Apartment complexes, formerly owned by CJB Apartments, will be auctioned Wednesday, while $158,600 of residents' security deposits remains missing.
Cardinal Villas, Everbrook, Sunreach, Autumn Breeze, Silvertree and Windsong apartments will be auctioned at the Office of the Sheriff of Delaware County at 10 a.m.
The asking price for all six complexes is more than $18.4 million.
Charles Joe Burnworth and Linda Burnworth, owners of CJB Apartments, filed for bankruptcy on April 29 after the apartments suffered numerous debts.
Asset Management was placed in charge of all management duties after a foreclosure was signed against CJB Apartments.
During the shift of management control, the security deposits have turned up missing.
According to the court case, Burnworth told tenants that he turned the money over to Asset Management when they took control of the six properties.
However, Asset Management claims to have never received the security deposits from Burnworth.
"As far as I know CJB never returns damage deposits [to its tenants]," Rhonda Janney of Asset Management said.
CJB does not have the money, said Bill Tucker of Tucker and Associates, attorney for the Burnworths. All assets they had were turned over to Asset Management, Tucker said.
Asset Management has in return had problems renting to students because of the missing deposits.
As of Feb. 28, only 64 of the 308 apartments had been rented for the 2003-2004 school year, according to court documents. The documents did not specify how many apartments are normally rented that far in advance.
Tucker credits CJB Apartments' negative cash flow to a decrease in student enrollment at Ball State and overall overbilling of Muncie apartments.
According to Ball State's 2002 financial report, enrollment has been steadily increasing since 1999, and for the first time since 1997 topped 18,000 in the fall 2002.
"The bottom line is that this is just a business failure," Tucker said.
As the apartments fell further into debt with Wells Fargo Bank, the Lennar Partners, Inc. stepped in and signed a foreclosure on CJB.
On Feb. 5 the Burnworths wrote a promissory note to Prudential Mortgage Company for $13.5 million.
"They couldn't break even," Tucker said.
While CJB was in control, the apartments started deteriorating, causing residents to live in undesirable situations, according to court documents.
Alan Rosenwihel, a fifth-year student at Ball State who lives at Silvertree, had to live in a flooded apartment after approximately $15,000 of damage was done to his belongings.
The roof of Rosenwihel's apartment collapsed after the apartment above him flooded.
Rosenwihel said the flooding occurred because of bad plumbing.
CJB had promised to replace their belongings, but in the end did not, Rosenwihel said.
When Asset Management took over, they reported that numerous apartments were not livable.
According to the court case, Asset Management states that "80 of the 308 apartments are not rentable without a significant amount of work."
Also disclosed in the court case, one apartment is said to be covered from floor to ceiling with mold.
The documents also indicate that the pool at Silvertree has yet to open due to cracking and leakage.
From March to April, Asset Management spent $74,035 on maintenance and repairs.
In an e-mail included in the official court case written by Janney, she notes that all the apartment furnaces are damaged due to years of neglect. She also states that none of the dryers throughout the complexes are vented properly.
"I agree 100 percent that a lot of things are old," Cliff Johnson, former CJB leasing manager, said.
In the e-mail, Janney notes that Silvertree is in the worst condition of the six complexes. One of the buildings at Silvertree remains boarded across the front from an accident that occurred in June 2002. Someone drove a car into the first floor of the building, and CJB did not make the necessary repairs, according to the case documents.
Students living in the apartments have mixed feelings about Asset Management and CJB.
Ball State student Caroline Goodnight's Silvertree apartment was robbed over Spring Break 2002.
Because there was no apparent sign of forced entry, she believes that it was someone who had a key.
Janney wrote in another documented e-mail: "My biggest concern about changing the locks is how many masters are out there that we do not know about.
"The other day I had a water leak from the upstairs apartment. I called the carpet man to go in and extract the water ... and was informed that he already had a master. How many other people/maintenance companies do you figure have keys?"
When the foreclosure was signed, all of CJB employees lost their job, Johnson said.
Although Asset Management collected keys from CJB employees, it was not clear if all the keys had been collected.
After Asset Management did not change Goodnight's locks, she was forced to do it herself.
However, Goodnight said she believes that Asset Management is working hard to repair the apartments.
"Our dishwasher was leaking and they got us a new one immediately," Goodnight said.
Although Rosenwihel had a bad time replacing his damaged property with CJB, he has complete faith in Asset Management.
"The maintenance man does so much for us that we know him by name," Rosenwihel said.
Because of Asset Management's work, Rosenwihel has renewed his lease for the upcoming school year.
Stacy Goins, another resident and BSU student, does not feel the same. A friend of the Burnworths, Goins claims that CJB turned over all the security deposits. Goins said that Asset Management is rude and states that they increased their rent when taking over.
Goins plans to move out when her lease is up.
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