Editor's note: This story has been updated with comments from the Strategic Housing Finance Corp.

Just over two months after Travis County's Strategic Housing Finance Corp. announced the planned sale of the Rosemont at Oak Valley affordable apartment community, local housing nonprofit Foundation Communities—Rosemont's prospective buyer—is backing out of the deal.

For residents at Rosemont, the scrapped sale comes after years of uncertainty surrounding their living situation at the complex, including allegations of mismanagement and widespread reports of substandard living conditions.

Like much of Central Texas, Rosemont experienced facility damage as a result of Winter Storm Uri in February 2021. That summer, county commissioners intervened to assist tenants after property manager Capstone Real Estate Services Inc. announced widespread evictions at the complex to repair damages from the winter storm.

Residents at that time said the move came after years of already living in substandard conditions that Capstone and the county affordable housing nonprofit had not addressed. Even after Travis County allocated millions of dollars to facility improvements, tenants maintained issues ranging from damage to mold persisted at Rosemont.

The local renters rights group Building and Strengthening Tenant Action has been working with the Neighbors at Rosemont Tenants Association over the past several years. According to BASTA representatives, tenant leaders were informed Feb. 22 that Foundation Communities was backing out of its planned acquisition after inspecting the site and discovering “horrible conditions” that tenants had long been pointing to.

“They were very disappointed. And I think some of them say that part of them felt like this was going to happen. They’re so used to being let down,” BASTA Project Coordinator Gabby Garcia said. “For so long, they’ve been fighting just for the most basic things to get fixed there. They’re doing everything right; they’re reporting the conditions; and their current owners just have managed it so badly that this was like a light at the end of the tunnel after two years of fighting. And so having that hope extinguished has been hard. But they’re not the type to give up.”

Foundation Communities Executive Director Walter Moreau declined to comment on the specifics of what the nonprofit had uncovered at Rosemont but said the organization determined conditions there are beyond the scope of what it can address.

“We’re sad. We’re disappointed we couldn't move forward,” Moreau said Feb. 27. “The last two months, we’ve been doing inspections and basically doing our due diligence. And we knew the property needed a lot of repairs, but the inspections revealed a number of issues. And it’s just a big property too. So at this time, we just don’t have the capacity to buy it and turn it around and do it right.”

Garcia said the February announcement came as a shock to some tenants who had previously met with Foundation Communities and shared information about lingering facility issues at Rosemont in the lead-up to the planned acquisition. She said the experience mirrored many tenants' past claims that their reports of experiences at Rosemont were not taken seriously.

Patrick Howard, SHFC's executive vice president, said maintenance issues at Rosemont were present before the winter storm, in part given the property's age. He said news of storm-related relocations and repairs may have raised the hopes of residents looking for more comprehensive fixes, which were complicated by insurance and maintenance processes since 2021.

“It had some longstanding issues that warranted more than just the impact of the storm, but obviously this was an opportunity for folks in terms of pointing things out and hoping that those things get resolved. I think some of that differences in terms of expectations has caused some of what I believe was problematic. And then I think things just are worn down," Howard said.

According to Howard, the 280-unit property is currently at approximately 58% occupancy. Due to repeated code violation reports, Austin has blocked any new rentals at the complex.

“It hasn’t sustained itself since we bought it," he said. "This has been the most sensational purchase and sale and management ... Nothing’s gone right with this."

The SHFC began a bidding process for a sale of the Rosemont community last fall after receiving an unsolicited purchase offer. In addition to residents' calls for long-needed repairs, community members also voiced concern over the outlook for the long-term affordability of units there given that a restrictive covenant ensuring lower rents is set to expire in the coming years.

At that time, tenant leaders and BASTA produced several demands for a sale that Garcia said they will continue to press for if a new solicitation process begins. Resident requests include maintenance assurances and an extended restrictive covenant for affordability from any interested buyers.

Howard said the SHFC board will consider Rosemont's future at its upcoming March regular meeting. He said leaders at the housing entity will consider proposals from other interested buyers involved in last year's solicitation, and that board members hope to quickly select a new approach in the coming months.

Howard added that all potential buyers have agreed to an "unprecedented" 99-year extension of affordable housing at the community.

“All the respondents, the three remaining respondents that didn’t get selected, they’re all qualified to do the work. They all committed to long-term affordability and they all have the wherewithal to make it happen. It would just be a matter of some of the board’s preferences in terms of the approach, how long it’s going to take to close," he said.

In the meantime, Garcia said residents remain disappointed over another setback in their community after what some viewed as their best chance for improved management and living conditions.

“It’s also frustrating that out of all of the developers that do affordable housing in Austin, Foundation Communities is probably best positioned to actually pull off a huge feat. And the fact that they backed out when they probably were the ones that could do it, it’s very frustrating, and I think it says a lot about the affordable housing community in Austin and just how we need to do better,” she said.

“I wish the outcome for us was different, but we did the best we could,” Moreau said.