Assisted Housing:

Overview of Problems at the Longwood Cooperative in Cleveland, Ohio

RCED-88-202: Published: Aug 23, 1988. Publicly Released: Sep 6, 1988.

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Pursuant to a congressional request, GAO reviewed the events surrounding the failure and foreclosure of the Longwood Cooperative, a low-income, multifamily housing project, focusing on: (1) the history of Longwood's financial and management problems; (2) why it took nearly 4 years for the Department of Housing and Urban Development (HUD) to gain possession of Longwood after foreclosure proceedings began in 1982; and (3) HUD efforts to revitalize Longwood through its resale and rehabilitation.

GAO found that: (1) Longwood began operations in the late 1950s, and converted to a nonprofit cooperative in July 1975 because of continuing financial problems; (2) a private firm managed Longwood from July 1975 through April 1977, when another firm replaced it; (3) the second firm inadequately managed Longwood, and the financial problems continued despite substantial federal assistance; (4) the Department of Justice began foreclosure proceedings on behalf of HUD in August 1982, but HUD did not gain control of Longwood until July 1986 because of court delays; (5) HUD sold the project in August 1987 under the condition that the new owner rehabilitate it within 2 years, and HUD estimated that rehabilitation costs would exceed $12 million; and (6) the new owner had completed about 85 percent of the rehabilitation work as of May 1988.

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