News

Major deal would sell Woodland Park apartments to local developer

Sand Hill Property Company confirms negotiations are in the works

East Palo Alto's largest chunk of rental housing could soon be sold to Menlo Park developer Sand Hill Property Company, a company executive confirmed Tuesday.

The deal involves 1,800 units -- more than half of the city's multi-family rental housing. Silicon Valley Business Journal first reported on the potential acquisition on Feb. 16.

Sand Hill's portfolio manager, Michael Kramer, who oversees acquisition, financing, development, leasing and asset management, said the company has formed a new affiliate to operate the portfolio, Woodland Park Communities. Steve Emslie, former City of Palo Alto assistant manager, will be the executive director.

The fate of the Woodland Park apartments has been of special concern to city leaders and the community since it was bought by now-defunct Page Mill Properties in 2007.

East Palo Alto's 107-acre west side contains about 22 percent of the city's residents -- 6,075 people -- according to the city's Draft General Plan, which was recently released.

The area contains 77 percent of the city's multi-family housing and 95 percent of the city's rent-controlled housing. About 68 percent of residents in the west side are Hispanic, with a substantial concentration of Spanish speakers who are not fluent in English -- 48 percent compared to 34 percent of the city as a whole, according to the draft plan.

Much of the west side's housing is in the Woodland Park apartments, which is currently owned by Equity Residential, a Chicago-based real estate investment trust.

East Palo Alto renters have been under increasing pressure with the skyrocketing of housing prices in surrounding communities and rising demand for housing fueled by the expansion of Facebook to the north and Google to the south. Many of the most economically vulnerable residents live on the west side and at Woodland Park, according to the city.

City leaders and residents have said they want to preserve housing for low- and very-low-income residents and have put into place rent ordinances. But even rent-stabilized apartments can turn into market-rate units when a tenant leaves, fair-housing advocates have said.

Advocates are concerned that the area, which has many older apartments, might be redeveloped.

But Kramer sought to allay fears on Tuesday. He said that Sand Hill has no plans to redevelop the properties at this time.

"Woodland Park Communities is newly established, and it is dedicated to the acquisition of long-term, income-generating multi-family properties," Kramer said.

The company plans to "honor all existing leases for the foreseeable future," he added.

Emslie said Woodland Park Communities "is really focused on the transition and managing the asset. We want to work with the city's general plan process and to be very collaborative and support what the city wants."

Development is a long way off, he added, noting that the company plans to let the general plan, policy and any analysis all work through before making any decisions.

Some East Palo Alto residents have voiced concerns about density and high-rise buildings that could be a part of the city's updated general plan, which may be adopted before September, according to City Manager Carlos Martinez. An eight-story tower was being considered as a possible allowance to entice developers to retain some low-income housing.

Emslie, with his tenure in Palo Alto, said that he developed skills working in a highly engaged community, which he thinks will benefit the project overall for both cities.

"All of the stakeholders' interests are always considered," he said of his vision for any future project. "It will be fair and equitable."

Martinez said that any new owner would be obligated to follow the city's Rent Stabilization Ordinance, which prevents evictions unless under just cause.

"We're waiting to see what happens," he said of the possible ownership by Sand Hill/Woodland Park Communities, but the city is keeping residents informed of their rights.

On news of the pending sale, rent-stabilization-program officials sent letters to all renters within the city informing them of their rights if a property changes ownership. The letter does not mention Woodland Park apartments specifically, and it was also received by renters who do not reside within the acquisition's boundaries but who live in rent-stabilized housing.

Woodland Park has had a rocky history since it was first amassed by Page Mill Properties in 2007, which has contributed to residents' and the city's concerns. The properties were mired in lawsuits over the rent-stabilization ordinance and steep rent hikes by Page Mill, including lawsuits by investors and a $100 million failed investment in the company by the California Public Employees' Retirement System (CalPERS).

Page Mill filed for bankruptcy in 2009 after defaulting on a $50 million loan payment, the Palo Alto Weekly reported at the time. A subsequent auction failed to entice any buyers, largely because of pending litigation, and the properties returned to Wells Fargo in 2010.

City leaders tried to get the bank to sell off parts of the portfolio to multiple buyers so that one company would not monopolize the rental-housing stock, but the bank kept the parcels intact, according to news reports at the time.

Equity Residential purchased Woodland Park in 2011 for $130 million. But the company's ownership was also controversial. Tenants filed a class-action lawsuit in September 2014 alleging that the company charged unlawful and exorbitant late fees.

Reached on Tuesday, Equity Residential would only confirm the potential sale.

"We are working with Sand Hill regarding a potential sale but have no comment beyond that," the company wrote in an email.

Kramer and Emslie said they could not comment on specifics regarding the deal, nor when it might close, due to privacy considerations during negotiations, but they said they would release more information after the deal is completed.

Comments

Like this comment
Posted by Schumpeter
a resident of Duveneck/St. Francis
on Feb 16, 2016 at 8:07 pm

[Post removed.]


12 people like this
Posted by Hmmm
a resident of East Palo Alto
on Feb 16, 2016 at 8:13 pm

I had a good chuckle at the story's quotes from the potential buyer regarding potential redevelopment, as if they currently have any say in the matter on city policies, procedures and the current thrust of the General Plan.

As this article also points out, an investment from a royal monetary fund indicates slow movement rather than swift:
Web Link


19 people like this
Posted by Marsan
a resident of Another Palo Alto neighborhood
on Feb 16, 2016 at 8:25 pm

Caveat Emptor: SandHill Properties, and the man who owns the company, are not known to be completely reliable in their business dealings, historically. They are, however, known to be quite brusque, even rude.


10 people like this
Posted by oh the absurdity
a resident of Evergreen Park
on Feb 16, 2016 at 8:50 pm

[Post removed.]


15 people like this
Posted by Hmmm
a resident of East Palo Alto
on Feb 16, 2016 at 9:15 pm

Marsan - I'll pass your warning on - thank you. Since they also own Edgewood Shopping Center, with rent increase do we get bagel (a la With Six You Get Egg Roll)?

Oh the absurdity - there's a solid set of tenant protections in this town, which also offer a fair return to the landlord. The real bugaboo in Calif is the vacancy decontrol law, aka Costa-Hawkins. The chances of that being struck down, even in this state's terrible housing crisis, are nil.


7 people like this
Posted by People
a resident of Midtown
on Feb 17, 2016 at 1:38 am

Need to come together and vote for these things by bringing the matter up with city council and the mayor (you voted them into their position). If you sit around for too long, it will be too late. People need to come together and make this happen. Seriously.


18 people like this
Posted by condos?
a resident of Crescent Park
on Feb 17, 2016 at 11:00 am

I'm hoping that these apartments remain much needed rentals. Unfortunately, the fact that EPA has rent-control, combined with the proximity to PA makes it likely that the new owner would be tempted to convert at least some of the units to more lucrative condos.


12 people like this
Posted by Observation
a resident of Old Palo Alto
on Feb 17, 2016 at 12:16 pm

There you have it. A former Planning Dept director getting the lucrative real estate commission for the sale of the Woodland apts from a local developer. [Portion removed.]


6 people like this
Posted by Judith
a resident of Leland Manor/Garland Drive
on Feb 17, 2016 at 12:58 pm

@Observation - You seem to have missed the fact that the apartments in question are in East Palo Alto and not in any way under the control of the Palo Alto Planning Department, Planning Commission or City Council.


4 people like this
Posted by Mark Weiss
a resident of Another Palo Alto neighborhood
on Feb 17, 2016 at 1:05 pm

[Post removed.]


Like this comment
Posted by Hmmm
a resident of East Palo Alto
on Feb 17, 2016 at 1:09 pm

[Post removed.]


4 people like this
Posted by Been there, seen that
a resident of Duveneck/St. Francis
on Feb 18, 2016 at 9:09 am

Yes, Observation, I noticed that right off too. Judith: it just re-confirms the close ties between the PA planning department and local developers. The foxes are indeed in the henhouse(s)


5 people like this
Posted by Background
a resident of Crescent Park
on Feb 18, 2016 at 1:14 pm

Steve Emslie was the lead planner promoting the monster development 27 University Ave. which led to a Grand Jury investigation and severe criticism of the city. Mr, Emslie resigned shortly thereafter.
<Web Link;
His close ties to Stanford development were evident in his advocacy.
Now he works directly for the developers he supported from his high level city position.


Like this comment
Posted by Background
a resident of Crescent Park
on Feb 18, 2016 at 1:31 pm

The County is reorganizing its web site. Will post a URL that works as soon as I find it.


Sorry, but further commenting on this topic has been closed.

Salt & Straw Palo Alto to open Nov. 23
By Elena Kadvany | 0 comments | 4,356 views

Lakes and Larders (part 2)
By Laura Stec | 0 comments | 1,492 views

Can we ever improve our schools?
By Diana Diamond | 9 comments | 1,388 views