Affordable Housing Developer Makes Apartments Unaffordable For Many
ANTIOCH (KPIX 5) – Tenants in Antioch and Hayward say an affordable housing developer is making their apartment complexes unaffordable.
Sandy Heneitz is a low-income senior who now has to move because her rent is going up. She was in tears talking about moving away from her grandchildren. "Watching my little ones grow up is harder, it's an inconvenience now that I have to move," Heneitz said.
In February, Reliant Management Group purchased seven Bay Area properties including Sandy's building, Villa Medanos in Antioch. This purchase is part of a $116 million Bay Area Affordable Housing portfolio.
Reliant's plan is to turn each of the buildings into 100% deed restricted affordable housing for 55 years, but it came with unintended consequences: mass displacement of nearly all existing tenants.
"It just seemed like the exact opposite of what an affordable housing project should be doing," Kara Broadfuehrer with the National Housing Law Project said. Broadfuehrer specializes in low income housing tax credit, or LIHTC properties.
"The property at the time it was acquired is what you would call naturally occurring affordable housing, the rents were well below market," Broadfuehrer said.
Sandy, for example, was paying $925 a month for a one-bedroom apartment. Reliant tried to raise her rent to $1,309 a month. That's the maximum allowable rent developers can charge at a LIHTC property in Antioch. To qualify to live in a LIHTC property you have to make less than 60% of Area Median Income, because the cost of living is so high in the Bay Area. AMI is $49,000 a year.
Sandy's salary is lower than that, but she cannot afford the rent increase, so she is moving to Concord.
Tenants at Leisure Terrace in Hayward are facing a similar situation. Rent for a two-bedroom apartment there is increasing from $1,200 a month to $2,100. Most tenants at Leisure Terrace and Villa Medanos say they were told they made too much money to stay, including Katie Brown, who lives with her fiancé. They both work at Whole Foods.
"We were trying to save up for a wedding and our future, last month we were evicted," Brown said. Now she's putting her wedding on hold because they can't afford a wedding and a move within the same year.
California has safeguards in place to prevent this type of displacement. Affordable housing developers are supposed to go through each property and individually verify the income of the tenants living there. If a tenant makes more than 60% AMI and over-qualifies, they should be offered relocation assistance. Reliant says it tried to do that, but oftentimes tenants would have incomplete information so Reliant could not verify their income, and those cases prevented Reliant from allowing some tenants who may have qualified to stay.
"Nobody wants to see anybody displaced, period," Joe Sherman, President of Reliant Group, said.
"Over income people, while it's disruptive and horrible to move, they have other choices. The least vulnerable people have far fewer choices," Sherman said.
Tenants shouted Sherman down during a recent Hayward City Council meeting, yelling out "Tell the truth!" as he approached the microphone to explain what he calls a miscommunication.
"No question the communication could have been better. I was surprised to hear there were so many people who didn't understand," Sherman added.
Reliant did raise the rents at Leisure Terrace and Villa Medanos to the maximum allowable amount under LIHTC guidelines, which they do not have to do. "...but in the current environment, it's not possible to pay your debt service unless you're achieving maximum LIHTC rents," Sherman said.
"I had affordable housing, a lot of my neighbors had affordable housing and now a lot of my neighbors don't have anywhere to live right now," Octavious Scott said.
Scott is a veteran working a temporary job making $21 an hour. He overqualified to stay at Villa Medanos and tried to fight to stay. Reliant served him an unlawful detainer, trying to evict him, but dropped it after he agreed to move.
"I don't think they're an ethical organization and I urge city councils across the Bay Area to never give them this type of privilege," Scott said.
Hayward City Councilmember Aisha Wahab says she thinks the city made a mistake approving this project. She tried to introduce a corrective action at a recent city council meeting, but the motion didn't have enough support to pass. Instead, the council agreed to study the issue and learn from this case.
Wahab says most councilmembers believed the tenants at Leisure Terrace would be able to stay in their homes, but she says she did not anticipate this mass displacement.
"I do not think we had all the information available at the time… at the end of the day, we're not happy," Wahab said.
Analysts within the state treasurer's office also believed most tenants would be allowed to stay during this conversion. Internal emails from the treasurer's office show an email to Reliant that states, "...most of all existing tenants will be staying at the project after the project has become affordable."
Sherman now says he's reevaluating the way Reliant goes about its communication for these types of conversions, but for tenants in Antioch and Hayward, it might be too little, too late.
