[Hpn] Court victory for poor tenants in Sacramento
Wed, 04 Jul 2001 16:48:31 -0700
The Sacramento Bee
Court victory for poor tenants
By Denny Walsh and Silvina Martínez
Bee Staff Writers
(Published July 4, 2001)
A federal judge Tuesday took the unusual step of blocking the sale of four
Sacramento County apartment complexes until the owner complies with state
law designed to guarantee low-income housing.
The rare ruling is a crucial victory for at least 351 poor families, some
with members who are disabled. They share a fear of winding up homeless
without their rental assistance.
"It is beyond cavil that the purpose of the California statutes are to
preserve low-cost housing," said U.S. District Judge Lawrence K. Karlton in
a 40-page order.
But, he found, the apartments' Denver-based owner, National Housing
Partnership, did not give detailed enough information to tenants and local
government officials regarding its intent to pay off its federally
subsidized mortgages and to opt out of a rent-subsidy program. The
partnership planned these moves to facilitate the sale.
"Notice that contains only the major ideas or concepts" is not sufficient,
Karlton ruled, citing state case law.
Nor did the owner comply with the state's requirement that parties willing
to preserve multi-family complexes as low-cost housing must be given an
opportunity to purchase them, Karlton found.
"The court is convinced that a violation of the state notice and
right-of-first-refusal provisions preclude sale of the properties, and thus
commands" no sale shall take place until the provisions are satisfied.
Andrew Clare, an attorney for National Housing Partnership, said Tuesday,
"It's almost impossible to comment until I've seen the order."
Matthew Pavone, the attorney for U.S. Housing Partners, the Walnut
Creek-based partnership seeking to buy the complexes, could not be reached.
Pavone told Karlton during a June 18 hearing that his client has incurred
more than $250,000 in non-refundable costs related to the purchase. However,
the judge refused to require plaintiffs to post a bond, as is routinely done
in connection with injunctions such as the one he ordered Tuesday.
"I note that the named plaintiffs are all persons of very moderate means and
the organizational plaintiffs are nonprofit corporations," Karlton said in
He is "unwilling to close the courthouse door on public-interest litigation
by imposing a burdensome security requirement," the judge said.
"Accordingly, bond is set in the amount of one dollar." The lawsuit was
filed by Legal Services of Northern California attorneys Anne Pearson and
Tuesday's order is one of the few times a court has stepped in to prevent a
landlord from getting out of the affordable-housing market.
The news brought relief to Mary Fleming, a 59-year-old tenant at the Kenneth
Arms in Carmichael, one of the complexes.
"Most of us would have had nowhere to go," said Fleming, who makes $12,000 a
year as a housekeeper for a nursing home. "I would have had to go to a
Jinny Breimann, president of the Kenneth Arms tenants' association, said she
was shocked to hear about the injunction.
"I'm so excited. It's so wonderful. I'm carried away. This has brought my
faith back in the justice system. A lot of people would have ended up on the
In addition to the 97-unit Kenneth Arms, the properties at issue are the
89-unit Manzanita Arms, also in Carmichael, the 95-unit Rancho Arms in
Rancho Cordova, and the 70-unit San Juan Apartments in Fair Oaks.
The owner asserted that the right of first refusal does not apply because an
unsolicited, bona fide offer was received from a qualified purchaser.
But Karlton pointed out that a qualified purchaser of an assisted-housing
development in California must agree to maintain the affordability of the
units "for persons and families of low or moderate income and very low
The judge noted that current rent chargeable to the tenants is 30 percent of
the occupants' adjusted income, while the buyer proposes to charge 30
percent of 80 percent of the Sacramento area's median income.
"This difference is potentially enormous," Karlton said.
Tenants' attorneys argued that it figures out to $867 a month, which is
almost twice as much as rents for comparable units in the private,
Also in Tuesday's order, Karlton dismissed all of the lawsuit's claims under
federal law and dismissed the U.S. Department of Housing and Urban
Development as a defendant.
Federal law imposes no obligation on owners to comply with state notice
requirements, he said. And "HUD has no discretion to refuse the prepayment,
and once the owners prepay their mortgages, HUD no longer has any say
concerning the use of the properties.
"Even if I concurred with plaintiffs' view that moving away from unit-based
(subsidized) housing is ill advised, particularly given the limited
low-income housing in the Sacramento area, the court is bound by the
contrary judgment of Congress."
The Bee's Denny Walsh can be reached at (916) 321-1189 or email@example.com.
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