Upheavel at local apartment complex unearths loophole in rent-control law
By Gloria I. Wang
A change in ownership of a Los Gatos apartment complex has both relieved some of the tenants' concerns and raised new ones, as the former, smaller operation has been replaced with a development corporation and property management company. The situation also serves as an example of a loophole in the town's rent-control law.
The Riviera Terrace of Los Gatos apartments, on Riviera Drive, changed hands in April. The previous owners, Valley Fair Realty, sold the complex to Sobrato Development for an undisclosed amount, and new management took over April 25. Riviera Terrace, built in 1961, has 123 apartments.
The sale was, in many ways, a relief for the residents of Riviera Terrace. Many had complained about the previous on-site management--which consisted of a husband-and-wife team--for not properly maintaining the complex and being unresponsive to tenants' concerns.
After property management company Trammell Crow Residential Services took over Riviera Terrace on April 25, some residents heaved a sigh of relief. "They seem to be very nice. They seem to be very professional and concerned," 12-year tenant Alex Bargelt said. "They told me, 'Whether we like you or not, that doesn't make a difference, we'll give you a good reference, anyway.' "
New ownership, however, brings with it new rent increases. Town code limits rent increases to once a year, at a rate of 5 percent of the existing rent. The exception to the rule is when a change in ownership occurs. In that case, owners can pass along either improvement costs, or debts incurred from the purchase of the property. For Riviera Terrace, it means that residents will experience a rent increase of at least $400, once their lease anniversary comes up, said John Shenk, Sobrato's senior vice president.
Upon receiving a warning of a "significant rent increase" from Trammell Crow on April 27, Bargelt gave his notice the next day. Bargelt declined to specify his current rate, but said that it had gone up $179 in October, and to pay the anticipated cost of $1,800 was not worth it. "No matter what you do to it, it's still a one-bedroom," Bargelt said. "I don't know how they can justify that when the economy is starting to slump." Bargelt said that the residents living above, below, to the right and to the left of him have moved or are planning to move, and that, so far, more than 20 people have also given notice.
Glenda Allaun, a seven-year resident, is paying $1,050 a month for her 700-square-foot apartment; when she moved in seven years ago, it was $650. "We're all between a rock and a hard place," Allaun said. "If we could afford to live somewhere better, we would."
Martin Eichner of Project Sentinel, a nonprofit organization that resolves housing disputes and discrimination conflicts, said that, if tenants feel that the rent increase is unfair, they should file formal complaints. That can't be done, however, until the landlord gives an official notice that lists the amount of the increase, a date and has Project Sentinel's contact information, which landlords are required by law to provide. "Until these qualifications are met, nothing's effective." To file a formal complaint, residents must produce a petition with the signatures of the majority of the tenants.
Shenk said that the previous owners charged well under current market prices, and that the new owners need to keep up with market prices, even if many people cannot or do not want to pay the rent. "It's reality," Shenk said. According to Shenk, such a significant rent increase has never happened at Riviera Terrace.
Management has fixed up an interior courtyard, redecorated the rental office and renovated the interiors of some empty apartments. Shenk said that Sobrato Development has no plans to change the existing buildings, because of a possible major project in the near future: the addition of a new, 100-unit building adjacent to the existing complex.
Shenk has met with town officials, including Director of Community Development Bud Lortz, to discuss possibly constructing 100 new units, then charging lower rental fees for 100 of the existing units. Presently there are large gravel lots next to the complex that residents use for parking, but something could be built in that space. Riviera Terrace is at its maximum allowed density, with 20 units per acre, but increased density is possible, if exchanged with affordable housing.
"We're certainly willing to pursue it," Shenk said. "I like it a lot. I think it would do a lot of wonderful things." Shenk said that the project would be at no financial cost to the town, and would prevent longtime residents from leaving Los Gatos
Lortz cautions that the idea is still in the beginning stages. Sobrato Development has not submitted any plans to the town; nor has the proposal been agreed upon by the company or the town. If Sobrato Development applies for the addition, it would go through the usual route of meeting with town staff, neighbors and town committees.
Lisa Meddows, who has lived in Riviera Terrace for 21 years, said that the Riviera Terrace apartments lacked amenities. "Not all units have air conditioning, ovens are not self-cleaning, some kitchen appliances are 40 years old, no vanity cabinet under bathroom sink, unheated pool," Meddows said.
"It's a 40-year-old building with termites holding up the building," Allaun said. Her dishwasher broke several months ago and she said that the managers refused to fix it.
Allaun said that, under previous management, there had been an unusually high eviction rate. "People have moved in and out faster than I can see them," Allaun said. She was hesitant to file a complaint against the managers, because she wanted to be able to get good references if she ever moved.
"I've tread lightly with [the managers] because I'm afraid of getting evicted," Meddows said.
Bargelt wrote a letter to the Los Gatos Weekly-Times in March, voicing concerns about the sale of the property. The letter addressed potential changes in landscaping, architecture and rent increases. It appeared in the March 14 issue; for unknown reasons, Riviera Terrace residents did not receive the paper that week.
According to Allaun, the complex had never missed a single week of the newspaper until the week the letter was published. "It's always been a strange situation," Allaun said. "I know we're not doing anything illegal, but I do know that threatening the tenants [with eviction] is illegal."
When contacted by the Weekly-Times on March 16, the managers insisted that everyone had received the newspaper and refused to answer any other questions.
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Los Gatos, California Since 1881
