for bankruptcy last month, just before it was auction blocked in a foreclosure sale. A $46 million loan was taken for the property, but no payment was made, according to the lender’s court filings.

A Utah architectural firm sued Nelson Partners in January, claiming more than $1 million for work done on student housing projects in Pocatello, Idaho and Pullman, Washington. . The lawsuit is pending.

The New York Times first reported on the dispute over ownership of Skyloft apartments near the University of Texas at Austin. After the building was seized and sold, the investors sued Nelson Partners and left no evidence of their investment.

In May, Nelson Partners settled the lawsuit and agreed to pay Skyloft’s investors $50 million.

In Mississippi, Nelson Partners filed for bankruptcy shortly before another foreclosure sale, and a court granted the lender permission to sell the property, deeming it “abandoned” due to its damaged state and unpaid utility bills. .

In May, a Texas bankruptcy court approved the sale of the second of two student housing projects in the state. One in Fort Worth and one in Houston.

Additionally, there are hundreds of thousands of dollars in various liens filed against the company by vendors who claim they have not been paid.

I contacted Nelson Partners and was told someone would call me back shortly.

they didn’t.

There’s no reason to doubt that Nelson faced a very difficult situation, but at some point this string of broken promises, betrayal of investors, unpaid lenders, and outstanding debts will have to come to an end.

Not to mention the students stuck in desolation elsewhere in the country, especially the USU students who were once again scrambled to put a roof over their heads after Nelson promised he would deliver on his promise this time around. .

they didn’t.

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