Wells Fargo Bank said Wednesday it will head to court for third-party intervention after East Palo Alto's biggest landlord missed a sizable payment last month, throwing the ownership of about 1,800 city units into question.
Wells Fargo spokeswoman Elise Wilkinson said the bank will request a court-appointed receiver to oversee management of Page Mill Properties' East Palo Alto rental units, which are currently run by Page Mill subsidiary Woodland Park Management. A receiver is an uninvolved person or company who carries out court orders.
"The safety and quality of life of the tenants at Woodland Park is of primary concern to Wells Fargo," Wilkinson said in a written statement. "The receiver will ensure that professional on-site property management is addressing property conditions and maintenance. While our discussions with the borrower are confidential, we want the community to know that we take the situation very seriously and will continue to monitor it to understand the issues facing the tenants and properties."
Last week a Page Mill spokesman told The Daily News that the company was unable to make a one-time $50 million balloon payment to Wells Fargo on Aug. 4 because of financial problems due to the economy. And several days ago, Page Mill removed furniture from an on-site office and pulled management staff from the complexes, causing residents to wonder whether the properties were abandoned and if they should pay September rent.
Page Mill said Wednesday it's restoring service after reaching an interim solution with Wells Fargo.
"We would like to apologize to our residents for any interruption in our customary service levels that resulted from the bank's recent hold on our funds," Page Mill General Counsel Jim Shore said in a statement. "We're confident that any such service interruptions are over and service continues unabated. Any issues brought to our attention by residents are either resolved or are quickly on their way to being resolved."
Wells Fargo has not taken over ownership of the buildings and will only do so if the two parties cannot negotiate a deal, according to a person familiar with the situation who wasn't authorized to speak on the record. If Page Mill defaults on its loan and the properties go into foreclosure, the bank likely wouldn't take over until the end of the year or later, the person said.
The California Public Employees' Retirement System, or CalPERS, had funded $95 million of a $100 million investment commitment as of June with Page Mill, CalPERS spokesman Clark McKinley said.
McKinley declined to comment on what effect a Wells Fargo takeover would have on that investment.
"Of course, we are watching the whole situation with interest, and we may have comment at some later time," he said.
Meanwhile, Menlo Park Fire Protection District Chief Harold Schapelhouman said his department is waiting for logs and other proof that Page Mill is performing a fire watch and making repairs to its buildings on Newell Court.
"On the Newell property, there's nine buildings," Schapelhouman said. "Of the nine buildings, only one of the current alarm systems is even remotely working. We gave them a citation, a notice to repair, back in the June/July time frame. They have not done that."
Schapelhouman added that Page Mill officials were previously responsive to his department's concerns but had stopped readily making repairs over the past few months.
East Palo Alto police Chief Ron Davis and Schapelhouman met Tuesday to discuss what actions their departments will take if Page Mill abandons the property and decided to assign personnel to protect residents if necessary. They were relieved when property management staff returned to work earlier this week and appeared to be fixing things, Schapelhouman said.
"It's not as if we have an abandoned property with no one in it," he said. "We have an abandoned property with a lot of people in it. There has to be some level of supervision."
Page Mill spokesman Adam Alberti said Wednesday that a fire watch was in place, and employees were making repairs.
E-mail Jessica Bernstein-Wax at jbernstein@dailynewsgroup.com.
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