LOCAL NEWS

Utah Student housing company has national, local history of issues

Aug 26, 2022, 1:31 PM
The unfinished housing complex in Logan, Utah. (KSL TV)...
The unfinished housing complex in Logan, Utah. (KSL TV)
(KSL TV)

LOGAN, Utah — A student housing company has left students without housing two years in a row — and these failures are not the first ones. 

The 800 Block apartments sent Utah State University students scrambling for housing in fall of 2021 when Nelson Partners told students just weeks before the school year began, that the housing would not be completed in time. Then in 2022, it happened again. 

The California-based company has a history of student housing problems. KSL TV previously reported the most recent housing crisis that left students without housing this fall. Students in Logan are familiar with this chain of events.  

Nelson Partners delayed construction on student housing near Utah State in 2013, and again in 2015, leaving students to fend for themselves. 

The firm faced multiple foreclosures according to The Real Deal New York Real Estate News, one in Texas and one in Mississippi.

Yet the company continues to buy up property.

800 Block Housing

Britain Johnston is a junior at Utah State majoring in nursing. She was the victim of the 800 Block housing  issues two years in a row.

“I’m going into my junior year – if I can find housing,” Johnston said.

In 2021 she signed up for the new 800 Block housing.

“I was like it’s so close to campus but it’s not actually on campus so it’s perfect,” she said. “They had us put down just a $50 deposit on the lease…which is normal.”

But as summer went on, the building didn’t appear to be finished. An unfinished roof, exposed construction in rooms, and the whole building gated off late into the summer gave clues it might not be ready in time.

“The entire summer my friends were like, ‘Listen, it looks like it’s not going to be done,’ and I was like, ‘Oh, well, they haven’t said anything so it’ll be fine,” she said.

As students began to get nervous, Johnston said many of them began to reach out to the company since they hadn’t heard anything.

“Me and my mom actually tried to email them and call them and reach out to them in various ways, many different times. Just trying to you know ask questions, see how it was coming and about probably mid-July they just stopped answering the phone, stopped answering emails, wouldn’t like contact anyone. They hadn’t sent out an email.”

Classes were supposed to start on Aug. 30 last fall which means the housing was supposed to be open for students to move in by Aug. 23, 2021.

On Aug. 6, 2021, students got the following notice explaining the housing would not be completed in time.

The email received by Jeremy Johnston, Britain Johnston’s father, notifying them the 800 Block Apartments would not be completed in time for school fall 2021.

“They weren’t answering their phone anymore, they didn’t give us that deposit back,” Johnston said. “…and none of my friends did either.” 

It was not clear how many spots had been leased to students, but according to KSL’s previous reporting on the issue, it was over 200 students left looking for housing.

With over 200 spots, that $50 means if Nelson partners did not return students’ deposits, the company would have collected over $10,000.  

“So we were supposed to be moving up there the week of the 20th and then they finally sent out an email, ‘Oh yeah it’s not going to be done, due to Covid’ and they were just kind of blaming it on supply chain and making it seem like it was a global supply chain issue,” she said. “Everyone was obviously super mad and just kind of like ‘Well, what are we supposed to do now?’ [We] just rushed into trying to find housing when everything was obviously booked because school was starting in a week. I had a lot of friends that just transferred schools because they couldn’t find housing and 800 Block didn’t offer any other housing options.” 

Johnston also started exploring other school options. She got accepted to a school in Virginia and was preparing to move there when she finally found housing in Logan the week before school started. 

“A lot of my friends just moved schools or had to commute from their houses.” 

This spring, applications for the 800 Block apartments opened up for a second time. 

It was expected to be finished, for certain this time, by Fall 2022. 

The building had banners promising the completion of the building and a commitment on its website. 

A photo of a banner advertising Nelson Partner’s promise to finish the 800 Block housing by Fall 2022. (Jaxon Didericksen)

A photo of the 800 Block Promise from their website. (Jaxon Didericksen)

Some students were locked into leases as early as April for the fall semester of 2022. Johnston thought it surely couldn’t happen twice so she signed up again. 

“Okay, they did this last year, there’s no way they’re going to do this again this year. I’ll just sign up and sign the lease. This year they didn’t make us give a deposit,” she said. 

Then, on July 27, one month before the start of school, students received the following notice: 

The email sent to future tenants of the 800 Block Apartments 2022, announcing the housing would not be completed in time for the school year.

The building’s opening was once again delayed. 

The notice offered a list of four other housing options near Utah State University, all of which were already booked according to Johnston and a link to VRBO, which are vacation rentals.  

According to VRBO’s website they “offer families an array of rental property types such as condos, cabins, lake rentals, beach houses, and more.” 

“They listed a bunch of places, which are obviously all full,” Johnston said. “Last year they didn’t even give us any options.” 

In a phone call with KSL TV, Jim Finn, Senior Strategist for Nelson Partners, said the company had been hoping to open at least half of the building, even if the other half was temporarily incomplete. 

Finn said this plan fell apart when the city of Logan denied the application for a Temporary Certificate of Occupancy for the project. He shared the letter from the city denying the permit. 

The letter from Logan City denying the necessary permit for 800 Block apartments to open. (Nelson Partners)

The letter states: “Based on my on-site assessment, input from City departments, and legal counsel from the City Attorney’s office, the City cannot grant a Temporary Certificate of Occupancy (“TCO”) for the 800 Block project. After evaluating the project in its current state and considering the amount of outstanding issues to be resolved, the City is not willing to assume any liability that may stem from allowing students to move into a potentially dangerous and unfinished project, especially one of this size and scale.” 

Johnston couldn’t help but feel foolish for being dropped from a lease, twice. 

“Oh my gosh, I’m so dumb, like I should not have done that again. Everything is like super booked and then when this happened again everyone’s like scrambling to get housing again and there’s even less opportunities for housing,” she said. 

Nelson Partners sent the following statement to KSL TV:

“On July 26th, we were informed by Logan building officials that they would not be granting us a Temporary Certificate of Occupancy (TCO) for 800 Block.

“We immediately contacted residents and parents via email to inform them that the original move-in date of August 27 has been postponed due to numerous supply chain and labor shortages that have affected the construction industry across the country.

“We are committed to finalizing this project despite the numerous challenges the project has faced. And we will continue to work closely with Logan officials to get construction completed and inspected.”

When the 800 Block apartments near Utah State University weren’t finished, several students took to a public petition asking Nelson Partners to find housing for every student displaced. 

Not one of Nelson Partner’s student housing apartments, in any state, is on a college campus. That means the company is not regulated by any of the universities the students attend. 

“Because USU is not involved in the construction or really that permitting process of private developments, we don’t have any control of what is being done there. And really, we were notified the same day that students were notified that they wouldn’t have housing available,” Katie Jo North, executive director of student enrollment at Utah State University said. “We have been trying really hard. We actually were able to get a list of those students and we’ve been calling them and trying to find housing for these students.” 

A pattern of behavior

However, while the frustrations of students and parents of the 800 Block invoked an outcry from the public, a look into Nelson Partners’ history shows a pattern of behavior. 

Previously, Patrick Nelson and his brother, Brian Nelson bought properties under the company, Nelson Brothers, until the two brothers split in 2017 and “Nelson Partners” was formed with Patrick Nelson acting as CEO. 

According to The Utah Statesman, a student-run publication at Utah State University, students signed leases for new luxury housing at “The Factory” in Logan in 2015. The student housing was supposed to be ready for move-in on Aug. 27, 2015. 

However, by Aug. 7, nearly 300 students were informed by The Factory management that they were unable to fulfill that promise. 

Patrick Nelson, said to the Utah Statesman in 2015, “I know we’ve lost a lot of people’s trust, but all we can do is work really hard to get everything done and earn people’s trust back.”  

That also wasn’t the first.  

That same housing, “The Factory,” missed a projected opening date two years earlier in 2013 according to The Utah Statesman article. 

At that time, the bank loan was not secured and the project ran out of money – causing them to delay opening the housing.  

However, the article explains that in that circumstance, they found alternate housing for every student that asked. 

A management “nightmare”

Beyond Nelson Partners’ struggles to finish housing on time, they have been routinely criticized for the management of their properties. 

In 2021, The Utah Statesman issued a two-part series about the “nightmare” students had experienced living in Alpine Flats, another Nelson Partners property in Logan. 

The articles detailed multiple instances of leases breached or changed without notice, contracts “lost in the system” and no longer honored, and unresponsive management. 

Out of 44 total Google reviews on the Nelson Partners, only three of them had over one star. 

According to Finn, there is “no pattern” in the different management issues and construction delays. Finn says each situation is unique to local issues. 

National issues

In May 2022, Nelson Partners Student Housing agreed to settle a lawsuit at its former Skyloft student housing near the University of Texas at Austin. The New York Times reported a Texas judge ordered Nelson Partners Student Housing to pay $50 million in a preliminary settlement from investors who claimed they were defrauded by chief executive, Patrick Nelson. Skyloft investors claimed Nelson has used some of the funds he raised through them to finance other properties. Nelson denies it. 

According to The Real Deal New York Real Estate News, under the terms of the settlement, the firm would have 18 months to raise money for the settlement once it’s approved. 

Articles from the New York Times, the Utah Statesman, and the Real Deal all reference Nelson Partners claiming the pandemic as the reason for their construction and management failures.  

Nelson has repeatedly pointed to the COVID-19 pandemic as the source of his company’s financial woes stating in a May 2022 release, “At Nelson Partners, the sudden glitch in our incoming rents forced us to suspend dividends [to] our investors, which has happened only rarely in our 15 years in business. We had to halt loan payments on two buildings that then slid into foreclosure. We lost $12 million overall, and we were lucky to get a $2 million PPP loan. As for the universities and colleges, they did just fine, thank you.” 

However, while many of Nelson Partner’s statements address the impact of the pandemic on the company’s ability to deliver their housing on time, none of his news releases address or even acknowledge the impact their housing delays have had on students. 

A footprint in Utah

Despite these national issues, Nelson Partners continues to buy up housing. Nelson Partners has the following map on their website, showing the location of their properties. The state with the most? Utah. 

A map from Nelson Partner’s website shows the location of their student housing properties.

Nelson Partners has the following properties within the Beehive state:

  • 800 Block Student Housing Apartments 800 Block, 777 N 800 E, Logan, Utah
  • Alpine Flats Student Housing Apartments 729 East 900 North, Logan, Utah
  • Apple Tree Cove Student Housing Apartments 668 E 800 N, Logan, Utah
  • Hampton Ridge Student Housing Apartments 681 East, 700 North Logan, Utah
  • University Gardens Student Housing Apartments 71 S Elizabeth St., Salt Lake City, Utah
  • University Gateway Student Housing Apartments 643 West 1200 South, Orem, Utah
  • University Towers Student Housing Apartments 630 S 1200 W, Orem, Utah
  • Almond Tree Student Housing Apartments 83 S 1000 E, St. George Utah
  • Dixie 9 Student Housing Apartments 244-250 S 700 E, St. George, Utah

What’s being done?

Johnston said she would like to see some effort on the part of Nelson Partners to compensate students that are now struggling to find housing. 

“A settlement would be something at least or I’ve heard of sometimes when other housing at other universities isn’t done they’ll join together with a hotel and let students live there until it’s done,” she said. “Or you know, just really trying to show that they actually care and get housing for these students.” 

Finn confirmed to KSL TV that Nelson Partners “will honor the construction addendum” included with the 2022 800 Block lease. 

 

The construction addendum for tenants of 800 Block apartments. (Nelson Partners) The construction addendum for tenants of 800 Block apartments. (Nelson Partners) The construction addendum for tenants of 800 Block apartments. (Nelson Partners)

 

The addendum explains that when construction is delayed beyond Aug. 29, the landlord will pay the tenant $300 in rent credit at the time of their move-in. 

The tenant is then offered two options: 

First, if move-in is delayed past Aug. 31, the landlord will provide a limited number of alternative housing spots on a “first come-first serve basis” until the apartment is available to live in. “Resident will pay rent without abatement effective September 1, 2022. 

Second, the resident will find their own alternate housing, “and rent will abate until the premises are made available for move-in. The resident will receive up to a $500 concession for each month the move-in is delayed.” The compensation will be applied to the rent charged “on the actual move-in date.” 

Johnston said she would like Nelson Partners to know that their actions impact more than just students. 

“I would just want them to know how much of a toll it took on so many people and students and their families,” Johnston said. “How much stress it caused and just panic of, ‘Oh am I gonna get to go to school? Am I going to have to drive two hours every day to get to my classes? Am I going to have to live in my car?'” 

For now, Johnston has switched all of her classes to online for the semester since she’s been unable to find housing in Logan. 

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Utah Student housing company has national, local history of issues