The East Palo Alto City Council is discussing whether to accept a settlement proposal that would put to rest about 10 active lawsuits with its biggest landlord, city officials said Tuesday.
The council has met in closed session twice in the past several weeks to discuss the proposal but has yet to enter formal negotiations with Wald Realty Advisors, the court-ordered receiver that took over operations for Palo Alto-based Page Mill Properties' approximately 1,800 East Palo Alto rental units in September, City Attorney Vince Ewing and Vice Mayor Carlos Romero said.
A San Mateo County Superior Court judge appointed Wald to run the apartment complexes after Page Mill and its subsidiaries failed to make a $50 million balloon payment to Wells Fargo Bank in early August.
"Wald did make a settlement proposal," Ewing said Tuesday. "What the city has done is receive the information and start to consider it. The city has not made a counter offer or anything like that."
Page Mill and East Palo Alto have been involved in a bitter legal dispute for about two years, with many of the suits between the two parties centering on rent hikes and other issues related to the city's decades-old rent control law. Part of the question is whether Page Mill was correct in raising rents to the maximum amounts listed on yearly certificates generated by city officials. In many cases, those numbers were far below what tenants were actually paying when the company began buying properties in the city of 32,000 in 2006, leading to rent increases of as much as 50 percent for some residents. Many people left because they couldn't afford the new rents.
Attorneys for Page Mill won a legal battle this fall to have a new rent ordinance that would have closed existing loopholes removed from East Palo Alto's November election ballots.
However, the city plans to put the proposed ordinance before voters this June after correcting what a judge saw as noncompliance with state law, Ewing said.
The city council has received comments from tenants' groups and the rent stabilization board in recent weeks, which it will consider when discussing how to handle Wald's settlement proposal, he added.
The council is scheduled to consider the proposal again in closed session at its regular Jan. 5, 2010, meeting, Ewing and Romero said.
"I think it's safe to say that the council in one form or another will meet with the receiver to discuss his proposals in a formal fashion," Romero said. "The amount of time that we've put into this so far is an indication that the council would like to try to settle some of these issues through negotiations outside of the costly court proceedings."
Romero noted that a "global settlement" of all Page Mill cases would be difficult because some involve parties other than the city.
Receiver Dave Wald said in an e-mail Tuesday that he couldn't comment on active lawsuits but noted that "as a general matter, existing tenant rents are closely tied to the resolution of the pending litigation."
In an Oct. 28 litigation report, Wald's attorneys said they were having trouble getting information from Page Mill and its lawyers on the lawsuits.
"The receiver's communications with counsel handling the pre-existing actions also was complicated by the fact that those counsels generally asserted that they are owed substantial unpaid attorneys fees and costs," the report states.
"It also is important to note that (Page Mill's) former property manager has failed and refused to turn over all documentation in its possession regarding the operation of the receivership real properties ...," the document continues. "The receiver believes that the documentation that has been withheld by the property manager may be essential for the receiver to determine agreed upon rents in order to resolve many of the pre-existing actions."
Romero speculated that the situation might have changed in the past two months since Wald has apparently retained at least one former Page Mill attorney.
He noted that some tenants still send e-mails complaining about the condition of the apartment complexes.
"I'm still getting e-mails from folks saying it's the same Page Mill employees — just they switched the colors of their uniforms," Romero said. "To be fair to the receiver it appears to me that the deferred maintenance and the backlog of maintenance requests were so large that getting to them in a timely fashion has been really difficult."
Meanwhile, Youth United for Community Action is organizing a rally this Thursday at noon in front of one the bigger Page Mill complexes at 5 Newell Court to protest "the false and ever-changing rent increases," the youth organization said in a statement.
"While the court-appointment of Wald Realty Advisors took place almost two months ago many tenants still feel crunched by the high rents and feel there are many questions left unanswered," the statement said. "Many tenants still report getting mixed messages from staff, getting harassed by security and don't feel respected."
Wald said Tuesday that about 40 people work on-site at the complexes for the new property management company, Investors' Property Services. While a "significant number" of those staffers are new, some previously worked for Page Mill's property management arm, Woodland Park Management, he said.
A Page Mill spokesman couldn't reach company officials for comment Tuesday.
E-mail Jessica Bernstein-Wax at jbernstein@dailynewsgroup.com.
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