Condo residents fight for homes
In 1975, Central Expressway was a two-lane highway. The University Gardens Condominiums complex was a new community where young residents flocked, planning to spend the rest of their lives.
Now, this area has become a battleground between SMU and community residents – and SMU is winning the battle.
As of March 2002, the university has amassed 80 percent of the total University Gardens property, making it the majority owner of the complex. That leaves the 20 percent of individual owners who remain helpless in SMU’s hands.
The struggle began two years ago when developers, who saw the University Gardens property as a prime piece of real estate, approached SMU. Leon Bennett, SMU’s vice president of Legal Affairs, said the 12-acre complex was a premier area for commercial development, which alerted SMU to the possibility of its development. Throughout the controversy, Bennett has served as a liaison on behalf of the university.
SMU became concerned about the possibility of the property’s commercial development. Bennett said that due to the size of the land, any commercial enterprise would need to expand upwards in order to be profitable.
“We felt it could very well be made into a high rise,” Bennett said. “That sort of structure would overshadow the university. We didn’t think this would be consistent with the campus atmosphere.”
As a result, in spring of 1999, SMU set up Peruna Properties, a corporation designed specifically to purchase property at University Gardens. Bennett said the university took this action to ensure the school’s protection. Initially, he said, there were no long-term plans for the property.
University Gardens residents became concerned with SMU’s attempts to purchase the property. In September of 1999, the Homeowner’s Association passed a bylaw to prevent a single owner from controlling the property. The bylaw stated that no owner could own more than 10 percent of the property. However, at the time, Peruna Properties already owned 14 percent of University Gardens. A grandfather clause was passed stating that if an owner already owned more than 10 percent of the property, he could keep it, but could not buy any more units.
“Pretty much this law said, ‘You can’t buy anymore units SMU,’ ” said Kim Pierce, former Homeowner’s Association president.
Pierce said that SMU kept buying units, completely disregarding the new bylaw.
In December of 1999, the association sent a letter to SMU demanding that it stop the purchase of property at University Gardens.
Two months later, SMU responded with a letter suing the association on the principle that it believed the bylaw was illegal. The group initiated a countersuit and a legal battle ensued. The court froze all of SMU’s property.
In January of 2001, the two sides attempted to reach a settlement. Nine months later, the Homeowner’s Association and Peruna Properties finally reached an agreement. The terms stated that residents of the complex would have a three-month window to offer their property to SMU.
Residents were able to negotiate a price with the university, but a minimum was set at $75 per square foot, Bennett said. During this period, SMU secured enough property to become the majority owner of the complex.
Faced with the prospect of selling their property to SMU, resident opinion differed.
“Some people felt they should just take the money and run. … [while] others decided they wanted to hold out,” Pierce said.
Those that initially refused to sell did so for various reasons. Some residents felt attached to the community where they have spent most of their lives.
“I moved here in 1975, and have been here 25 years,” said Goldye Levi, an accountant and University Garden resident. “I would have liked to live out my life here because I am used to it. I am comfortable.”
Other residents cited monetary issues. Current Homeowner’s Association President Al Steiner said he felt SMU did not pay homeowners a fair price for their property.
Bennett countered that the price was fair.
“In our negotiations, we tried to achieve a fair market value and provide a window for owner-occupants wishing to remain on the property,” Bennett said.
This window allows owner-occupants to re-lease the property from SMU for two years following the closing date. The university hopes this will ease their transition to a new residence.
After a long battle, many residents grew tired and decided to sell.
“I came here in midlife and have been here since. For an extra $10,000, I didn’t want to fight with [SMU],” Levi said.
Although some were unhappy with the price, residents believed they couldn’t negotiate a better deal.
“I know that this is the best deal I am going to get in the next five years. After fighting for so long, you just get tired,” Pierce said. “The time has come. Work out the best deal you can and move forward.”
Still, many grieve for the loss of their homes.
“It is really a community around here, and this community will be destroyed. In 10 years this complex will not be here. It will just be another corner of the campus,” Pierce said.
In March 2002, voters elected to repeal the bylaw, enabling SMU to retain all of the property it owns at University Gardens, approximately 292 of the 347 units.
Since the beginning, the quality of communication between SMU and the University Gardens community has been a topic of dissent.
Residents claim that they were initially promised the property would not be used as student housing for the university, Pierce said.
That claim was upheld in a July 2000 deposition when Morgan Olsen, president of Peruna Properties, testified that the property would not be used for student housing.
Court documents prove otherwise.
In February of 1999, SMU’s financial adviser of the University Gardens Condominiums Acquisition confirmed SMU’s true intentions in the property to at least three banks. The written statement read, “SMU, through its subsidiary Peruna Properties Inc., plans to acquire individual condominium units over the next five to 10 years, eventually acquiring a 75 percent ‘super majority’ sufficient to acquire the property in total. Once the acquisition has been completed, the units will be rehabilitated and used for off-campus student housing.”
Pierce believes residents were misled.
“There were lies,” Pierce said. “Leon Bennett swore in his first testimony that they had no intention of putting students there. However, in SMU IRS documents, it plainly states why SMU wants the property – student housing. There was a lot of mistrust throughout the battle.”
Bennett disagrees.
“I do not think the university misled residents. It was certainly not our intention to mislead,” he said.
He said that initially there was no way for the university to know how it would use the property. For the time being, the property will continue to be used as it currently is.
“There was no way to predict what we’d do with the property. We still don’t have any long term plans for it,” Bennett said. “For the time being, it will continue to be housing. We will use it consistently with the current quality of living.”
Residents believe that SMU did not take the best approach with homeowners.
“They did it haphazardly,” Levi said. “I think the town is embarrassed about it. Their people may be good in education, but not in acquiring property. They need to attend their own marketing and business schools.”
As SMU competes to house the future Bush library, the University Gardens property appears to be a possible location. Bennett said while the site is a possibility, it is unknown whether or not the library would be built there.
“A lot of factors go into the selection of the site. It depends on what location is deemed best for the library, and then we will move forward with what is necessary for that location. There is no way to know right now,” he said
Residents are not surprised that SMU has emerged victori
ous in this battle.
Said Pierce: “The thing about SMU is that they have deep pockets and important people. My thing is to go ahead and move through this. We have lemons and we can make lemonade. But no one is going to get lemon meringue pie.”
