Bloomington alleges contract breach by Crawford Apartments, seeks $685K; Beacon among defendants

An Aug. 1 deadline set by the city of Bloomington for Crawford Apartments, to come into compliance with rental inspection code has not been met, according to a news release issued by the city on Tuesday (Aug. 5). The housing complex has ongoing rental code violations that date back to 2023.

That means the city is now “advancing enforcement efforts at Crawford Apartments” according to the news release. Those efforts now include a breach of contract claim filed on Wednesday by the city of Bloomington in Monroe County circuit court.

Named as defendants in the city’s lawsuit are the different ownership entities of the real estate, which include Crawford Apartments, Crawford Apartments II, Continental Management, and Cinnaire Corporation.

Also named in the city’s lawsuit is local nonprofit Beacon, Inc. which is the service provider for the facility, a permanent supportive housing complex with 61 apartments.

Permanent supportive housing is meant to give long-term, affordable housing to people who have experienced chronic homelessness, serious mental illness, or other challenges, and to combine a physical place to live with on-site supportive services. Crawford Apartments is located on Henderson Street, near Winslow Road, on the south side of town.

For Crawford Apartments, it’s Beacon, Inc. that provides the case management support connected with the supportive housing.

The city’s Tuesday news release implied that Beacon was, in the city’s view, in breach of contract. Reached on Tuesday by The B Square, Beacon executive director Forrest Gilmore said, “There is no contract that Beacon has with the city.” Gilmore added, “I have no idea what contract the city is referring to.”

Gilmore added, “We don’t have any ownership stake in the property, any financial interest in the property. It simply is not our property. However, we are providing supportive services on that site.”

Gilmore said, “For me, the focus is that we’ve done amazing work … My Beacon team has done an incredible job to help the property management fulfill their responsibilities, and we’re sorry to see that the property management was not able to follow through.”

The following day, the city of Bloomington filed its breach of contract action, which includes Beacon as a named defendant.

Responding to a B Square question based on the wording of the news release, the mayor’s office stated, “While the City does not hold a direct contract with Beacon, they are listed as the supportive services provider in development-related materials, including the Tri-Party Agreement between Continental, Cinnaire, and Beacon.”

In remarks to The B Square, Gilmore counted a different list of three as parties to the "tri-party agreement." He said it was an arrangement where the owner (property management company) signs a lease with both Beacon and the tenant.

The contracts that the city claims were breached include the original 2012 agreement for development of the properties as permanent supportive housing. The city is looking to recover a total of $685,000 in federal HOME funds that were provided to the housing development.

According to the city, its claim involves the obligations that are tied to the use of HOME funds, including HUD standards for supportive housing and services.

In its Tuesday news release, the city of Bloomington also claims that “Continental and Beacon failed to complete a required compliance checklist by the August 1 deadline.”

The checklist included as an item “Supportive Services Plan including Implementation Plan finalized, approved by the City, and implemented - Continental and Beacon.”

According to the mayor’s office, Beacon’s Aug. 1 deadline for submitting a supportive services plan was not met and only “a partial draft was submitted just before the August 5 stakeholder meeting.” The city’s Tuesday (Aug. 5) news release came late afternoon, after the stakeholder meeting.

Based on an email thread that the city of Bloomington provided in response to a B Square request, communications were contentious leading up to the Aug. 5 stakeholder meeting. The meeting was attended by the ownership group, property manager, city officials, as well as Beacon. A document on a Google Drive was apparently not accessible to everyone. Continental Management apparently believed it had an additional 30 days from the date of the inspection to correct rental code violations.

Continental Management indicated uncertainty about the origin of the Aug. 1 deadline: “Could you please let us know when this deadline was set and where it was communicated?”

Responding to that question, the city’s housing and neighborhood development (HAND) department director, Anna Killion-Hanson, wrote: “This email is a bit of a shock to me. The deadline was found in the Notice for Default, the list of compliance requirements and was discussed in detail at our last meeting.” Killion-Hanson’s email message continues, “Further, the compliance requirements were sent quite a while ago and this is the first I have heard that you did not have access.”

Ahead of the Aug. 1 deadline, on July 29, Bloomington mayor Kerry Thomson held a press conference on the topic of housing and homelessness, when she indicated optimism that Crawford’s Aug. 1 deadline for compliance with rental code would be met. Thomson said, “I am very proud to say that yesterday, through inspections, we saw dramatic progress at Crawford.” Thomson continued, “We believe that those units will come back into compliance, and we have to ensure that the people living there have the supportive services to keep them maintained well …”

At the news conference, Killion-Hanson said about the prospects that Crawford would achieve compliance with the city’s rental inspection code, “We believe that they will likely get there …” She added, “We’re going step by step. There is a current lawsuit in place, so August 1 was their date to cure.”

The lawsuit mentioned by Killion-Hanson includes two legal actions, one for each of the Crawford buildings, filed by the city over the ongoing rental code violations. [Filings for Crawford I and Crawford II.]

The message that came from the city’s attorney at the initial hearing on the two lawsuits, held on July 29, was that the city is focused on compliance with rental code, even if the claims in the lawsuit are for millions of dollars. The next hearing in those two lawsuits is set for Oct. 14.

Before October, more inspections at Crawford are scheduled. According to a statement from the mayor’s office on Wednesday, the city still considers compliance with the rental inspection code to be the “ultimate goal.” The statement continues, “[W]e’d far rather see time and resources going toward repairs and services.” According to the mayor’s office, more inspections at Crawford are scheduled for Sept. 4 and Sept. 5.

[Note: The reporter is the spouse of Mary Morgan, director of Heading Home of South Central Indiana, whose name appears in the compliance checklist, and as a recipient of the email thread messages.]