Problems mount for apartment complex

In the Pines faces new code violations while a bank tries to foreclose on the property.

Published: Saturday, January 9, 2010 at 6:01 a.m.
Last Modified: Friday, January 8, 2010 at 11:33 p.m.

With a Saturday deadline to fix 2-year-old city code violations or face $7 million in fines, In the Pines apartment complex instead faces new violations as the owner and a bank trying to foreclose on the property prepare to battle in court over rent payments and a repair fund.

The complex has been accruing fines of $31,000 per day since a June 2009 inspection found 31 of 33 buildings were still in noncompliance with violations that include deteriorating external wood staircases, failing roofs and electrical issues dating as far back as December 2007. One building was declared uninhabitable in August 2009 because of a sewage leak.

The complex needs an estimated $1.2 million in repairs.

Chris Cooper, interim code enforcement manager, said there was no evidence during a December inspection that any of the violations had been addressed and new complaints of sewage leaks and falling ceilings were reported in recent weeks.

The complex is on Southeast 16th Avenue between Main Street and Williston Road. A fall report to the mortgage lender showed that 47 percent of the 242 units were occupied.

The city is unlikely to collect its fine on a property that faces 32 liens, mostly from maintenance contractors, and a mortgage bank with first dibs on any assets.

"Our concern is that somebody goes in and fixes the property up for the folks that are out there," Cooper said. "If the bank takes ownership, they plan on correcting the problems and we hope that's the case."

Fines will continue to mount until the violations are fixed, he said.

First Regional Bank of California filed to foreclose on the complex and three Jacksonville complexes Dec. 2, saying owner Francesco Mileto of Fort Lauderdale was in default on $51 million still owed on the properties.

Mileto bought the complexes from a Los Angeles condo conversion developer in November 2008, after the initial violations were found.

As the lengthy foreclosure process proceeds, the bank is seeking to have the court appoint an independent receiver to manage the properties over concerns about the deteriorating value of In the Pines and that the owner is not accounting for nearly $383,000 in monthly rent payments.

At a Dec. 15 hearing, Mileto's attorney John Kinsey said the four complexes' accounts were frozen when the Federal Deposit Insurance Corp. shut down Orion Bank of South Florida and they are seeking to have those funds released.

He also said that the bank is at fault for delaying funds from a line of credit to fund repairs.

Bank attorney John Anthony said Mileto's credit was frozen because he defaulted on his mortgages.

He also said one reason Orion Bank failed is because Mileto owed it $22 million.

"This bank doesn't want to end up in the same boat," he said.

Circuit Judge Toby Monaco decided at the emergency hearing that the disputes merited a full hearing at a later date.

Instead, he issued an order that Mileto pay all costs of operating and maintaining the complexes from rent collections, and deposit any remaining funds with the court.

Mileto is also to provide full monthly financial reports to the bank.

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