Tenants Allege Harassment in East Palo Alto

Friday, December 5, 2008
Gennady Sheyner
Palo Alto Online

The railings inside 2001 Manhattan Ave. glisten with fresh black paint, but the hallways are deserted, save for a crew of painters. About a third of the apartments in this East Palo Alto apartment complex are vacant and visitors can pass by stretches of three apartments with doors ajar, revealing freshly installed Pergo floors and spotless kitchen cabinets.

The only thing seemingly missing is people.

The property, like many others in the Woodland Park neighborhood, has been losing tenants at what tenant advocates say is an alarming rate in the past year. Some have been priced out of their apartments by recent rent increases, while others left because of what they said was harassment from Page Mill Properties, a Palo Alto-based developer that manages 1,789 rental units in this low-income neighborhood.

At another apartment building, 1957 Cooley Ave., seven of 29 apartments stood empty on a recent afternoon.

Page Mill reports the vacancy rate at its 53 properties as about 13 percent, but tenant advocates and city officials maintain it's much higher. Chris Lund, a community organizer and Page Mill tenant, had recently toured 321 units at various apartment complexes and counted 77 vacancies, a 23 percent vacancy rate. Some of Page Mill's current tenants have also indicated their plans to move out soon.

Fredo Ambris, who lives at 1957 Cooley Ave., is one of them. Ambris, 23, said his rent has recently gone up from $800 to $1,250, far out of his price range. On a recent afternoon, he was discussing his plans to share a larger apartment with his friend, Jose Hernandez, who lives in an apartment complex across the street, also managed by Page Mill Properties.

"Everyone's moving out," said Hernandez, 27, who has been living in the neighborhood since 1989. While they talked, two men wearing sheriff's badges on their chests walked in through the building's front gate to serve an eviction notice to a different apartment. To Hernandez and Ambris, the proceedings were business as usual.

"See those houses across the street?" Hernandez asked, pointing to his complex at 1 Newell Ave. "Pretty much the whole second floor in that building is empty. The third floor - also empty."

Page Mill argues that all the money it received from the rent increase has been poured into property improvements at its various sites. Company representatives point to improved security lighting, seismic retrofits, new video surveillance systems and landscaping enhancements.

Russell Schaadt, director of asset management for Page Mill Properties, acknowledged that some people are moving out because of the rent increases. But he traced the problem to previous property owners, who kept the rents lower than allowed by the city's rent-control ordinance and failed to maintain the once desolate properties.

"We've spent more than $11 million to renovate these properties," Schaadt said. "We've installed a lot of cameras and lighting and we have gated up properties to keep them secure."

The company's website says Page Mill "is committed to the 'quadruple bottom line' by serving the needs of our investors, tenants, communities and the environment" and company officials point to planned amenities such as a new swimming pool and a community garden as signs of Page Mill's commitment to renovating a neighborhood that was neglected for decades.

But East Palo Alto officials and tenant advocates maintain that the residents are getting a rotten deal in this exchange. The city had filed a lawsuit against Page Mill earlier this year, seeking to prevent the rent increases. Last week, city officials decided to withdraw the suit.

Page Mill immediately released a statement claiming the "attorneys for the city acknowledge that the rent hikes weren't illegal and have chosen to simply give up and dismiss the case."

But Attorney Rick Jarvis, who represented the city against Page Mill, said the cost of litigation and the meager nature of potential winnings were the real reasons for the withdrawal.

"This doesn't mean the city agreed that the rent agreements were lawful, but, as a practical matter, with the passage of time there was less practical relief the city could get for the tenants," Jarvis said.

Even though the lawsuit has been dropped, the tension between East Palo Alto and Page Mill has only grown more heated. Mayor Ruben Abrica, who lives in a Page Mill building, plans to introduce a resolution at a City Council meeting later next month condemning what he called Page Mill's "underhanded tactics" toward its tenants.

Abrica pointed to Page Mill's recent changes to its parking policies, requiring all tenants to go to the central office and get a new parking sticker or risk having their cars towed. He also criticized the company for charging $100 late fees for rent payments that are a day late and for sending people door-to-door with new leases and asking tenants to sign these leases without providing a copy for the tenant.

Schaadt said the parking policy was necessary to ensure every resident has a secure parking space. He acknowledged that the company has been asking tenants to sign new leases but said the move was necessary because the previous leases were outdated and did not reflect current laws. He also said the $100 late fee is a standard practice and that tenants have five days to pay their rent before the fee is tacked on.

Even if Page Mill's tactics are legal, Abrica said, they are "unconscionable and unreasonable.

"These guys are extremely bureaucratic and heavy-handed in their business practices and they end up harassing many of their tenants," Abrica said.

"Some tenants complain and when they do, they get even more attacked," he added, referring to numerous follow-up administrative requests Page Mill makes.

Company representatives deny they harass tenants.

Abrica suspects Page Mill may be involved in a concerted effort to drive out its low-income tenants and replace them with residents who can afford the higher rent prices. He pointed to the business model known as "predatory equity," wherein investors purchase cheap rent-controlled houses and then drive the tenants out so they could charge substantially higher rates.

This practice, as detailed in a May article in the New York Times, relies on a higher-than-average vacancy rate. It has been especially common in New York City, where thousands of rent-controlled apartments have been recently purchased by private equity firms looking for major profits in a short time.

"I've seen this type of behavior before from landlords who were speculating on the market," Abrica said, referring to Page Mill's tactics.

Page Mill wouldn't disclose how much money it has invested in its East Palo Alto properties. But it received an investment of at least $75 million from the California Public Employee's Retirement System (CalPERS), the nation's largest pension fund. Clark McKinley, spokesman for CalPERS, said the fund "doesn't comment on the affairs of our real estate partners."

Meanwhile, dozens of tenants are still hoping the city's Rent Stabilization Board will keep their rents from spiking out of control. Juliet Brodie, director of the Stanford Community Law Clinic, represents 136 tenants who have signed a petition contesting their rent increases and claiming they violate the certificates of maximum legal rent, documents which dictate how much rent could be raised. The argument will be heard by East Palo Alto's Rent Stabilization Board in January.

Brodie is also handling the case of three tenants who were recently evicted. She said her clinic had to turn away other Page Mill tenants who are fighting evictions because it didn't have enough resources to accommodate them.

"What we're seeing is a frontal attack on rent control in East Palo Alto," Brodie said. "These people are really hurting. People are leaving town."

FAIR USE NOTICE. This document may contain copyrighted material the use of which may not have been specifically authorized by the copyright owner. Tenants Together is making this article available on our website in an effort to advance the understanding of tenant rights issues in California. We believe that this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the U.S. Copyright Law. If you wish to use this copyrighted material for purposes of your own that go beyond 'fair use,' you must obtain permission from the copyright owner.

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