Sam Zell, the billionaire chairman of apartment landlord Equity Residential (EQR), said the company bought a rent-controlled complex in California because it was a good investment and not with the goal of raising rents.
The 1,811-unit Woodland Park apartment complex in East Palo Alto was the subject of a Bloomberg News story yesterday examining the shrinking availability of affordable housing in California’s Silicon Valley. Each month, as many as 300 residents receive notices from Chicago-based Equity Residential giving them three days to pay back rent or vacate their homes, according to an employee’s sworn testimony in a lawsuit.
Equity Residential, founded by Zell, bought Woodland Park in 2011 and owns more than 70 percent of the regulated apartments in the only city between San Francisco and San Jose with a rent-control law. Zell, in response to a question about the story, said on CNBC today that the company is required to send out eviction notices to those who are behind on rent.
“It doesn’t mean anybody was evicted,” said Zell, 72. “But there’s this problem that says you have to pay your rent. If you don’t pay your rent, we will replace you with another affordable tenant who can pay their rent.”
Equity Residential has filed 236 unlawful detainer, or eviction, cases that have been unsealed in San Mateo County Superior Court since December 2011, according to the court website. At least 160 cases -- or 68 percent -- ended with a writ of possession of real property, giving the tenant 24 hours to move out.
Zell said the property would be worth five times its value if it didn’t have rent control. Equity Residential bought the complex knowing that the law was in place and accepted that it would remain regulated, he said.
East Palo Alto is a haven of low-rent housing in a region where companies such as Tesla Motors Inc., Facebook Inc. and Google Inc. have minted at least two dozen billionaires and thousands of millionaires. Woodland Park is where Silicon Valley’s cooks, janitors and housekeepers live, often working second jobs to hang on to their homes as rents soar and wages stagnate.
Affordable housing is becoming harder to find as communities like Woodland Park disappear from cities across the country. One in four renters now spend more than half of their income on housing, up from one in five a decade ago, according to a 2013 report from the Harvard University’s Joint Center for Housing Studies.
To contact the reporter on this story: Brian Louis in Chicago at email@example.com