Resolution Trust Corporation: Real Estate Activities in North Little Rock, Arkansas

Published by the Government Accountability Office on 1990-11-13.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

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    GAO                                                            Fact Sheet for the Honorable
                                                                   Ikryl Anthony, Jr., House of

I   _.--.--

    Novc~rn tm- I !I90
                                                                   RESOLUTION TRUST

                                                                   Real Estate Activities
                                                                   in North Little Rock,


    (;Ao/G<;D-Y              l-l SE’S
“------   .-   .-
General Government   Division


The Honorable  Beryl Anthony,          Jr.
House of Representatives
Dear Mr. Anthony:
On March 5, 1990, Chairman J. J. Pickle,               Subcommittee        on
Oversight,      House Committee on Ways and Means, requested
certain    information      on Resolution     Trust Corporation         (RTC)
activities      in six geographic      areas.     This   fact   sheet
addresses questions         on RTC real estate holdings           and
property    management activities         in one of those areas--
North Little       Rock zip codes 72114, 72116, 72117 and 72118
in the Second Congressional          District     of Arkansas.
Chairman Pickle        asked that we send this information
directly     to you because of your interest           in this area.
The five other areas are being covered in separate                    fact
sheets,    including     one on Pine Bluff,       Arkansas,     that is
also being sent to you at Chairman Pickle's                 request.
Specifically,        the Chairman asked for information        on (1)
thrifts      and real estate assets placed under RTC control;
 (2) real estate        assets that have been sold and the
purchasers      of those sold for $1 million        or more; (3) the
number of real estate           agents that has been qualified       or
disqualified       for RTC contracts      and for those disqualified,
the reasons why; and (4) the managers of any high-value
real estate properties           in the inventory   and what they are
paid.      The following      discussion   provides  this information.
The Office    of Thrift    Supervision      initially     places troubled
thrifts   under the direct       su ervision        of RTC--which     serves
as conservator1     or receiver 9 --when certain          conditions,
such as insolvency,      capital     inadequacy,       or unsafe and
unsound practices,      exist.

lA conservator     is appointed  to, among other things,
operate the thrift     as a going concern,   and preserve             and
conserve the assets and properties      of the thrift.

2A receiver      is charged by law with the duty           of winding       up
the affairs      of a bank or savings association.
 In Arkansas,     RTC had nine thrifts      with total    assets of
about $2.6 billion      in conservatorship        as of June 30, 1990.
It also controlled      the remaining     assets of five thrifts       in
Arkansas that had been resolved,          that is, sold to new
owners or closed if no purchaser          had been found.       None of
the conservatorships        or resolved   thrifts    were located   in
North Little      Rock, Arkansas, but two thrifts         in
conservatorship      in Little    Rock, Arkansas,     have branch
offices    in North Little     Rock.    Savers Savings Association
and First     Savings of Arkansas each had three branch
offices    in North Little     Rock.
Within   the review area, we identified           seven real estate
assets,    collectively       listed   for sale at about $3.3
million,    that were owned by thrifts          under RTC control.
Table 1 shows the specific           real estate    assets located  in
the review area that are owned by thrifts               in the RTC
conservatorship         program.
                                        Table 1:
                          Real Estate Assets Under RTC Control
                        in the Review Area, as of March 31, 1990
        Property      Asset                                           List
           type       rxniber             Address                     price
        Apartments    1035988-5   700 N. Hills Blvd.               $2,600,000
                                  N. Little Rock, AR 72114
        Residence     8308-1012   23 Mine Hill Drive                   70,000
                                  N. Little Rock, AR 72118
        Restaurant    3360-01     6503 Warden Road                    385,000
                                  N. Little Rock, AR 72116
        Comnercial    2608        513 Main Street                      84,000
        office                    N. Little Rock, AR 72114
        Camnercial    2638        Hwy 70 and 391                       34,650
        land                      Pulaski County, AR 72116
        Residential   SNDL5BD     Sandlewood Subdivision               36,225
        lots                      Pulaski County, AR 72116
        Land          SNDL6WD     Sarkdlewood Subdivision              46,725
                                  Pulaski County, AR 72116


Within the review area, thrifts     in RTC's conservatorship
program had sold six real estate assets for about $309,000
as of June 30, 1990.   Table 2 list    these assets.
                                      Table 2:
                    List of Properties Within The Review Area
                         Sold By RTC, as of June 30, 1990
     Property    Asset                                                Sale
       type      number                  Address                     price
    Residence    1040547-2      2 Dove Creek                      $119,000
                                N. Little Rock, AR 72116
    Residence     10331066       10516 Old ConwayHwy                  8,200
                                N.  Little Rock, AR 72118
    E&sidence    8308-1011      1217 Nicole Street                   44,000
                                N. Little Rock, AR 72116
    Residence     1283          31 Coronado Circle                   80,000
                                N. Little Rodr, AR 72116
    bsidential   2437           End of North Oaks Drive              15,400
                                N. Little Rock, AR 72118
    Cannercial   3360           WardenRoad                           42,500
                                tierwood, AR 72118

RTC procedures     do not require       real estate agents to
register    with it because state laws and regulations
require    agents to work through licensed          brokers.
However, real estate brokers interested             in handling        RTC
property    are required     to register.      Brokers must certify
that their employees or subcontractors,             including       real
estate agents, meet qualification            and integrity
requirements.      As of July 20, 1990, 502 brokers had
registered     to provide    real estate brokerage         services      in
North Little     Rock.    One of these brokers,        Southern Inn
Management, Inc.,       is located    in North Little       Rock--zip
code 72116.      An additional     27 brokers are located           in
Arkansas, but not in North Little            Rock.    The remaining         474
brokers are from other states.

    RTC may disqualify         brokers,     or any other contractors,         on
    the basis of information            provided on the Fitness         and
    Integrity    Certifications         Form that must be submitted          with
    the firm’s    Contractor       Registration      Request.      As of July
    31, 1990, none of the brokers with offices                  located    in the
    review area had been disqualified.                 In fact,    as of that
    date, only 19 firms of any type nationwide                  had been
    disqualified     from being considered           for RTC work.       Firms
    may ask for a reconsideration              of their status at any time
    after they have been disqualified.
    The fact that a firm is registered            with RTC and its name
    is included on the contractor          registry    simply enables the
    firm to be considered       for RTC contracts        and receive
    solicitations     for services.      Inclusion     in the registry
    does not imply that the firm is qualified              to do work for
    RTC or that it is an approved RTC contractor.                  RTC
    contracting    procedures     require contracting        officers     to
    determine qualifications         and obtain additional         ethics
    certifications      from potential    contractors      each time a firm
    is considered     for a contract.
    RTC-controlled      thrifts   owned only one high-value      real
    estate asset in North Little        Rock--the Country Club
    Apartments.       The owner, Savers Savings Association,
    contracted     with First   Capital  Management Group of Pine
    Bluff,    Arkansas,    for property  management services       for the
    property.      Under the contract,    First Capital    received    5
    percent of gross revenue for its services.
    To obtain information      requested by the Chairman, we
    gathered data primarily       from RTC’s Central Regional
    Off ice; thrifts     under RTC’s control      in Little      Rock,
    Arkansas; and RTC’s national        real property        inventory
    database.     We used information      from RTC’s March 31, 1990,
    database and updated it to June 30, 1990, with data
    obtained   from thrifts    under the RTC’s control           in Little
    Rock and Batesville,      Arkansas.      We did not verify         the
    computerized     data; therefore,    we cannot attest          to the
    completeness     or accuracy of the property         listings.
    RTC has experienced   considerable     problems with its real
    property   inventory system.     It was aware that data in the
    system were not always complete and accurate and has been
    trying   to clean up the data as it updates the inventory.
v   Because of these data quality      problems, RTC placed a
disclaimer    on the database magnetic            tapes   and floppy
disks.     The disclaimer  stated that
         .   .information
                 .               contained     in the computer product
    is not guaranteed           and is submitted        subject    to, without
    notice,     correction,        errors,   prior     sale or withdrawal
    from the market.            The RTC, now and forever,           makes no
    guarantee,      warranty,       or representation,         expressed or
    implied,     as to the location,          quality,      kind, character,
    size, description,           or fitness      for any use or purpose,
    of any property         listed     and/or described         in the computer
RTC is in the process of hiring         a contractor    to develop
and operate a completely        new system for its automated real
property    inventory   records.    It expects this new system to
be in place during the first        quarter   of 1991.     Since RTC
solicited     for a system that was operational,        it does not
expect the delays sometimes experienced           in systems
We discussed   the results  of our work with the managing
officials   of RTC*s Central Region, who agreed with the
facts presented   in this document.
We did our work from April through              July 1990 in accordance
with generally accepted government              auditing standards.

As agreed with the Subcommittee,     no further  distribution
of this fact sheet is planned; however, we will make
copies available  to other interested    parties  upon request.
The major contributors   to this fact sheet               are listed  in
the append ix.   If you have any questions,               please contact
me on 275-8387.
Sincerely            yours,

Di’rector, Federal
   Management Issues

APPENDIX                                                       APPENDIX


Gaston L. Gianni,  Jr., Associate    Director,   Federal Management Issues
Ronald L. King, Assistant  Director,     Federal Management Issues
Stuart M. Kaufman, Senior Social Scientist
George Jones, Evaluator-in-Charge
Raymond E. Hiel, Evaluator
Hye Y. Meador, Evaluator

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