The company that controls more than half of East Palo Alto’s rental housing market is opposing a proposed city law that would provide relocation benefits to displaced tenants, tighten restrictions on demolishing buildings and offer protection from landlord harassment.
Chicago-based Equity Residential, which in 2011 bought more than 1,800 units in the city, has challenged the proposal as an “unlawful” burden on apartment owners and landlords, stirring fears among community groups and some City Council members that the company aims to force out low-income residents to make room for more affluent tenants.
“We have a history of offering protection for tenants because they’re vulnerable,” said Councilman Ruben Abrica, a former East Palo Alto mayor. “[Equity] is objecting to the whole concept. They don’t see a need for it.”
Within six months of acquiring its properties from Wells Fargo in foreclosure sales, Equity raised the attention of city officials by issuing 706 three-day eviction notices from January to June 2012. Equity’s notices warned tenants who were late on rent that they had three days to pay before they would face eviction.
After the city Rent Stabilization Board made those figures public, Equity stopped reporting the notices. Company executive John Hyjer said it was not required by law to notify the city of three-day eviction notices, only of unlawful detainers—eviction cases filed in court.
“It’s less onerous on the City of East Palo Alto’s already stretched resources,” Hyjer, Equity’s first vice president of investments, said in an email.
Shirley Gibson, a lawyer for LegalAid San Mateo, said when the city is not told of all eviction notices, it becomes difficult for organizations like hers to direct tenants toward programs that assist with rent payment.
In June 2010, East Palo Alto voters passed the Rent Stabilization and Eviction for Good Cause Ordinance, designed to protect tenants from “unreasonable rent increases” and “arbitrary, discriminatory or retaliatory evictions,” and to guarantee landlords the “right to fair return.” The proposed law, known as the Tenant Protection Ordinance, would expand tenant rights.
Since Equity Residential objected to the proposed ordinance, city officials have been working with landlord and tenant representatives to make revisions. Equity views the proposed changes as a violation of local and state laws. Larisa Bowman, a lawyer for Community Legal Services in East Palo Alto, called such concerns “unfounded.”
Equity Residential has opposed other tenant protection efforts in California. Sam Zell, the company chairman, donated $50,000 to Proposition 98, a ballot measure that would have phased out rent control throughout California had it passed in June 2008. He is also the chairman of Equity Lifestyle Properties, which has filed lawsuits challenging city rent control laws in Santa Cruz and San Rafael. Both companies are real estate investment trusts and are publicly traded.
Since Equity Residential’s purchase of its East Palo Alto properties, some tenants have complained about difficulty paying rent — one type of complaint is that a person will be told by a rent collector to come back the next day and then will be informed the rent is late.
Bowman, the community legal representative, said some of the confusion over rent payments is because of the portfolio’s change in ownership, from Page Mill Properties to Wells Fargo to Equity Residential. However, she still remains concerned. “The amount of rent a person is being evicted over is $47,” she said. “Are you after $47 or are you after this unit? I can’t prove that [but] for tenants it certainly feels that way.”
William Webster, a long-time advocate for affordable housing in East Palo Alto and member of the Rent Stabilization Board, said he believes Equity Residential wants to replace long-term tenants paying rent under market rate. “They’re going to exploit every angle that is legally permissible in order to [extract] profits,” he said. “They have a vested interest at this point in making life miserable for long-term tenants, under the Rent Stabilization Program.”
Equity Residential said it
does not intend to displace residents. But Hyjer noted “there has been a lot of discussion with the city that a significant amount of housing in Woodland Park has and is becoming functionally obsolete. Equity Residential has no intention of displacing current residents if and when this housing gets replaced.”
East Palo Alto officials will present the newly drafted protection ordinance at a City Council meeting March 18. Councilman Abrica said officials are aware of Equity’s reputation for playing hardball but added that the city would not be intimidated.
“If they are determined to fight you, they will use every weapon at their disposal,” Abrica said. “We have demonstrated that we’re not going to roll over. If we have to fight, we will fight. But ultimately that becomes the decision of the council.”