A unique affordable housing community in South Sacramento has filed for chapter 11 in a bid to stave off foreclosure by the state of California, the Sacramento Business Journal reported. Southgate Town and Terrace Homes Inc. filed last week in the U.S. Bankruptcy Court for the Eastern District of California. "We take the position that we can simply refinance the note and cure the issue," said Steve Reynolds, an attorney for Southgate Town. With 104 apartment units, Southgate Town is what Reynolds called a limited equity housing cooperative, where the owners are the current residents. That arrangement is subject to a note held by the California Department of Housing and Community Development. Reynolds said that Southgate Town is current on the note, but the state and the property's managers disagree about whether it's in compliance with other requirements under the note. According to property records, the state has filed foreclosure actions four times in the last three years, most recently in March 2021. That filing set a foreclosure auction date of March 26, 2021, for the property, but the auction does not appear to have gone through. At the time, Southgate Town's tenants owed $3.55 million on the note with the state, according to the March 2021 notice.
