The bank's takeover of the Page Mill portfolio came on the heels of a three-year legal battle between the Palo Alto-based property manager and the city. The two sides clashed over the city's rent-control ordinance, with Page Mill initiating about a dozen lawsuits against the city. The company also angered thousands of residents by significantly raising rents in the affordable-housing units, prompting many tenants to leave.
Despite a chorus of community opposition and widespread concerns about displacement and gentrification, Wells Fargo has indicated that it plans to zoom ahead with the sale. In a letter to the city this week, the bank's Senior Vice President David Ash and Vice President Robert Maddox wrote that Equity is expected to complete its due diligence on the property acquisition in September. The closing of the deal, Wells Fargo officials wrote, is currently expected in late October.
Wells Fargo officials wrote in the letter that while the bank understands the community's concerns about selling the property to one investor, they believe a single buyer will present East Palo Alto with several advantages. The group would be well-capitalized and would be "able to quickly invest in the Property as needed to address tenants' needs and concerns, bringing stability and a better quality of life to the Property's residents compared to what's been experienced in the Property historically," the letter states. The buyer would also have the "capital, personnel and incentive to provide monetary and non-monetary support to the community overall."
"In addition, as East Palo Alto considers the future of affordable housing in its community as the existing rental stock age, it should be easier for the community to discuss its vision with one professional apartment organization with a long-term commitment to the Property rather than a disparate collection of smaller, less well-capitalized owners," Ash and Maddox wrote.
Wells Fargo officials noted in their letter that Equity has about 126,000 units in its portfolio, including 16 properties in California with affordable components.
"They are an exceptionally well-capitalized firm with an extensive track record of large, complicated transactions and have demonstrated expertise in owning and managing rent-controlled and rent-restricted properties."
But East Palo Alto officials and tenants believe the pending sale could spell the end of affordable housing in the city. A single buyer, they believe, could redevelop the area and significantly diminish the city's stock of affordable housing — about 60 percent of which is located in Woodland Park.
The council on Tuesday directed staff to write a letter to Wells Fargo asking it to reconsider selling all 1,800 properties to one investor; to share with the community the report the bank commissioned from the nonprofit group Bridge Housing shortly after Page Mill's default; to select a buyer whose plans are consistent with the city's long-term strategy for growth; and to respond to a letter the city had sent to the bank a month ago, asking about its plans for the properties.
Wells Fargo's announcement that it is planning to sell the properties to Equity — a company chaired by real-estate magnate Sam Zell — has prompted a grassroots mobilization of tenants and their advocates in opposition to the sale. Last week, about 170 people attended a Town Hall meeting organized by Youth United for Community Action, Peninsula Interfaith Action and Community Legal Services of East Palo Alto, according to a staff report. Many said they were frustrated that Wells Fargo "has not fulfilled its commitment to consider the community's interests in the disposition of these properties that provide a key source of affordable homes for residents," Carol Lamont, manager of the city's Rent Stabilization Program, and Planning Division Manager Brent Butler wrote in the report.
Residents expressed similar sentiments, with some questioning Wells Fargo's commitment to the community and arguing that its sale of the Woodland Park portfolio to Equity would jeopardize the future of affordable housing in East Palo Alto.
"The fact that they have come to us with buyers and did not include us in the process shows they don't have a lot of respect for our community," Anthony Clark said.
The council majority voiced similar concerns. Councilman Ruben Abrica, a tenant at one of the properties, called on those in attendance to reach out to political, religious and community leaders and urge them to call Wells Fargo and ask the bank to reconsider its sale.
"Wells Fargo is trying to reduce this to a business perspective, which it is, but in my opinion it's a lot more than that," Councilman Ruben Abrica said. "We're symbolic of what's happening to people around the country.
"For 30 years in this community, I have seen white tenants, black tenants, Latino tenants, people who spoke English, who spoke other languages, home owners — we have all stood together on this issue when it got tough. Sometimes, all we can do is express our opinions so people know where we stand."
Mayor Carlos Romero and Councilman David Woods had met with Wells Fargo officials before the bank selected Equity out of three finalists. Woods said he had told Wells Fargo that he thought it would be in East Palo Alto's best interests if the bank broke up the portfolio or, at the very least, selected an operator "who would keep them as rental units and not perform any future redevelopment."
"They selected a developer or a potential buyer who has indicated that they indeed would like to do redevelopment on the west side," Woods said.
Romero made a similar point.
"I felt it would be in the best interest of the City of East Palo Alto to break that portfolio up so we won't entertain another problem that we had associated with Page Mill."
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