Still reeling from the recent financial implosion of the city's largest landlord, East Palo Alto city officials, tenants and community activists are calling on Wells Fargo to halt its pending sale of 1,800 housing units to a single buyer -- a sale that they believe could lead to displacement of thousands of low-income residents.
The East Palo Alto City Council voted Tuesday night (Sept. 20) to send the bank a letter urging it to reconsider its sale of the 1,800 units formerly owned by Page Mill Properties to one company. Wells Fargo, which took over the properties in foreclosure after Page Mill defaulted on a loan a year ago, plans to sell the properties in the Woodland Park neighborhood to Equity Residential, a firm with about 126,000 units nationwide in its portfolio.
The bank's takeover of the Page Mill portfolio came on the heels of a three-year legal battle between the Palo Alto-based property manager and the city. The two sides clashed over the city's rent-control ordinance, with Page Mill initiating about a dozen lawsuits against the city. The company also angered thousands of residents by significantly raising rents in the affordable-housing units, prompting many tenants to leave.
Despite a chorus of community opposition and widespread concerns about displacement and gentrification, Wells Fargo has indicated that it plans to zoom ahead with the sale. In a letter to the city this week, the bank's Senior Vice President David Ash and Vice President Robert Maddox wrote that Equity is expected to complete its due diligence on the property acquisition in September. The closing of the deal, Wells Fargo officials wrote, is currently expected in late October.
Wells Fargo officials wrote in the letter that while the bank understands the community's concerns about selling the property to one investor, they believe a single buyer will present East Palo Alto with several advantages. The group would be well-capitalized and would be "able to quickly invest in the Property as needed to address tenants' needs and concerns, bringing stability and a better quality of life to the Property's residents compared to what's been experienced in the Property historically," the letter states. The buyer would also have the "capital, personnel and incentive to provide monetary and non-monetary support to the community overall."
"In addition, as East Palo Alto considers the future of affordable housing in its community as the existing rental stock age, it should be easier for the community to discuss its vision with one professional apartment organization with a long-term commitment to the Property rather than a disparate collection of smaller, less well-capitalized owners," Ash and Maddox wrote.
Wells Fargo officials noted in their letter that Equity has about 126,000 units in its portfolio, including 16 properties in California with affordable components.
"They are an exceptionally well-capitalized firm with an extensive track record of large, complicated transactions and have demonstrated expertise in owning and managing rent-controlled and rent-restricted properties."
But East Palo Alto officials and tenants believe the pending sale could spell the end of affordable housing in the city. A single buyer, they believe, could redevelop the area and significantly diminish the city's stock of affordable housing -- about 60 percent of which is located in Woodland Park.
The council on Tuesday directed staff to write a letter to Wells Fargo asking it to reconsider selling all 1,800 properties to one investor; to share with the community the report the bank commissioned from the non-profit group Bridge Housing shortly after Page Mill's default; to select a buyer whose plans are consistent with the city's long-term strategy for growth; and to respond to a letter the city had sent to the bank a month ago, asking about its plans for the properties.
Wells Fargo's announcement that it is planning to sell the properties to Equity -- a company chaired by real-estate magnate Sam Zell -- has prompted a grassroots mobilization of tenants and their advocates in opposition to the sale. Last week, about 170 people attended a Town Hall meeting organized by Youth United for Community Action, Peninsula Interfaith Action, and Community Legal Services of East Palo Alto, according to a staff report. Many said they were frustrated that Wells Fargo "has not fulfilled its commitment to consider the community's interests in the disposition of these properties that provide a key source of affordable homes for residents," Carol Lamont, manager of the city's Rent Stabilization Program, and Planning Division Manager Brent Butler wrote in the report.
Residents expressed similar sentiments, with some questioning Wells Fargo's commitment to the community and arguing that its sale of the Woodland Park portfolio to Equity would jeopardize the future of affordable housing in East Palo Alto.
"The fact that they have come to us with buyers and did not include us in the process shows they don't have a lot of respect for our community," Anthony Clark said.
The council majority voiced similar concerns. Councilman Ruben Abrica, a tenant at one of the properties, called on those in attendance to reach out to political, religious and community leaders and urge them to call Wells Fargo and ask the bank to reconsider its sale.
"Wells Fargo is trying to reduce this to a business perspective, which it is, but in my opinion it's a lot more than that," Councilman Ruben Abrica said. "We're symbolic of what's happening to people around the country.
"For 30 years in this community, I have seen white tenants, black tenants, Latino tenants, people who spoke English, who spoke other languages, home owners -- we have all stood together on this issue when it got tough. Sometimes, all we can do is express our opinions so people know where we stand."
Mayor Carlos Romero and Councilman David Woods had met with Wells Fargo officials before the bank selected Equity out of three finalists. Woods said he had told Wells Fargo that he thought it would be in East Palo Alto's best interests if the bank broke up the portfolio or, at the very least, selected an operator "who would keep them as rental units and not perform any future redevelopment."
"They selected a developer or a potential buyer who has indicated that they indeed would like to do redevelopment on the west side," Woods said.
Romero made a similar point.
"I felt it would be in the best interest of the City of East Palo Alto to break that portfolio up so we won't entertain another problem that we had associated with Page Mill."
Comments
East Palo Alto
on Sep 21, 2011 at 10:01 am
on Sep 21, 2011 at 10:01 am
Things just don't stay the same and life moves forward. Rising rents are occurring all over the bay area and landlords are just bringing up the rents to market value.
Midtown
on Sep 21, 2011 at 10:14 am
on Sep 21, 2011 at 10:14 am
Sam, one is either a part of the problem or a part of the solution. Sounds like you're comfortable sitting on your sofa spouting platitudes.
And of course the spin-meisters at Wells Fargo are paid to pitch with smoke and mirrors to justify all that matters to them; getting the money quickly and expediently and "commoners" be damned!
It's a sad state of moral decay hidden behind the usual fancy phrases.
I feel for those folks already struggling to make life work against the faceless and soulless corporate types.
Registered user
Midtown
on Sep 21, 2011 at 10:41 am
Registered user
on Sep 21, 2011 at 10:41 am
EPA should buy the property and give everyone free rent.
Downtown North
on Sep 21, 2011 at 10:42 am
on Sep 21, 2011 at 10:42 am
Sam has it mostly right. Spin or not, the bank is entitled to sell to whom ever it wishes. If Equity wants to buy the properties and deal with the continuing difficulties in EPA, they are entitled to do so.
What part of "private property rights" does Elizabeth not understand??
Oh, I forgot, this is EPA.
Crescent Park
on Sep 21, 2011 at 10:58 am
on Sep 21, 2011 at 10:58 am
This is a tough situation, but property rights (including the right to charge whatever rent one likes) is enshrined in the U.S. Constitution. No one has a right to rent control, other than in the short-term & as a result of successful political & social actions. If those renting in these apartments want to win, they had better organize & throw their weight around.
Duveneck/St. Francis
on Sep 21, 2011 at 10:59 am
on Sep 21, 2011 at 10:59 am
I am sorry, I do not agree that having one entity owning such a large chare of the rental housing is a good idea, it gives them too much power. I would like to see the properties broken up into smaller lots and sold to more corporations to allow more competative pricing and property management over there. We would not now be looking at this problem if so much property had not belonged to one entity, and now the market is being shaken. Let's not set ourselves up to be in this mess again, and don't give too much to any one entity.
Menlo Park
on Sep 21, 2011 at 11:05 am
on Sep 21, 2011 at 11:05 am
Wells Fargo is a bank- it is not a property manager. It did not take a bailout from the Feds, so it must be doing something right. Wells wants the properties off it's books. Let them do what they want to do with their property.
If the East Palo Alto pols want to buy the property and run it- let them. Keep the Feds out of it, as the Feds can't get anything right.
East Palo Alto
on Sep 21, 2011 at 11:25 am
on Sep 21, 2011 at 11:25 am
Yes, on the surface, the sale looks legal. There are, however, mitigating circumstances surrounding the sale & underneath it, including EPA's history as a redlined community & the responsibilities of a bank to its community, the system of checks and balances it must heed.
Us taxpayers, whether we believe in rent control or not, care about EPA or not, paid for Wells' purchase of Wachovia, which resulted in their accidental ownership of this portfolio. This is a portfolio which wasn't built or intended to be one property portfolio. These "units" being constantly referred to are peoples' homes, be it a studio apartment or a two bedroom house with a yard. It's very real that peoples' lives and futures are being messed about, due to Wells Fargo' duplicity & Equity's greed & proven track record of not caring a whit about tenants. Just check out their apartment reviews.
Now Wells has demonstrated that they are liars, having misled the residents about their intentions and recently hiding their activities.
To top it all off, many of us have never received an accurate maximum rent certificate under Wells Fargo's ownership. Their lame property management company, Laramar, can't even do that correctly.
We will NEVER do voluntary business with Wells Fargo due to their dishonesty & dishonorable behavior.
East Palo Alto
on Sep 21, 2011 at 11:29 am
on Sep 21, 2011 at 11:29 am
Chris, respectfully, we do have a RIGHT to rent control, because the residents have voted for it. We have a fair and balanced Rent Stabilization Ordinance.
What many are missing is encapsulated in what JustMe said - broken up as it should be, the properties would be more competitive. A small investor, be they a mom & pop type or a small company, could buy a few units that weren't enough to be under rent control & get a proper ROI w/out ousting people or angering the City. There are a number of landlords like that now, who take care of their rental property, have wonderful tenants & make a decent return.
East Palo Alto
on Sep 21, 2011 at 12:05 pm
on Sep 21, 2011 at 12:05 pm
Post removed by Palo Alto Online staff.]
Crescent Park
on Sep 21, 2011 at 12:31 pm
on Sep 21, 2011 at 12:31 pm
If this property was such a great opportunity, there would be many others looking to buy. I'm guessing "no".
My daughter rents in an Equity property and has enjoyed a nicely maintained and cared for facility. No trash, etc. Everything is painted and clean. Gardens well kept, etc. No problems.
East Palo Alto
on Sep 21, 2011 at 12:43 pm
on Sep 21, 2011 at 12:43 pm
CP Dad, there were other contestants, equally as bad as Equity. Of course, WF didn't want us to know this, as they've been playing Secret Squirrel most of the time.
Your daughter, frankly, is lucky to live in one of their better properties. I was appalled when I read their apt. rankings, especially locally. They're not a choice landlord & due to that, have high turnover at many of their locations.
East Palo Alto
on Sep 21, 2011 at 1:43 pm
on Sep 21, 2011 at 1:43 pm
For people like JustMe, here is a petition you can sign, opting not to show your signature publicly if you prefer:
Web Link
Thank you in advance for considering signing this petition.
Residents are currently en route to a protest at the Wells Fargo offices in San Francisco.
Leland Manor/Garland Drive
on Sep 22, 2011 at 8:51 am
on Sep 22, 2011 at 8:51 am
[Post removed by Palo Alto Online staff.]
Crescent Park
on Sep 22, 2011 at 2:50 pm
on Sep 22, 2011 at 2:50 pm
Private property owners should be able to sell, upgrade, hire a property manager of their choice, or do whatever else they wish to do with their property so long as it's legal. I do not fault the ownership group one bit for simply wishing to upgrade the property and get as large a return as they can with rent or sales. It's business. The west side of EPA is in a rapidly changing area that is prime for these upgrades based on its location and proximity to Palo Alto and Stanford. Like the Four Seasons Hotel, the adjoining business center, and the Home Depot/IKEA complex, these improvements would go a long way in changing the image and reputation of EPA. It only makes sense.
Duveneck/St. Francis
on Sep 22, 2011 at 5:14 pm
on Sep 22, 2011 at 5:14 pm
Wells Fargo is a public company that has a responsibility to its shareholders to sell this property for the largest amount. I assume that is one of their primary criteria, not EPA. Unfortunately, thats how capitalism works.
Stanford
on Sep 22, 2011 at 7:50 pm
on Sep 22, 2011 at 7:50 pm
It's not like EPA residents aren't aware of some of the comments being made here on this board. Wells Fargo, in addition to having a responsibility to its shareholders, has a responsibility to its TENANTS (and they've failed miserably) as well as the COMMUNITY in which they do business. This means that they have to behave responsibly and the sale of these units to Equity is arguably irresponsible. It's not as straight forward as what it owes its shareholders, even though that's the elevator speech.
Nonresident opinions about what needs to be done in East Palo Alto lacks depth and accuracy due to lack of real knowledge. What troubles me in these comments is the lack of perception on the nonresident side (except by JustMe)about the clash of values and that the residents values are being attacked, by Wells Fargo, these commenters and Equity.
If East Palo Alto is willing to live with the pros and cons of rent control, residents are living their values and walking their talk. Their values are different from some of their neighbors and they're also being exploited for that.
What also saddens me in the lack of depth in the nonresident comments is that none of them are curious about how or why East Palo Alto came into being and its history as a disadvantaged and underserved community. I don't use these last two terms lightly.
To believe that Wells Fargo is fine to sell these properties to Equity is a fine proposition demonstrates a lack of insight, lack of facts and lack of understanding about the very real racial history of this country. Just because people prefer to ignore its racial history doesn't erase it, or its people. Let's hope that Wells Fargo isn't successful in erasing these thousands of families.
South of Midtown
on Sep 23, 2011 at 8:22 am
on Sep 23, 2011 at 8:22 am
NoW, That sounds pretty sanctimonious. The history of this country is full of the struggles of people of all ethnicities working hard to make it in a competitive environment. It's still that way. The opportunity to strive is here for everybody. For anyone with a crummy landlord, I suggest you get a shovel and start digging. When you get in a position to own the property others live in, you can be as generous or as greedy as you choose.
Stanford
on Sep 23, 2011 at 10:41 am
on Sep 23, 2011 at 10:41 am
Who cares what Observer thinks. It's another example of classist elitism at work, which is happening all over the peninsula. It's great that residents, voters and city officials are all on the same page and walking their talk. They're standing up for their beliefs and values. It's the classic little person vs. big corporation here. May the little person win!
East Palo Alto
on Sep 23, 2011 at 6:35 pm
on Sep 23, 2011 at 6:35 pm
It also needs to be said that WF isn't giving right of first refusal to tenants in duplexes or single family homes. They want to sell all of these diverse properties as one portfolio, so it doesn't matter if residents wanted to make an offer.
another community
on Sep 24, 2011 at 11:23 am
on Sep 24, 2011 at 11:23 am
"Affordable rents" does not mean "Dirt Cheap rents"...and capital improvements should allow for pass-through rental increases to pay for upgrades.
Otherwise a landlord would have a negative incentive to never make any up-grades and be the stereotypical "Slum-lord".
Besides, it is my belief that there are actually some tenants out there that want to live in a decent place, and, as far as change goes, it's human nature to bemoan an event before it even happens.
Stanford
on Sep 24, 2011 at 11:51 am
on Sep 24, 2011 at 11:51 am
Cid, you ought to read the Rent Stabilization Ordinance. Of course landlords can make improvements on their property and get a better return on their investment in East Palo Alto. Your loose use of terms is misleading. If Wells Fargo had gotten their act together when they took over the portfolio and actually worked to get the rent certificates issued, they'd be a longer way towards making money on it. Which, of course, they have because they paid little for Wachovia. This whole debacle isn't the City or the residents' fault, it's the fault of banks just like Wells Fargo and greedy investors.
That's what rent control is for, in part - to protect residents from the greed of bankers and developers.
Another thing you are missing, like so many people on this board: a truly accurate view of the condition of the properties. You cast judgement based on an article, not with real knowledge. There's a healthy in between of greedy guts like Equity and slumlords; a number of the landlords there have historically been able to be that in between, but it certainly doesn't make headlines.
East Palo Alto
on Sep 25, 2011 at 8:40 am
on Sep 25, 2011 at 8:40 am
This portfolio of properties is structured specifically for future development which will wipe out the structures and rebuild a gated community. Current residents will be forced to move just like the redevelopment of Whisky Gulch and Ikea
Stanford
on Sep 26, 2011 at 6:41 pm
on Sep 26, 2011 at 6:41 pm
The big diff is that in the 2 redevs cited above there were relo fees paid to tenants & it was planned redev by the City. In this case, the City is fighting this sale. These are key differences!!
Menlo Park
on Sep 27, 2011 at 11:37 am
on Sep 27, 2011 at 11:37 am
I live across the street from one of these properties...I must say in my opinion the best thing that can happen is gentrification of this are. You would not believe the amount of junk food wrappers that is dropped on the street in front of our house (and blows into my yard) and the number of cars that pass at all times of night with loud sub-woofers thumping. Don't tell me people the residents can't afford higher rent when they are spending money on these things. I see parties with blow-up castles etc. Affordable housing is a relative term. I'd love to see a landlord who invests in the properties and see rents move with the market. If they choose to expand the Four Seasons Business Park, frankly I have no problem with that. We're a big state. There's a wide range of places one can choose to live in California, with rents that vary tremendously. I don't see any reason to try to fight with market rents anywhere, the free market will ensure that assets are used by those who most value them as long as prices are allowed to fluctuate based on supply and demand.
Stanford
on Sep 27, 2011 at 6:45 pm
on Sep 27, 2011 at 6:45 pm
Bluethroat should rename themselves Cutthroat; much more suitable. As if having some complaints about the neighbors justifies this level of rape and pillage - er, gentrification.