[ Metro | Metroactive Central | Archives ]

HUDdled Masses

Christopher Gardner

House and Home: Children play at Lawrence Road Apartments, where new federal laws mean an uncertain future for 86 low-income families.

Silicon Valley's economic boom proves a bust for low-income tenants and seniors as landlords ditch HUD and go yupscale

By Ami Chen Mills

LAWRENCE ROAD Apartments in Santa Clara stands only a few hundred yards from its namesake expressway, but it's quiet in the central courtyard, where children of mixed races play in a large sandbox surrounded by graceful elm and pine trees--as well as abandoned shopping carts, pizza-delivery fliers, empty cans and discarded furniture.

A few yards away, mothers tend babies on a sun-splashed lawn while a hysterical woman in tight jeans waits outside a neighbor's apartment for police to arrive. She says her husband has been tampering with phone wires, shifting hundred-dollar 900-number charges to other people's bills.

Lawrence Road Apartments is no Shangri-la. But low-income residents and immigrants who live here call the quiet, if dilapidated, complex home. And they're happy to have one.

Make that: were happy to have one.

On May 30, 86 families at Lawrence Road found a foreboding letter from their Culver City­based landlord, Goldrich & Kest Management Company, tacked to their front doors. In the letter, G & K announced its plans to buy out of its financing agreement with the federal government and cash in on Silicon Valley's tight housing market by converting its low-rent apartment complexes into market-rate apartments. They have plans to do the same at another larger complex, called the Blossom Hill Apartments, which houses 200 low-income families.

G & K is the first developer in the county to opt for "prepayment" through new regulations in the Housing Opportunity Extension Act of 1996, signed by President Clinton in March. The act allows developers, who in the 1960s received cheap federal financing, to pay out of their mortgage agreements and go yupscale. The Lawrence Road Apartments may be the first of six such projects in the valley to jump classes as a result of a leaner, meaner Congress--leaving low-income families and disabled seniors to fend for themselves on crowded streets. There are precious few affordable--or even available--rentals in Silicon Valley, where a recent boom in the job market has forced vacancy rates down to an estimated 2 percent. Despite lukewarm and complicated assurances from the Department of Housing and Urban Development that they will receive Section 8 vouchers to continue living here, tenants at Lawrence Road face an uncertain future at best.

Christopher Gardner

No Place Like Home: A widow at Lawrence Road apartments says she won't be able to care for her aged mother if forced to leave.

Section 8-Ball

ON A BLAZING-HOT Tuesday in June, residents jostle in Lawrence Road's normally placid central courtyard. A grumpy group of elderly Russian Jews congregates at a rusted picnic table. Intermingled among them are wide-eyed Ethiopians and European Americans who have emerged from their apartments to give visiting Santa Clara city officials a piece or two of their minds. Children run and scream in the background. Their parents and grandparents complain noisily in three languages. Finally, a thin voice pipes up above the din.

"They want to know," ventures a young, bespectacled Russian student translating for his grandparents, "What would happen to those people on Section 8?"

"The federal government makes those decisions--not the city," shrugs Geoffrey Goodfellow, planning director for the city of Santa Clara. Local HUD officials have been just as vague. "My understanding is that you will get vouchers, subject to funds available, and you could live here for three years more," Goodfellow explains.

"What happens after three years?" queries one Russian woman.

"Apparently, you're on your own," Goodfellow says, not unkindly.

"Can you help us?" asks another woman, coming close.

An elderly Russian man with wing-like eyebrows voices his worries in fractured English. "We are old people. I have heart problem, heart attack. Clinton, he signed bill. Very clear about owners' rights, nothing about our rights. It is 'if, if, if.' Who defends us? Who helps us? We are old. We live here forever, for death, for our death."

Ten Russian families, mostly elderly couples on disability or Social Security incomes, live here, along with a group of Ethiopian families and others. Most are living by the grace of "project-based" Section 8 rent subsidies. They pay 30 percent of their monthly incomes in rent, and HUD makes up the difference between that and a below-market amount mandated for the units. Some tenants claim they were on waiting lists for Section 8 housing for six years or more before coming here.

When families are accepted into Section 8 housing, they lose their position on waiting lists for other projects. HUD says Lawrence Road residents will receive mobile, or "sticky," vouchers, which may be used at Lawrence Road, or will travel with tenants on the private market. But federal funding for vouchers is on shaky ground and landlords are less interested in renting to government-backed low-income tenants when Silicon Valley engineers and software designers are combing the classifieds too.

According to Candace Capogrossi, deputy director of the Santa Clara County Housing Authority, landlords who rent to Section 8 tenants have dwindled of late. "The housing lists have been getting smaller because rents have been going up. Even with a voucher, it's hard," she says.

Home, Home on the Web:

HUD Homes and Communities Page: HUD's own home page with information on community planning, the housing marketplace, public policy and consumer alerts.

HUD User: HUD's virtual library.

National Housing Institute: A public interest group providing information on the nation's low-income housing crisis.

Rolling Thunder

IF GOLDRICH & KEST raises rents above what the housing authority calculates as "fair market" rates, some tenants will be forced to pay the difference, or move out. A letter from San Francisco HUD to former Santa Clara Mayor Everett Souza implied that G & K must maintain current rents for all tenants for three years.

Yet local HUD officials--and housing advocates--seem as confused as tenants. Jim Grow, staff attorney for the National Law Housing Project in Oakland and a veteran HUD watchdog, contends, "HUD headquarters has said something different [from the letter], but it is interesting to hear the way the area office is explaining things to the mayor."

According to Grow's take on the law, only moderate-income tenants who do not get vouchers and receive nothing from HUD now can count on a three-year rent freeze. Current Section 8 tenants with "special needs," like the elderly and disabled, will receive "super" vouchers which would cover a rent increase. But it is unclear if the landlord must accept them, and for how long. Other Section 8 and qualified low-income tenants will receive regular vouchers which would not make up for an increase in rent above fair market. According to G & K, rents will be raised at Lawrence Road, but Carole Glodney, company president, says there are no plans to go condo or upgrade the units until Section 8 tenants move out. "We're very concerned and we want to work closely with HUD to protect tenants," Glodney says, and confesses that she, too, is confused about new regulations. "HUD just keeps changing its mind from month to month," she says.

If rents are raised, residents with regular vouchers may be forced onto the open market, where they would have to pay the difference between what they pay now and any amount over "fair market" rents, which, in Silicon Valley, are virtually nonexistent. Fair market, say experts like Terry Feinberg, director of the Tri-County Apartment Association, an owners group, is notoriously lower than actual rents in the county. "Fair market always lags behind the true market, which is ridiculous," Feinberg says, and one reason landlords are shunning Section 8 tenants for professionals who can pay high rents. For Lawrence Road residents, the economic renaissance in the valley will be their downfall.

"This was like thunder from sky," says Zefira Litvinova, 71. "My husband is disabled. He had three operations. Our very low income is not enough to pay for a regular apartment here. They cost $1,000! $2,000! We think we will end up on the street. Why are we not given any clear statements?"

Michele Keehley, 24, single mother of a 3-year-old, waited for six years on the Section 8 list before she was accepted here in August. "I feel cheated. Right now, it's all I can do to live here and pay for my daughter's school. I hope to be doing better in three years, but for now I don't know what I'm supposed to do." Keehley works as a medical assistant at Kaiser, five minutes from Lawrence Road. She's afraid if she is forced to leave, she will have to move out of the area, possibly as far as Modesto, because there are no apartments here in her price range.

HUD Trips

FOR TENANTS WHO GET vouchers, phrases in HUD's wordy assurances loom like the ghosts of a homeless future. All vouchers depend on "availability of funds"--which, in the midst of massive cuts in social spending, are hardly guaranteed. Already, the renewal period for vouchers has been cut from five years to one. Activists like Grow say homelessness will skyrocket if Congress continues slashing money for housing. "Congress is more responsive to the interests of owners, and Bill Clinton is not fighting for housing," Grow says, "There's going to be blood all over the place."

In 2002, Grow says, it will cost an estimated $20 billion to help house low-income families, which--after recent cuts--amounts to the total HUD budget today. Housing officials fear cuts will run deeper, perhaps to 50 percent, packing the phrase "subject to availability of funds" with meaning for Lawrence Road residents. Finally, the 86 families here come in at the top of a waiting list for federal housing vouchers, above the 10,000 people in the county currently on HUD waiting lists. According to Capogrossi, the Housing Authority office receives 100 calls a day from people hoping to get on a waiting list which has been closed to families since 15,000 applicants phoned in to apply during one 24-hour period in February of 1988. Despite local efforts to build new affordable housing, "it would be a tremendous loss," Capogrossi says, to lose current Section 8 projects.

Developers who took advantage of low-interest, low-down federal loans to build housing in the 1960s were required to stay in the federal program for 20 years, but were expected to stay in for at least 40. In the late '80s, when the first 20-year obligations came up, and prepayment became an option, the housing market had only gotten tighter and property values had skyrocketed, making prepayment a more lucrative option than HUD had anticipated.

Hundreds of low-income projects threatened to desert the program. One such project was El Rancho Verde in East San Jose. When owners there gave notice of their intent to prepay, tenants and housing coalitions petitioned the city, county and even the federal government for help. Local activists like to think that San Jose­based activism helped to launch the Housing Act of 1990, which abruptly closed the door on prepayment by making prepayment difficult and offering cash incentives to owners who stayed in.

Now, the work of El Rancho Verde tenants and housing advocates has been reversed. The project-based HUD program is expensive, but as yet there are no alternatives in low-vacancy markets. According to Billie Wachter, who worked with El Rancho tenants in 1990, the Republican budget ax falls hardest on the poor, while ignoring subsidies for middle- and upper-class Americans, like the mortgage interest tax deduction, a subsidy which dwarfs the HUD budget. "This is an open drive to privatize all forms of low-income housing and it's suicidal and short-sighted and incredibly cruel," Wachter says.

Mice and Zen

RESIDENTS AT Lawrence Road are just starting to organize to prevent prepayment, like residents at the El Rancho Verde complex did in 1990. But their numbers are considerably smaller, and so far action has been limited to calling attention to mismanagement by G & K. They have compiled a videotape of leaks, holes, broken windows and dirty walls in their units.

Saida Idris, a mother of three, points to a huge hole in the closet of her two-bedroom apartment where mice come in, she says, "and eat my husband's clothes." Other apartments are missing screen doors and even locks. Some have broken windows and bathroom linoleum so rotted, it no longer sticks to the floor. Idris changes the newspaper under her leaking sink once a day.

G & K President Glodney says she has not heard of problems at Lawrence Road. "If there were resident unrest, I would be aware of it," she says. Yet G & K hastily installed new managers at Lawrence Road last week, responding to tenant complaints of shoddy and inconsistent management. Evidence compiled by tenants is compelling, but HUD officials say neglected apartments alone will not stop the prepayment. And the truth remains that, even with leaks, breaks, smells, garbage and mice, it's a scarier world for these people outside of their apartments. And the families at Lawrence Road just want to stay home.

[ Metro | Metroactive Central | Archives ]

From the July 11-17, 1996 issue of Metro

This page was designed and created by the Boulevards team.
Copyright © 1996 Metro Publishing and Virtual Valley, Inc.

Foreclosures - Real Estate Investing
San Jose.com Real Estate