Desperate Tenants Turn To Cities As Rents Rise

By Jim Hinch, the Voice of San Diego

December 11, 2024

One by one, anxious apartment tenants stood before the Imperial Beach City Council on Wednesday evening and pleaded for help.

“I’ll be living in my car,” said Philip Del Rio, a tenant at the Hawaiian Gardens apartment complex a few blocks from City Hall. Like other Hawaiian Gardens residents, Del Rio recently received a notice from his building’s new corporate owner informing him that he would be evicted on Feb. 1 because the owner planned to “substantially remodel” the building.

“I don’t know what I’ll do,” Del Rio told the Council. “I was diagnosed with cancer seven years ago. I’m in remission but my doctors say the cancer will come back…All you hear from landlords is the numbers. Where’s the morals, the decency?”

Del Rio was one of more than 30 speakers at Wednesday’s packed Council meeting. Along with other Hawaiian Gardens tenants and residents of a neighboring building also recently bought by a new corporate owner, he begged Councilmembers to adopt regulations that would prevent landlords from evicting tenants for remodeling projects and other so-called “no-fault” reasons.

His plea is becoming increasingly common in a regional housing market transformed in recent years by a wave of corporate investors buying aging properties, remodeling them and raising rents, often substantially. The tactic is one of many factors driving up housing costs and vaulting San Diego County into the upper ranks of the nation’s most expensive housing markets.

The trend has even reached once-affordable communities such as Imperial Beach, where aging homes now sell for close to $1 million and rents can approach $2,500 per month for a one-bedroom apartment. As prices rise, tenants are turning to city leaders for help.

Already, San Diego and Chula Vista have enacted tenant protection ordinances that limit evictions and require landlords to reimburse tenants evicted for remodeling projects and other no-fault reasons. In July, county supervisors moved to crack down on what they described as institutional investors’ monopolization and manipulation of local housing markets.

On Wednesday, Imperial Beach leaders appeared poised to join the trend. They formed a committee to seek community input on possible new regulations protecting tenants and said they could consider a temporary moratorium on evictions at their first meeting in January.

“The last thing we want is hundreds of families on the street,” said Mayor Paloma Aguirre. “This is about looking out for each other…It’s our priority to protect the safety and well-being of our community, and I think we can do that.”

Landlords at the meeting objected to the move, saying they are already squeezed by inflation and California’s existing rules protecting tenants, among the strictest in the nation.

“My heart goes out to people who have to be moved,” said local landlord Sheila Martinez. But “it is a business…You’re asking to put an unfair burden on people who own property. We try to do right by tenants. If you pass any regulation, it will fall on all our shoulders, not a handful” of unscrupulous owners.

The events leading to Wednesday’s meeting began last year, when a La Jolla-based company called F&F Property Management, Inc. bought the Hawaiian Gardens apartment complex for $19 million from a family who had owned the complex for years.

Residents said conditions at the complex quickly worsened. “F&F rips off their tenants,” said Susan Vanderlinden, 68, who moved into Hawaiian Gardens in 2016 and now pays $1,115 per month for a studio apartment.

Vanderlinden said the new owners stopped responding to routine maintenance requests and often waited days or weeks to fix major problems such as mold or water leaks. She said her utility bill quadrupled after the owners added new charges and changed how they calculated rates.

She said company employees often entered residents’ units without permission or peered through windows as if examining units. The repeated intrusions prompted Vanderlinden to keep a baseball bat and airhorn near her bed.

“I saw a guy [in an F&F uniform] staring into my kitchen window,” she said. “I screamed.”

On Oct. 30, all residents in the complex received a notice informing them they had until Jan. 31 to move out because F&F planned to remodel the entire complex. Attached to the letter were copies of building permits showing that the company intended to renovate units and convert a two-story pool house and community room into additional rental units.

“If you fail to quit and deliver possession of those premises to the Owner on or before January 31, 2025, legal proceedings will be commenced against you,” said the letter.

Vanderlinden said she was prepared to move but couldn’t find anyplace she could afford on her $1,600 monthly income, most of which comes from Social Security.

“I’ll have to live in my car but there are no safe parking places,” she said. “I’ll be homeless.”

An F&F spokesperson said that residents’ claims of neglect and unfair treatment are “inaccurate.” In a written statement provided to Voice of San Diego, company representatives said that “F&F Properties is going above and beyond what the law requires to try and ensure the smoothest of transitions” for evicted tenants.

The statement said the company is giving tenants more time to move than required by law and is waiving their last month’s rent and returning security deposits. The company also is “attempting to provide alternative housing options in its other communities,” the statement said.

In a separate statement emailed to Imperial Beach officials on Wednesday, the company said that Hawaiian Gardens, built in 1973, requires a comprehensive overhaul because antiquated plumbing and electrical systems, asbestos and other problems have rendered “the property nearly uninhabitable.”

Tom McCartin, a real estate broker involved in the sale of Hawaiian Gardens to F&F, also provided a statement attesting to the company’s commitment to treating tenants fairly and emphasizing that Hawaiian Gardens had “a high amount of deferred maintenance.”

“I personally know [the owner of F&F] and I have sold several properties to them over the years,” McCartin said in the statement. “They have done a great job of taking blighted properties and improving them, thus improving the surrounding neighborhood.”

Headquartered in an office building near La Jolla, F&F owns more than 40 apartment complexes throughout San Diego County. On its website, the company describes itself as a purveyor of “boutique communities.” Rents in company-owned complexes range from roughly $2,000 per month for a studio apartment to nearly $3,000 for two bedrooms.

In a May 2020 podcast interview, company owner Dan Feder defended himself and other landlords against what he called the “sick agenda” of state lawmakers seeking to roll back rents during the pandemic.

Housing providers, he said, “are being chosen as boogey men today for some crazy reason because it fits some agenda…It’s become a blame type of a thing.”

Elsewhere in the podcast, Feder said he entered the apartment business not to flip properties for quick profit but because the business promised a “steady-Eddie source of long-term income.” He said he researched prominent philanthropic donors to learn which lines of business enabled the donors to become wealthy enough to give away large sums of money on a regular basis.

“Wow, what a great business,” he recalled thinking when he learned that many major philanthropists own apartment buildings. “It’s an opportunity to have a really incredible life.”

Feder said one key to his company’s success is what he described as a performance “dashboard” designed at his request by computer programmers in Russia and India that measures how well the company is meeting business goals.

The dashboard’s algorithms, Feder said, “tell us where we’re at, every minute, every day.”

At Wednesday’s Council meeting, city leaders openly wrestled with how to balance the competing demands of tenants, landlords and the city’s own need for more affordable housing.

“The [housing] market in Imperial Beach is resetting,” said Councilmember Jack Fisher. “In 1996, [our family was] poor and this was the cheapest community to live in. [Now,] every home is a million dollars.”

Fisher and other Councilmembers said they worried about legal challenges to an eviction moratorium and the unintended consequences of limiting landlords’ ability to remodel their apartments.

At same time, said Fisher, “we’ve heard about the greed of corporations, and I somewhat agree with that. It is a business. But business affects livelihoods…The path right now isn’t very clear…It sucks on all ends.”

Vanderlinden, the Hawaiian Gardens tenant, watched the proceedings from the back of the Council chamber. Wearing a “Straight Outta Imperial Beach” t-shirt and leaning against her walker, she said she felt cautiously hopeful that city leaders would figure out a way to keep her in her home.

“I feel a little bit more happy,” she said as she left the meeting and shivered in the cold night air. “But it’s a bit iffy.”

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