CLEVELAND — With downtown Cleveland’s largest apartment complex in foreclosure, 80% vacant and up for sale, the city is trying to step into the court process at Reserve Square — claiming the high-profile property has become a public nuisance.
Lawyers for the city recently filed a motion to intervene in a foreclosure lawsuit that’s playing out in federal court. City officials say the court-appointed receiver in charge of the property isn’t doing enough to fix code violations, including elevator outages, water damage and deterioration in the parking garage.
“We were patient for a long time,” Mark Griffin, the city’s law director, said during an interview Friday. “But month after month, these violations were not getting taken care of. So we felt that we had to step in.”
Reserve Square spans an entire city block off East 12th Street between Chester and Superior avenues. The 975-unit apartment complex, built in the 1970s, is comprised of two towers, a nearly 1,000-space garage and roughly 220,000 square feet of commercial space.
“If this building fails, it’s a hole in downtown,” Griffin said.
Government-sponsored mortgage giant Fannie Mae started the foreclosure process in mid-2025 over more than $78 million in unpaid principal, interest and fees. The property owner, an affiliate of the K&D Group of Willoughby, cooperated with the foreclosure.
WATCH: Reserve Square faces foreclosure lawsuit
At the time, K&D’s chief executive officer said soaring vacancy — fueled by changes in federal immigration policy and the loss of international students — made it impossible to refinance the debt. With its proximity to Cleveland State University and relatively affordable rents, Reserve Square had become a popular landing spot for students from overseas.
In August 2025, K&D passed control of the property to the receiver, Andrew Hayman of the Michigan-based Hayman Company. He’s responsible for trying to preserve the value of the real estate during the court process and shepherding the complex through a sale.
Court records show that’s not a simple task.
Hayman’s reports describe early efforts to get rid of squatters and bedbugs. Occupancy at the apartments has plummeted to 20%. Only a quarter of the commercial space is full.
And tenants are frustrated.
“Everything about it is broken,” said John Dasher, who lives on the 21st floor.
He and his roommate, Louis Tombazzi, moved into Reserve Square more than seven years ago. They like the location and love their lofty view of downtown office towers and Lake Erie in the distance. But they’ve watched the building gradually decline and empty out.
Dasher said it’s not unusual to run into people who are panhandling in the hallways.
“They work their way up into our gated garage area, and they work their way right into our building because our doors are all broken,” he said.
The air-conditioning and heat are inconsistent. Many mornings, there’s no hot water in their apartment. And when the elevators act up, the roommates have to take the stairs.
“Which is not good for people our age,” said Tombazzi, who is 71.
He and Dasher, 72, want to stay. But they’re not sure it will be possible.
“We always ask when these things will be fixed,” Tombazzi said. “And they always say, ‘Well, we’re working on it.’”
Hayman Company did not respond to a phone message or an inquiry through its website.
In the receiver's most recent monthly report to the court, Hayman wrote that more tenants are finally moving into the apartments than leaving. There are new cleaning and security crews in place, and contractors have been working to fix water damage and broken elevators.
Reserve Square went up for sale a few weeks ago, through the Institutional Property Advisors arm of the Marcus & Millichap brokerage. There’s no asking price on the listing. And no deadline for offers yet.
Dan Burkons, an executive managing director with IPA’s Midwest multifamily team, said he’s been talking to investors who want to tackle a major renovation project.
“There’s this overhang of structural repairs that need to be made,” Burkons said, noting that some of those groups are willing to invest $30 million to $40 million in a makeover.
“Once somebody does that,” he added, “this really is a matter of do they have the right management systems in place to lease 600 units. That’s a big undertaking.”
But local chatter about an alternative — demolition — is scaring some suitors away, Burkons said.
On the city’s own website, an information page about Reserve Square acknowledges that prospect, describing demolition as “the preferred long-term redevelopment strategy” if the building somehow ends up in public hands.
On Friday, though, Griffin said demolition isn’t the best path for that property.
“That would be terrible for downtown,” he said. “People have come to us and said, ‘Why doesn’t the city take it and tear it down and put a park here?’ That’s not urban life. We need capacity. We need people here. … We need people to live downtown.”
In a follow-up email, a city spokesman confirmed that a teardown isn’t on the table.
“Demolition is not being considered at this time,” he wrote, “but we’re keeping an open mind as we have conversations with additional stakeholders. Right now, our focus is holding the current property owner accountable and preventing any future owners from coming in who may further neglect these issues.”
Burkons said the brokerage team would love to meet with officials from City Hall to talk about the marketing effort. “I think we have aligned goals of getting a buyer who wants to put serious time and money into the asset,” he said.
In Cleveland’s motion to intervene in court, the city’s lawyers said there are 19 open violation notices for Reserve Square, covering dozens of issues.
It’s unusual, but not unprecedented, for the city to try to insert itself in a foreclosure case. Cleveland made a similar move last year, when the city was trying to stop an auction involving 14 historic apartment buildings near Shaker Square. In that case, the auction still happened — but the city’s maneuver delayed the sale and gave officials a greater voice.
“We’re being more aggressive,” Griffin said Friday, while standing on a sidewalk near Reserve Square.
“We want the folks who live here to know that we’re going to do everything we can to make sure every violation is fixed,” he added. “That their elevators work. That the pool is restored. And that the laundry room is what they expect. But also, that the hallways are taken care of. They deserve a safe place.”
Michelle Jarboe is the business growth and development reporter at News 5 Cleveland. Follow her on X @MJarboe or email her at Michelle.Jarboe@wews.com.
