Contract rents can be at market rate and apply to tenants who were at one time receiving Section 8 housing assistance but whose financial circumstances improved to the level where they were no longer eligible for the federal program. Those tenants are able to stay in a Palo Alto Housing unit if they pay the higher rent, according to the nonprofit's president and CEO, Randy Tsuda.
Joseph and Evelyn Haletky are 41-year tenants at Webster Wood, located at 941 Webster St. The couple received a letter on Jan. 11 informing them that their rent would rise from $1,467 per month to $4,545 for their three-bedroom unit, effective on April 1. The increase is being prompted by new contract rents and utility allowances authorized by the federal Department of Housing and Urban Development.
The notice has left the Haletkys reeling.
"Essentially, that's an eviction notice," said Joseph Haletky, who works full time to support himself and Evelyn, who is disabled.
The new amount is far above what they can afford together, he said, but there is a possibility that Evelyn could qualify for housing assistance if they split up. He is already looking for housing for himself in La Honda for about $1,400 a month, but it isn't appropriate for his wife, he added.
"This has been home for 47 years," he said of Palo Alto.
Tsuda said last week that the contract rent rates — $2,790 for a one-bedroom apartment; $3,445 for two bedrooms; $4,545 for three bedrooms; and $5,355 for four bedrooms — were granted by the federal housing agency after HUD and Palo Alto Housing did separate market studies. The increases are based on what the market rate is for comparable housing in the area.
Webster Wood accounts for 68 of the housing agency's 700 residential units for low- and moderate-income households on the Midpeninsula.
Palo Alto Housing's tenants are classified as either Section 8 or contract. Some Section 8 households pay a subsidized rent of 30 percent of their adjusted income. There will be no increase in rent for those renters. Other Section 8 households that are currently paying a prorated rent due to other eligibility requirements will have their rent determined in accordance with HUD's proration formula, Tsuda said. Each year tenants go through an annual eligibility recertification to determine if they are able to stay in the program.
Even if the Haletkys were to re-apply for Section 8 certification, assuming they could qualify, their current $1,467 rent would increase to about $2,500 per month, Tsuda estimated.
Joseph Haletky said an abrupt $1,000-a-month increase would still leave him in a bind. His last rent increase — last summer — was $70.
"There have been periodic rent increases, as costs for running and maintaining the apartments have risen. But Palo Alto Housing Corporation (Palo Alto Housing's previous name) limited those raises to what was needed to cover costs. As a nonprofit, they were not interested in raising rents just because private landlords were doing it. As a result, 'market rate' fell considerably behind rents for comparable apartments," he said in an email to the Weekly.
"This drastic rise brings the rents up to what other landlords charge, but it is so steep that it is a virtual eviction notice for all those whose income is above the subsidy limit. It would seem to be a betrayal of the PAHC mission to provide affordable housing," he wrote.
Tsuda acknowledged that bind for some tenants, given that contract rates had not been adjusted for many years. Those low rates were based on the prior HUD contract. Although HUD had the ability to make annual adjustments, that didn't happen.
"For years, it was vastly under market rate," Tsuda said.
According to the letter sent by Evangeline Granadosin, property supervisor, tenants in the contract rent program have until this Thursday to submit their income and asset information for review to enable staff to determine their eligibility for Section 8.
In a follow-up email, Georgina Mascarenhas, vice president of property management, said that 19 of the 22 contract rate households have completed recertification paperwork and/or scheduled meetings to start the recertification process.
Haletky said he wrote an email to Granadosin but he hasn't received a reply.
"Palo Alto Housing Corporation was founded with the mission of making and keeping affordable housing in the Palo Alto area. These new rents are a blatant betrayal of that mission that your organization has been so faithful to for almost half a century," Haletky wrote in the letter.
Haletky said he had two small children when he moved to the complex and appreciated the nonprofit for giving him a place to live. As a Palo Alto resident, he founded the Downtown Food Closet and Urban Ministry of Palo Alto; became active in the music and theater scene at Stanford and three local theater companies; and is a member of First Lutheran Church.
"I do not appreciate being thrown away like this," he said.
THERE'S MORE ONLINE
Palo Alto Housing President and CEO Randy Tsuda talks with Weekly journalists about the nonprofit and about new regional efforts to develop more housing. Watch the "Behind the Headlines" webcast at youtube.com/paweekly/videos or download the podcast at paloaltoonline.com/podcasts/behind_the_headlines.
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