A Clairton housing complex for the needy is undone by owner's bankruptcy
Residents of Century Townhomes, placed by charity Sisters Place, face uncertain future, while the owner faces criminal investigation
August 17, 2014 12:00 AM
Sister Mary Parks, secretary of the Century Townhomes Association, describes how the development's landlord, David Geisler, has failed to fill in open areas alongside steps which could create a hazard for residents.
The secretary of the Century Townhomes Association, Sister Mary Parks, said the exteriors of the units are to remain brick. David Geisler, the landlord of Century Townhomes, replaced fallen brick with siding on a couple of dwelling units which are not filled, she said.
Sister Mary Parks, left, secretary of the Century Townhomes Association, talks with the organization's treasurer, Paulette Dale, as they stand in front number 6602 Soltis, of one of the units owned by Sisters Place. Sister Mary said the next-door unit is overgrown with untrimmed weeds, a responsibility of landlord David Geisler.
By Joyce Gannon / Pittsburgh Post-Gazette
For almost two decades, Sisters Place, a nonprofit founded by religious groups that were concerned about dire economic conditions in the Mon Valley, has helped struggling single parents find an affordable place to live in a cluster of red brick rowhouses on a wooded hill in Clairton.
But for the last year, the organization’s executive director, Sister Mary Parks, in addition to assisting families who live in the complex called Century Townhomes, has spent hours in her office dealing with unexpected water shut-off notices, emergency repairs, and piles of spreadsheets and legal documents.
The maintenance issues and endless paperwork are the result of problems that began after an Upper St. Clair businessman acquired many of the units but then stopped paying the bills to maintain them.
When he bought 165 units at Century Townhomes in 2012, David Geisler told residents he planned to revitalize the complex, which was built by the federal government in the 1940s to house workers at U.S. Steel’s Clairton Coke Works.
But in June, Mr. Geisler’s company, Century Arms Townhomes LLC, filed for Chapter 11 bankruptcy protection. Besides defaulting on its mortgages and racking up over $2 million in debt to lenders, Century Arms has accumulated more than $500,000 in unpaid utilities, unpaid taxes and debt to the homeowners association that pays the water bills for the community’s residents.
“It’s kind of hard to keep a handle on all these bills,” said Sister Mary Parks, who became secretary of the homeowners association to try to sort out a mess involving more than $260,000 that Mr. Geisler currently owes that organization for water and sewage bills.
The Allegheny County District Attorney’s office has opened a criminal investigation involving Mr. Geisler, said Mike Manko, spokesman for District Attorney Stephen A. Zappala Jr. He declined to specify details but said the probe began after the district attorney’s office became aware of plans by Pennsylvania American Water Co. to shut off service to almost 200 homes because of delinquent water bills.
On Friday, a U.S. bankruptcy judge in Pittsburgh is scheduled to hear arguments on several possible scenarios that could determine the future of the townhome complex. Under one, Mr. Geisler’s Century Arms would be permitted to sell its 165 Clairton properties for $2.2 million to Star Properties Group of Jefferson Hills. Another motion by the mortgage lenders seeks to allow them to foreclose on the properties or to have a trustee appointed to manage the properties until the bankruptcy is sorted out and a sale occurs.
Mr. Geisler, who said he is confident his proposed sale will go through and that Century Arms will pay off creditors, believes his investment collapsed under the weight of high-interest mortgage loans and a spike in municipal sewage costs that he didn’t foresee when he bought the townhomes.
“It was kind of a perfect storm of events,” Mr. Geisler said. “This was the biggest project I’ve ever taken on and it was more than I could handle as an individual.”
Besides the debt to lenders, documents filed with the bankruptcy court show that Century Arms also owes $335,000 to the Clairton Municipal Authority for unpaid sewage charges; $120,000 to Century Townhomes Association, the complex’s homeowners organization, for delinquent water bills; approximately $102,000 to the Clairton school district for unpaid taxes; nearly $29,000 to the city of Clairton for unpaid taxes; $22,500 to the Internal Revenue Service; and about $14,000 in delinquent garbage pick-up fees.
Many of the units Century Arms owns at Century Townhomes are boarded-up and city officials are investigating maintenance issues such as frayed external wiring, overgrown grass and weeds, and pest infestations. Mr. Geisler has been charged with some violations, including failure to provide approved garbage containers.
“Everyone’s hoping for a better owner to take care of the property and pay the bills,” said Deron Gabriel, a Downtown attorney who serves as Clairton’s city solicitor.
“Overgrown like a jungle”
When Sisters Place was scouting the Mon Valley for suitable housing for single parents and their children two decades ago, “We came here because we could get the units cheaply and rehab them,” said Sister Mary Parks. “Now we are constantly fighting blight and it’s overgrown like a jungle.”
In the mid-1990s, Sisters Place bought 18 units at Century Townhomes, renovated them, and quickly found families to occupy all but two units, which house a learning center and a program center.
Because of the success it had filling the homes, Sisters Place in the early 2000s rented another 16 units. Of those, 14 were among 165 units that Action-Housing sold to Mr. Geisler in August 2012.
Since then, conditions have deteriorated so much that Sisters Place has looked for other units to house some of its families, said Sister Mary Parks. “He fixes practically nothing if it costs money, like the air conditioning, so we’ve been moving people out to transitional housing.”
Lee Lasich, a Clairton councilwoman whose district includes Century Townhomes, grew up there when the community was known as Woodland Terrace.
“It’s really deteriorated in the last year to 18 months,” she said. “Now there are high weeds, gutters falling off, and cosmetic [repairs] that should be taken care of and are not.”
In the winter months, leaking water caused dangerous ice patches to form in the complex, said Ms. Lasich. “People thought he would organize and help care for it as the biggest owner, but that didn’t turn out in their favor.”
High interest payments strapped owner
For his part, Mr. Geisler, 43, said he saw potential in the site despite the fact Clairton was among the hardest hit of the region’s former industrial towns following the exodus of the steel industry from Pittsburgh in the 1970s and 1980s.
Century Townhomes sits apart from the town’s battered business district. “I thought it could be converted to good, lower- to middle-income property,” he said. “It’s a nice wooded area with a lot of green.”
To finance his purchase price of $2 million, Mr. Geisler took out two loans for $800,000 apiece from WJA Secure Real Estate Fund and Equity Indexed Managed Fund, affiliated businesses based in Laguna Hills, Calif.
With an interest rate on each mortgage of 14 percent, monthly interest payments of close to $20,000 “pretty much sucked up most of my cash flow,” said Mr. Geisler.
Only about half of the 165 units he bought were occupied when he acquired them, Mr. Geisler said, and rent payments from the existing tenants were too low to cover his mortgage costs plus renovations.
When he tried to refinance the loans last fall, “I struck out. I went through 50 different lenders and they said there was too much renovation needed … and Clairton was a challenging city.”
In court documents, the lenders said Century Arms “has no equity in the property” and “is without financial resources … to have a meaningful prospect of reorganization.”
On top of the loan issues, Mr. Geisler said he faced unexpected costs when the Clairton Municipal Authority raised rates to finance repairs to the city’s sewage treatment facilities. In a bankruptcy court filing, Mr. Geisler’s attorney, Michael Kaminski, states that sewage charges for Mr. Geisler’s 165 units ranged from $2,000 to $3,000 per month before he bought them in August 2012, but later rose to $15,000 to $16,000 per month because of assessments and rate increases.
Adding to Mr. Geisler’s problems was the fact that Action-Housing for years had acted as the homeowners’ association for the entire complex, and collected and paid water and sewage bills for all the residents of Century Townhomes.
Because the development is serviced by only one water meter, Action-Housing billed all the residents a flat rate and made up any shortages, according to court documents. While he assumed the responsibility for the billing and collections in his sales agreement, Mr. Geisler quickly fell behind in making water and sewage payments for the other homeowners, said Sister Mary Parks.
During the months after he bought his properties, Sisters Place and other property owners attempted to work with him to pay their share of the utilities, “But he billed us sporadically, and some months, not at all,” she said.
After Pennsylvania American Water in January 2013 sent shut-off notices to all property owners for failure to pay their bills, Mr. Geisler agreed to meet with the other owners to reorganize the homeowners association and sort through the mounting utility debts.
Since the newly elected association took over collections for utility payments in July 2013, Mr. Geisler has paid them only a handful of times for his share of the charges which last week totaled $263,383 for the period from September 2012 through this month.
“At one point we sent him a registered letter to tell him what he owed and never heard back,” said Sister Mary Parks.
A history of bankruptcies
The Century Arms case is not Mr. Geisler’s first trip to bankruptcy court.
In 2008, The Kid Co., a children’s entertainment company owned by Mr. Geisler and his his wife, Lisa, filed for Chapter 11 and closed its locations in Ross and West Mifflin. Those venues featured miniature golf, climbing gyms, laser tag and rooms for private birthday parties.
Prior to opening The Kid Co., the Geislers had owned Seabase Family Fun Center in Greensburg. Mr. Geisler said they sold that in 2006 and it still operates.
“We lost all of our personal money in [The Kid Co.],” he said. “We tried to expand too quickly. We catered to kids’ birthday parties and, after the economic collapse of 2008, people stopped spending and their disposable income dried up.”
In an interview with the Post-Gazette in 2005, Mr. Geisler and his wife said they met when both studied structural engineering at Washington University in St. Louis, and that he went on to earn an MBA from the University of Maryland. They got into the family entertainment business, they said, because it was more fulfilling than working for corporations owned by others.
After The Kid Co. crashed, Mr. Geisler said he worked as a business analyst in contract positions for several local companies, “to get on my feet again.”
He was able to secure the mortgages for Century Townhomes, he said, because the economy began to pick up and he borrowed from “hard-money lenders” that typically make loans with high interest rates and maintain looser guidelines for borrowers’ income and ability to repay.
“They didn’t care about the previous bankruptcy,” said Mr. Geisler.
“This is just so much stress on everybody,” said Sister Mary Parks, a member of the religious order of the Sisters of St. Joseph who works at Sisters Place offices in a converted home located a few blocks from Clairton’s depressed town center.
Though the services that Sisters Place provides for its 32 families who reside at Century Townhomes — including after-school care, parenting classes, recovery programs and a computer lab — haven’t been disrupted by the property issues, dealing with a constant stream of inquiries about bills and maintenance problems, and concern about what happens next, has frequently consumed the nonprofit’s office staff, said Sister Mary Parks.
“I’m on the phone every day with people and I feel like I’m not giving the families what they deserve. The people who get lost in the shuffle are the poor people. If someone who is reputable would buy it, I would hail him or her as a hero.”
Joyce Gannon: firstname.lastname@example.org or 412-263-1580.
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