Despite protests from the community and concern from the City Council, Wells Fargo Bank is now finalizing its sale of more than 1,800 housing units in East Palo Alto to a single buyer with a nationwide portfolio.
The firm Equity Residential announced Friday that it is preparing to take ownership of the Woodland Park housing portfolio that was previously owned by the Palo Alto-based company Page Mill Properties. Wells Fargo acquired the properties a year ago through foreclosure after Page Mill defaulted on a $50 million loan from the bank.
Wells Fargo's recent decision to sell the properties to Equity Residential has attracted heated opposition from the council and from the city's affordable-housing advocates, many of whom fear that Equity will redevelop the neighborhood, which includes more than half of the city's affordable-housing stock.
In September, the council sent a letter to Wells Fargo urging the bank not to sell the properties to a single buyer. At a Sept. 20 council meeting, council members and housing advocates voiced concern that the new buyer would follow the example of Page Mill, which raised rents and filed about a dozen lawsuits against the city, challenging its rent-control program.
Equity announced Friday that it is set to take ownership of the apartments before the end of the year. In a statement, the company said it would remain committed to preserving affordable housing in East Palo Alto. John Hyjer, the company's vice president of investments for Northern California, said the company is "excited to welcome residents of Woodland Park to the Equity Residential community of properties."
The company owns or has an investment in 417 properties, totaling 119,011 apartment units.
"Woodland Park is indeed a special property, as it represents the largest block of affordable housing in East Palo Alto," Hyjer said in a statement. "Recognizing that, we will continue to serve the needs of Woodland Park's residents in this capacity."
The company, according to the statement, plans to operate the apartment community "with a commitment to maintaining its status as affordable, workforce housing in a region with a lack of available alternatives in this category of housing."
Hyjer said in an interview Thursday that Equity will fully comply with the city's rent-control laws and will not seek to convert the rent-controlled units to market rate.
"We are not going to challenge any statute on rent-control affordability," Hyjer told the Weekly. "Anything that's currently affordable housing will continue to stay that way."
Hyjer said the company has ample experience when it comes to rent control. Equity is the largest landlord in Berkeley, where 20 percent of its portfolio is affordable housing. He said the company wanted to purchase the Woodland Park properties because of their lucrative location in the middle of the Peninsula.
"We saw this as an opportunity to purchase very well-located assets in a prime location," Hyjer said.
With the purchase of the Woodland Park portfolio, the company will now become the largest landlord in East Palo Alto. Hyjer said the company plans to invest $15 million over the next three years to renovating the properties, which were built between 1912 and 1969. Though both Page Mill and Wells Fargo had invested millions in improvements, many units remain dilapidated.
"We're looking to working from inside out as we get to these units to upgrade them and make them more livable," Hyjer said.
The Chicago-based Equity Residential is the nation's largest real-estate investment trust. It is chaired by real estate mogul Sam Zell, whose holdings also include the Tribune Company. Tenant advocates had opposed the sale out of fear that the new buyer would raise rents, forcing the displacement of many families in the Woodland Park neighborhood.
East Palo Alto Mayor Carlos Romero had met with Equity officials Wednesday to discuss the change in ownership and said he was assured that the company has no plans to break up the portfolio or redevelop the properties any time soon. He also said the company expressed a commitment to preserving rent control in the Woodland Park neighborhood. Romero was one of several council members who had urged Wells Fargo not to sell all 1,812 units to a single buyer.
Romero, who attended a protest against the sale in September, said Equity officials told him that the company would comply with the city's rent-control laws.
"For the foreseeable future, they said they'll run this as a rent-control portfolio and they said they have no interest or desire to work against the rent-control ordinance," Romero said. "At this point, I have to take them for their word."