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Apartment manager, tenants meet to hash out rent dispute
By Gloria I. Wang
Management and tenants met in the first of a series of hearings in the rent dispute mediation process of the Riviera Terrace of Los Gatos apartment complex.
Sobrato Development, a local land developer, purchased Riviera Terrace in April. Since then, most of the 123 units have received notices of a rent increase of $429. The increase naturally did not sit well with the tenants, who say they dealt with a $200 rent increase last year. In response, they filed petitions with Project Sentinel, a nonprofit organization that deals with housing conflicts.
Project Sentinel held a meeting for both parties July 30 in the Los Gatos Neighborhood Center. Three employees of Trammell Crow Residential, the company that manages the apartments, spoke on the behalf of Sobrato. Three of the five residents chosen by the tenants to represent the group were also on hand. Several other residents came to listen to the meeting, but were not allowed to speak.
Project Sentinel's Director of Dispute Resolution, Martin Eichner, mediated the 1 1/2 hour meeting. Since the meeting was the first step in the process--a "fact-finding mission," as one attendee called it--Eichner conducted it in a question-and-answer format, with few decisions being made.
Residents were mainly concerned with the justification for increasing the rent during a time of high unemployment, when vacancies appear to be on the rise.
"In a falling real estate market, what's the strategy that resulted in you increasing the rent?" Eichner asked the Trammell Crow representatives.
Trammell Crow's David Lee explained that the increase is made possible by a section of the town's rent ordinance that allows Sobrato to increase the rent by 5 percent annually and also impose what's known as a debt pass-through. The debt pass-through says that owners can recoup part of a property's financing by passing on certain costs to the tenants.
Lee said that even with the rent increase, many of the apartments still rent for lower than the market rate. The increase and other calculations were based on the market conditions between March 1 and April 1, Lee said.
Sobrato is "not always about the dollar," Lee said. Tenants would be given options and benefits for the higher rent, including renovations and improvements in their units, and the ability to trade their apartments for updated ones without paying any extra.
The owner wants "an amicable solution that helps the community as a whole," Lee said. Lee mentioned Sobrato's proposal to build new units on the adjoining parking lot and convert the existing building into low-income housing, a proposal that was denied by a town committee recently. "They were willing to do a lot of things that are significantly compassionate," Lee said.
Although improving the community is important, tenant representative Rob Moyer said, whether or not the existing tenants will even be part of the community depends on the rent situation. "I think that compassion is more than just regrouting your bathroom," Moyer said.
Tenant representative John Bourgeois added that most of the tenants were more concerned with being able to stay in Los Gatos than some of the physical improvements to their homes.
"I have no doubt that the Sobrato family is an honorable family. Regardless, these are our homes. This is where we live," said Pharaoh Alberts, another tenant representative. "Perhaps something more than the bottom line should be considered." According to Alberts, Riviera Terrace is more than half-empty at present.
Both parties agreed that the ultimate compromise would be to negotiate the rent increase down to a number that's satisfactory to both sides. Lee acknowledged that, when the negotiation period begins, Sobrato representatives themselves will meet with the neighbors.
"Tonight is not going to be a night where we'll say, 'The rental increase came out at X, we'll bring it down to Y,'" Lee said.
The tenants who were represented at the meeting belonged to two of three groups. Residents were separated by the rental increase dates of Aug. 1, Sept. 1 and October or later. The latter group was not to receive their notices until the first weekend of August.
In order to begin the mediation process, Eichner said, Project Sentinel would need to receive petitions from at least 25 percent of the tenants. So far, Eichner has received petitions from more than half of the residents in the first and second groups--25 from Group 1 and 23 from Group 2, though "petitions keep dribbling in," Eichner said. As with the first two groups, the last group, consisting of approximately 30 residents, will most likely submit petitions and then meet to select representatives. The three groups may merge after members of the third group begin the process.
Heather Wallace, the district manager for the apartments, agreed to waive most of the rent increases for the time being. The tenants would not pay anything beyond the 5 percent increase and would be on month-to-month leases until the end of negotiations.
What has yet to be decided is if the tenants will be charged for the added rent retroactively when negotiations are over. The tenants requested that the charges be waived. Wallace said that she would discuss it with Sobrato and have an answer before the end of the week.
The next steps include Wallace giving to Eichner a list of the names of tenants in the third group, and Eichner disseminating the list to the five representatives. Trammell Crow promised to have Sobrato provide financial statements showing how it arrived at the $429 figure and agreed to give the residents a date for when those statements would be available.
The tenants in Group 1 must file a request for mediation by August 18, since they are given a time limit of 60 days from the petition filing date to do so. Project Sentinel will choose the mediator when the "true mediation stage" begins. Eichner said that he hopes Riviera Terrace will not reach that point and instead resolve the rent dispute early on in the process.
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Los Gatos, California Since 1881
