The nonprofit arm of Little Rock's public housing authority will sue the Texas development firm that previously managed three low-income housing properties in the city, alleging breach of contract and seeking financial damages, the nonprofit's attorney said Thursday at the housing authority's monthly board meeting.
ITEX, based in Houston, managed the Homes at Granite Mountain and two Madison Heights complexes under a two-year contract for each that expired in June. The Metropolitan Housing Alliance board of commissioners decided in July not to renew the contracts, which stated that ITEX must "maintain the Project in good repair ... and in a condition at all times acceptable to the Owner including but not limited to cleaning, painting, decorating, plumbing, carpentry, grounds care, and such other maintenance and repair work as may be necessary."
The Central Arkansas Housing Corp., the nonprofit and the owner and manager of the three properties, will file the breach-of-contract lawsuit in the U.S. District Court for the Eastern District of Arkansas "in the next couple business days," said attorney Sylvester Smith of The Firm in Little Rock.
Housing authority board members said repeatedly at public meetings that tenants told them ITEX did not respond to requests to fix fire damage, mold buildup, plumbing problems and other quality-of-life issues at the three properties the firm managed.
On Thursday, Smith showed the board a photo of a Madison Heights unit where mold rotted the ceiling, which fell on a tenant and caused physical injury, officials said. The Central Arkansas Housing Corp. later shut down the entire building out of concern for tenants' health because of the potential spread of mold.
Additionally, some tenants' rent, security deposits and emergency rental assistance payments are "unaccounted for," and some appliances disappeared from the properties after ITEX left, Smith said.
The lawsuit will request financial damages and leave the dollar amount for a jury to decide, he said.
"We intend to fight vigorously to recoup the funds we believe ITEX owes these entities," Smith said.
He previously told the Arkansas Democrat-Gazette that ITEX had no excuse not to take care of the property and ensure all units were occupied and livable, since revenue from tenants' monthly rent is supposed to fund repairs and maintenance. Sixty units at one of the Madison Heights complexes were unoccupied when ITEX stopped managing the property, and 18 of those units could be ready for new tenants after some basic cleaning, Smith said.
ITEX did not respond to calls or an email requesting comment on Thursday. The company received notice of the meeting, according to an email from Metropolitan Housing Alliance human resources, but no ITEX employees were present.
Kenyon Lowe and Leta Anthony, who serve as both housing authority commissioners and Central Arkansas Housing Corp. directors, said they were upset about ITEX's actions. The Metropolitan Housing Alliance is the largest public housing authority in Arkansas and provides housing assistance to about 8,000 low-income people.
"We say that poor folks deserve good things too, and this situation here is a travesty," Lowe said.
Lowe chairs the housing authority board, and Anthony chairs the nonprofit's board of directors. Both boards are made up of mostly the same members.
In August, ITEX demanded $544,000 in compensation after the housing authority did not renew the management contracts.
Smith previously said the corporation and the housing authority will not comply with the demand, especially since the contracts ended on their own, not by a board vote.