Corporate Billionaires Take Over Berkeley Public Housing

I was pressured out of my public housing after living in Berkeley’s public housing for much of my life. I was pressured out and have been made homeless. I had to move in with some of my relatives to avoid living on the streets.” — Terry Pete, former public housing tenant

by Lynda Carson

According to the Berkeley Housing Authority (BHA), a notice was sent on February 11, 2014, to all of Berkeley’s public housing residents advising them of the transfer of ownership of their public housing units to the Related Company, owned by billionaires Jorge M. Perez and Stephen M. Ross. Seemingly, this effectively concluded the BHA’s project to privatize and dispose of Berkeley’s 75 public housing townhouses.

However, the deal to privatize public housing in Berkeley became a lot more complicated as of March 17, 2014, when Preet Bharara, the U.S. Attorney for the Southern District of New York, filed a civil rights lawsuit in federal court against the Related Companies, Inc., for engaging in a pattern and practice of developing rental apartments that are inaccessible to persons with disabilities in New York City, and elsewhere.

U.S. Attorney Preet Bharara said, “We will not allow developers and architects who deprive people with disabilities of accessible housing to evade the consequences of their failure to comply with clear, long-standing federal civil rights laws. When developers demonstrate an unwillingness to design and construct accessible housing in accordance with federal law, this Office will not hesitate to use its enforcement tools to compel the developers to make both their preexisting and future constructions accessible.

“To ensure that RELATED’s current and future residential housing developments are accessible to people with disabilities and to redress its history of non-compliance with the Fair Housing Act, the United States seeks a court order enjoining RELATED from designing and constructing multi-family housing, such as 15 Hudson Yards, without the accessibility features required by federal law and requiring RELATED to retrofit the inaccessible conditions at all the rental properties it has developed to make them accessible. The United States also seeks damages for persons harmed by RELATED’s unlawful practices, and a civil penalty to vindicate the public interest.”

Another strange twist to this story occurred on March 19, when the U.S. Department of Housing and Urban Development (HUD) announced that it is giving $112,344 to the BHA for maintenance of its public housing units, even though the BHA sold and transferred ownership of all of its public housing units to billionaires Jorge M. Perez and Stephen M. Ross, of the Related Companies, on February 14, 2014. Now that the BHA has sold all of its public housing units, one can only wonder what the $112,344 is really going to be used for.

Meanwhile, current and former Berkeley public housing tenants are speaking up and shedding a little bit of light on what has been happening once the decision was made to privatize and sell their public housing units to out-of-state billionaires Jorge M. Perez and Stephen M. Ross.

Contrary to the claim by the BHA that a notice was sent on February 11 to notify Berkeley’s public housing tenants that their homes have been sold to out-of-state billionaires, it appears that not all of the public housing tenants were properly notified about the takeover of their housing.

Kenya Johnson and Francesca Barnett have lived for a number of years at a public housing unit on Russell Street in Berkeley. On March 18, Barnett said, “Where we live there is a duplex and a house located at this property. All three units are still fully occupied with public housing tenants. I live in a two-bedroom unit with my roommate Kenya. There is nothing that I can say about our building being sold. Far as I know, we have not received a notice yet telling us that our home has been sold.

“In fact, around two weeks ago, someone came by and told us that our building has not been sold. I have lived here around a year, and my roommate has lived here for around four years or more. I definitely am under the impression that my home was not sold yet, and that we are still public housing tenants. I am surprised to hear that our housing has been sold if that is the case. We were told that depending on who buys the property, that it will be the deciding factor on what will happen to us. We were advised that we may receive a 30 Day Notice, or a 60 Day Notice telling us that we may have to move somewhere else, when the building is sold. But it depends on who will buy our housing. They do not allow us to have a say in regards to what happens to our public housing.”

The February 11, 2014, notice sent to some of Berkeley’s public housing tenants from the BHA tells them that their 75 public housing units have been sold to the new ownership entity, Berkeley 75, LP, effective February 14, 2014.

Additionally, the notice tells the tenants that Berkeley 75, LP, will be their new landlord, and that the BHA will no longer have any involvement in their tenancy. The tenants were advised that, beginning on February 14 and continuing through the end of the rehabilitation of their housing units, they can use Section 8 vouchers to move if they decide to do so. The notice did not list a phone number or address telling tenants how they can contact the new owners of their privatized housing units.

Out-of-state billionaires Jorge M. Perez and Stephen M. Ross of The Related Companies took control of Berkeley’s public housing units on February 14, in a complicated deal that edged out local nonprofit housing developers. Many of Berkeley’s low-income families have become displaced as a direct result of the sell-out of Berkeley’s public housing units that originally were supposed to remain as public housing units in perpetuity, when they were built with taxpayer funding.

Former public housing tenant Terry Pete said, “I was pressured out of my public housing around a year ago after living in Berkeley’s public housing for much of my life. I was pressured out of my housing and have been made homeless. I had to move in with some of my relatives to avoid living on the streets. I was not given a Section 8 housing voucher and moved because the stress was so horrible living at the public housing project once they started to pressure tenants out of their public housing units. The stress caused major health problems for me. Many others were pressured out of their housing also, and someone needs to look into what has happened to us.”

It was reported in 2010 that Jorge M. Perez owned 75 percent of The Related Companies, and that billionaire Stephen M. Ross, a 95 percent owner of the Miami Dolphins football franchise, owned 25 percent of the development company.

The billionaires who targeted Berkeley public housing dfor privatization evidently have political connections to the White House. Jorge M. Perez has been a major political fundraiser for President Barack Obama and Hillary Rodham Clinton, and was an advisor to ex-President Bill Clinton during his term in office.

Perez and Ross also have been involved in a major project to privatize many of Oakland’s public housing units in partnership with the Oakland Housing Authority (OHA) and the East Bay Asian Local Development Corporation (EBALDC), a local nonprofit housing developer. As a direct result of the partnership, in recent years the Oakland Coliseum Gardens public housing units were demolished, 178 low-income families were displaced from their homes, and the newly rehabilitated project near the Coliseum BART station in East Oakland is now called Lion Creek Crossings.

To give an idea about the way that EBALDC feels about low-income public housing tenants, the EBALDC website currently refers to the old Coliseum Gardens public housing complex as the “notorious” 1964 OHA public housing development, when describing how nice the newer Lion Creek Crossings privatized rental housing project is.

However, the website fails to mention that a 15-year-old girl was shot and killed in late December of 2012 at Lion Creek Crossings, along with a 14-year-old boy who was also shot during that same incident, and that 15-year-old Hadari Askari was gunned down at the same housing complex on July 10, 2012.

“And Now Where?” Lithograph by Rockwell Kent

 

Elsie Smith said, “I was a public housing tenant for 14 years and moved out of there around two years ago when they offered me a Section 8 housing choice voucher and told me that they wanted to sell my housing. They put a lot of pressure on us to get out of there. I am lucky, because things turned out all right for me. However, it did not turn out so well for others that did not want to move out of their longtime public housing.”

Eleanor Walden, a former Berkeley Rent Board Commissioner, said, “I have heard of problems with elderly people being given a notice of two days to get out of their housing lately. Berkeley used to be a moral island that was better than many other places, but now it is no better than cities in Mississippi. We put people on the streets, and there is no morality here anymore. We sit back and wait for the axe to fall, and fear that our lives will be eroded and demeaned by people that throw a lot of money around, and displace us in the process.

“I am horrified by what is going on and do not know what we can do about it. It is inhumane and it is a bad situation for the poor in Berkeley. It is an injustice to the low-income families in Berkeley who face displacement because their public housing has been sold to some billionaires.”

According to released documents, rents have been collected from Berkeley’s former public housing tenants with an appropriate proration forwarded to Berkeley 75, LP, the new ownership entity. On February 20, the BHA delivered the first list of potential renters to Berkeley 75, LP, for the newly privatized, federally subsidized project-based units.

Berkeley 75, LP, is currently screening the first group of applicants for suitability as tenants at the to-be-rehabilitated 75 units. The potential tenants face a stiff double examination before being allowed entry into the former public housing units as new tenants, and have to be cleared by both Related and the BHA.

Once the privatized units are rehabilitated and inspected, and the new tenants are chosen with new contracts signed, the BHA will start earning as little as $75 per month per unit in administration fees from the privatized public housing units sold to the out-of-state billionaires.

Jorge M. Perez is known as the “Condo King” of Miami, Florida, because he has developed and owns so many condominiums in that region through The Related Companies/Related Group.

Public records reveal that the out-of-state billionaires got a sweet deal in their efforts to grab Berkeley’s public housing units from the poor. It cost The Related Company around $35 million to buy Berkeley’s 75 public housing units, at a cost that works out to around $99 per square foot, even though the median price of housing in Berkeley is currently going for about $454 per square foot.

Public records also reveal that the City of Berkeley loaned the Related Companies of California $400,000 in predevelopment costs to fund some of the work associated with the disposition and rehabilitation of the BHA housing units. However, the $400,000 loan was later converted to a grant that left the taxpayers holding the bag.

On March 13, BHA Commissioners also voted to pay an additional $23,241 in consultant fees to EJP/Praxis consultants, even though the deal is done and the public housing units have already been sold. Also, it appears that during the past three years, the BHA paid EJP/Praxis consultants as much as $98,711 for their assistance in privatizing and selling Berkeley’s public housing units. Consulting fees to EJP/Praxis were originally expected to be as little as $37,000, but costs shot up to almost $100,000.

Documents also reveal that on May 12, 2011, BHA Commissioners voted to pay Overland, Pacific and Cutler $147,000 to relocate tenants from their public housing units, and these amounts do not reflect the full costs of legal expenses and other costs associated with privatizing Berkeley’s 75 public housing units.

Budget cuts to HUD’s federal housing programs may eventually result in higher rents for new tenants moving into privatized former public housing units in Berkeley.

A Government Accountability Office (GAO) report released in early March 2014 reveals that the massive sequestration budget cuts have savaged our nation’s federally subsidized housing programs, including the Section 8 Housing Choice Voucher Program.

In total, according to the GAO report, HUD estimates that, due to sequestration funding cuts, Public Housing Authorities provided rental assistance payments to 42,000 fewer low-income households during 2013. HUD also estimates that sequestration funding cuts to Homeless Assistance Grants will lead to states and localities removing as many as 60,000 formerly homeless persons from housing and emergency shelter programs all across the nation, placing them at risk of ending up back onto the streets.

Sequestration cuts also reduced funding for HUD’s project-based housing assistance, through which HUD makes payments to owners of multifamily rental housing units on behalf of 1.2 million low and very low-income families. Funding to renew contracts for this program decreased from $9 billion to $8.6 billion.

No one could be reached at the Berkeley Housing Authority for comment at the time this story was published.

Lynda Carson may be reached at tenantsrule@yahoo.com

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