New rent increases to hit 'Page Mill' tenants

by Sue Dremann

A second wave of rent increases this year could hit tenants in as many as 850 East Palo Alto apartments by September, the apartments' owner, Palo Alto-based Page Mill Properties, has announced.

The new 7.7 percent average increase will come on top of a 9 percent increase most tenants received in April, Page Mill CEO David Taran said.

Page Mill owns 1,700 apartments located west of Highway 101 and both north and south of University Avenue.

Taran said the increases are needed to offset an $11 million investment Page Mill has made since it acquired the properties over the past two years, including anti-crime efforts.

Taran also said Page Mill has hired 45 tenants, is making arrangements for tenants with special-circumstances and is discussing special rents for teachers in Ravenswood City School District so more can live in the community.

"In the long term, we want to continue to transform the area so that residents can thrive," Taran said.

Despite a community outcry about the increases early this year, only an estimated 13 tenants moved out after the April rent hike, Taran said. Some may have left because they can no longer easily conduct criminal activities, he added.

But Taran's timetable is disputed by Victor Ramirez, a paralegal with Community Legal Services of East Palo Alto, who said increases will take effect Aug. 15, not in September. He also said some tenants will get far larger increases than the 7.7 percent average. He said he saw one tenant's notice that set a new rent of $875, up from the present rent of $715.

"That's more than 20 percent," he said. "It's very upsetting. I don't have good words for this. Yes, it will displace a lot of people."

The increase stems from a lawsuit the company won against the City of East Palo Alto, which has a rent-stabilization ordinance that caps annual increases at 3.2 percent. The annual certificates accumulated over several years when the cap was not used by prior owners, and Page Mill felt it could use the accumulated increase. The city challenged the increases over 3.2 percent.

In February, Judge Beth Larson Freeman of the San Mateo County Superior Court gave Page Mill the right to apply unused certificates. The certificates allow Page Mill to raise rents as much as 37 percent.

Each year the city allows landlords to raise rents under its rent-stabilization ordinance, but ties the rate to the consumer price index, with a 3.2 percent annual cap. The city sends out notices of maximum allowable rents every year in July and rent increases generally occur in August.

Page Mill first raised rents an average of 9 percent in April. The increase would have been effective last September, but paperwork glitches by the city and the lawsuit delayed it, Taran said.

Page Mill can raise the rates again this September, but the rent increase won't be based just on this year's certificates, Taran said. The company plans to use more of the old certificates to raise the rent 7.7 percent average, he said. Notices were sent to tenants Friday, he added.

The impact of the new increases is unknown, particularly coming on the heels of a previous increase. City officials could not be reached for comment.

Taran said he would work with anyone with disabilities, with fixed incomes or where there are special circumstances in adjusting rents. The increases are necessary to recoup some of the $11 million in costs Page Mill has laid out so far to repair dilapidated buildings and to cover a small portion of inflation, he said.

The properties and surrounding neighborhood were in much worse condition than anticipated when Page Mill acquired them, Taran said.

An overgrowth of vegetation provided hiding places for criminals and habitat for rodents; the front doors of many units were broken, leaving tenants vulnerable to home invasion and crime; plumbing didn't work; roofs leaked and chop shops operated in some of the parking garages, he said. Many buildings were seismically unstable and staircases were broken and street lights were all broken, he said.

"People were afraid to go to their windows," he said.

Since acquiring the properties, Page Mill has made seismic upgrades, removed hiding places, repaired rotting porches and steps, fixed broken doors, replaced 24 roofs, added gates, night security and surveillance cameras, and evicted troublemakers who terrorized tenants, Taran said. He said he also hired a pest-control company to remove rodents and replaced street lights.

In addition, 45 tenants have been hired to work for the company in East Palo Alto and at Page Mill's offices in downtown Palo Alto, he added.

"We wanted to make more than a real estate investment. We wanted to do something for the community – for us to make a major impact," he said.

A goal is to offer housing for a variety of income levels, Taran said. He is currently talking to teachers in the Ravenswood City School District about providing affordable housing so they can live in the community and not have to commute, he said.

Page Mill's portfolio includes high-rise commercial buildings such as Park Center Plaza in San Jose Market Center in San Francisco and restoration of San Francisco's Clift Hotel.

Lance Ignon, a consultant/spokesman for Page Mill Properties, said the firm has no plans to convert the apartments to condominiums.

Page Mill looked at Craig's List in the company's consideration of average rents in East Palo Alto, Ignon said.

"We found two other comparable 1 bed, 1 bath apartments advertised. One was for $1,000 and the other was for $1,300. Our average -- what we are advertising for empty apartments -- is $1,100. Most of the apartment rents after the increases are less than that," he said.

Fifty-one percent of tenants will be affected by the rent increase, Ignon said.

Comparable apartments in Foster City are $1,766 per month; in Mountain View, $1,500; in Redwood City, $1,400 and in Palo Alto, $2,100, he added.

He said the 1,700-units figure now being used replaces an earlier estimate of 1,600 units, but no additional units have been acquired.

(Staff Writer Sue Dremann can be e-mailed at sdremann@paweekly.com.)