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Thursday, August 18, 2011

PageMill, Wells Fargo and Sam Zell

Dear Friends, 

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As many of you know we've been in discussion recently with Wells Fargo and Equity Residential, the proposed buyers of the former Pagemill Properties on the west side of East Palo Alto.  As an East Palo Alto resident and leader I view this issue, and how Wells Fargo handles this important portfolio as a milestone event for our community and it’s residents.

First, a little background (from my perspective): 

A few years ago over 80% of East Palo Alto's multi family housing stock was purchased piece by piece by a predator equity group, Pagemill Properties. After the purchase Pagemill began systematically dismantling our rent control ordinances and aggressively evicting working class families. The community was in shock.

However, the Pagemill group went bankrupt in 2009 and lost the property to Wachovia, soon to be acquired by Wells Fargo. Inmy opinion Wells initially, for the most part,  acted in good faith. They secured the properties, stabilized the rental rates and began a process to include the community in a discussion about how to best deal with the portfolio of over 1600 units. The community has a lot of input, but the most common was 1) Don't sell to one investor. A monopoly of all our rental housing is a bad thing, and 2) Find a group that will affirm our rent control policies and support affordable housing for working families. 

After months of discussion, Wells suddenly went silent. Repeated requests for an update went unheard. About three weeks ago Wells floated the names of three potential buyers, Apollo, Prime and Equity. Some of our elected officials met with the three groups. Last week Wells indicated their intention to sell to Equity. They would not consider breaking up the parcel. The community was sucker-punched. 

The selection of Equity Residential is particularly unacceptable.   The founder and chairman of Equity Residential, Sam Zell, was described in a 1995 New York Times article as “a classic vulture investor.”  Mr. Zell is a well known opponent of rent control.  His company, Equity LifeStyle has sued multiple California cities to invalidate local rent control laws, while funding a deceptive statewide ballot measure to end rent control in California.  

Current Conversation:

Over the past week there have been many discussion about a plausible reaction from community groups. On Tuesday we met with David Ash from Wells Fargo and representatives from Equity Residential. In the meeting we submitted the following requests:

1.     Refrain from selling the Page Mill portfolio to Equity Residential; 

2.     Immediately implement a process which engages public involvement in the vetting of potential buyers;

3.     Break up the portfolio and transition the portfolio to multiple buyers to avoid another Page Mill fiasco; and

4.     Complete the registration process of rents and comply with all other requirements of local law while Wells Fargo remains the owner of these rental units.

 

The meeting with Equity and Wells was both contentious and cordial. They even brought cookies. We presented our requests to Wells, they promptly refused. Wells positioned the meeting as a courtesy call and that the deal was essentially done, with a 45 day period for Equity to perform due diligence.  In the meeting David Ash had the guts to say with a straight face that Wells believes this is absolutely the best deal for East Palo Alto. An official from Equity was surprisingly honest. Their play is to hold certain properties and raze others. The razed buildings pulls the units out of rent control and allows them to charge market rate rents.

Why are we upset?

Some may ask, “What’s the big deal?” Others may be opponents to rent control or affordable housing in general. There are a number of reasons this issue has garnished my attention:

Issue One: I don’t think it’s ever a good deal for any one investor to have a monopoly on housing stock. As aforementioned, this is over 80% of our apartment housing as well as 50% of our below market rate stock and 15% of the County’s affordable housing stock. Clearly Equity Residental will have a market control While I’m a proponent of the free market, clearly this is a quality of life issue for our community and a situation where the market being monopolized the the playing field unleveled.

Issue Two: Affordable housing is critical for working class families and the stability of the region. East Palo Alto remains a place of available housing for lower income Silicon Valley families. In spite of the challenges and reputation, East Palo Alto is a place where good families can create a home. Having a community / region where folks from diverse economic backgrounds can thrive is part of the fabric of our nation.

Issue Three: Given the current economic challenges we must protect opportunities for middle and working  and low income families. With the economic pressures on East Palo Alto due to foreclosures, unemployment and rising energy costs many families are being pushed out. Additionally, we are watching the possible impact on housing prices brought on by Facebook’s entry into the community and their possible addition of 3000 employees. The Wells property is a 10 minute bike ride to the new Facebook offices.

How Can You Help?

There are a couple of ways you can immediately help the cause. We're looking to raise awareness of this issue and put as much pressure on Wells Fargo as possible. Wells is espcially sensitive to their public profile, so please do all you can. 

1)          Contact Wells Fargo and insist they address our requests, listed above. You can contact:       

 

David Ash

West Coast Regional Manager-Special Situations Group-ORE

600 California St.

19th Floor

San Francisco, CA 94108

 

2)          Join us on a protest march on Monday, 8/22 at 3:30. We’ll meet at the Westpark Apartments at 5 Newell Ct., East Palo Alto. We will march to the Palo Alto Wells Fargo branch and present our requests to the group.

 

Granted, this is symbolic gesture, but we are hoping to get media attention and to show solidarity for the cause.

 

3)          Pray for justice and the cause of families in East Palo Alto

 

While I may have a definite opinion about the way this transaction is being handled, I’m somewhat torn. Wells Fargo has been a faithful funder and partner for our organization over the years. They provided seed funding for our land trust project as well as supporting our foreclosure intervention program. Wells Fargo volunteers recently donated time to work on our Daphne house project and have taught homeownership classes for our students. Despite of being on the other side of Wells on this issue – we also appreciate their partnership. Sometimes the world is alot more grey than black and white.

 

Thanks you for standing with us on this important endeavor.  I encourage you to write a letter, come to the Monday protest and please pray for East Palo Alto.

- John Liotti

 

Posted via email from Insecurely Radical

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