Updated, November 30th, 2015 – Added copies of lease termination notices as obtained from the City of Alameda through a public records request.
Matt Srihdar, CEO of Srihdar Equities closed escrow and took possession of the 33-unit apartment building at 470 Central Avenue just days before Alameda City Council approved an urgency rent control and just cause eviction ordinance. Now, he’s embroiled in the ongoing controversy over what to do about rising rents in Alameda.
Sridhar’s company specializes in acquiring under-performing (read: money losing) properties, renovating them, and returning improved units to the market.
The purchase of 470 Central Avenue closed in late October, just days before the November 4th city council meeting that saw two tenant activists arrested and the passage of the urgency ordinance, which put a 65-day hold on most landlord-originated lease terminations.
(Strictly speaking, it’s not an “eviction” until the landlord takes the tenant to court to force them out after posting notice of intent to terminate the tenancy. The city’s ordinances refers both to actions “to terminate a tenancy” and to “evictions.”)
A few days after that, Srihdar Equities posted notice to all tenants in the Central Avenue building that they had 60 days to vacate due to renovations of the property.
Now, seemingly careening from one event to the next, Alameda City Council is set to consider, on December 1st, an amendment to the urgency ordinance that would remove “substantial rehabilitation” as a ground for just cause lease terminations during the 65-day moratorium.
Liz Warmerdam, interim city manager for the City of Alameda, told Action Alameda News, “the City Council passed the moratorium to maintain the status quo while we go through the necessary public process to adopt new legislation to address the rent crisis.
“Right on the heels of that action, a landlord issued eviction notices to 33 households at 470 Central. As you can imagine, that was very troubling. The City Council will consider at its December 1st meeting options to revise the moratorium to prevent these types of disruptions to families, particularly during the holiday season.”
Asked about the timing of the notices, Srihdar said, “We’re not excited about putting people out during the holiday, but the urgency ordinance forced us to act. Whatever ordinance comes next may prevent us recovering possession and doing the needed renovations to make the property viable. We have to protect our investment.”
According to Srihdar, the previous owner was losing money on the property, hence the sale. The 1960s-era building at 470 Central Avenue is in poor condition and needs to be updated through a complete renovation.
With the purchase, Srihdar inherited the monthly loss on the property, until he can rehabilitate the building. He conceded that upgrading the property and returning it to profitability will necessitate higher rents.
“We focus on providing quality housing, not just acceptable housing,” he said.
As of last week, LoopNet, a commercial real estate site, still had a sales listing for the property; one of the highlights itemized is “no rent control.”
Nonetheless, as close-of-escrow approached, Sridhar learned of impending actions by city council regarding rent control and just cause evictions.
“We contacted the City of Alameda to request mediation support immediately after noticing the tenants,” he explained. “We were the first to propose mediation. We are ready to talk, but to date, our tenants are not communicating with us. We have not built our company by mis-treating people. We believe the tenants are being coached by people with a larger political interest. People who have a vested interest in mediation failing.”
Sridhar noted that he himself grew up living in rental apartments, and saw his parents mis-treated by landlords. In our conversation, he said multiple times that he wants and welcomes City of Alameda involvement in resolving the inherent conflict between his renovating the property to make it profitable but having to displace tenants to do so. So long as mediation doesn’t just turn into a venue for wider interests to advocate a political agenda.
He also rebuts the “greedy landlord” accusation, saying, “real estate is a long term game, it is not a Google, not a Twitter. Property owners do well over time due to appreciation,” and pointing out that the building, once returned to the market, would be only modestly profitable.
Regarding rent control, for which an enduring ordinance seems forthcoming from Alameda city hall early in the new year, Sridhar said, “Rent control makes it difficult to improve existing housing stock. Rent control is essentially for eternity. It’s bad policy to implement an eternity policy based on two to three years of market activity.”
At the time we spoke last week, the agenda for the December 1st city council meeting hadn’t been posted, and there were rumors that city officials were contemplating suing Sridhar Equities to nullify the termination notices.
On that point, Sridhar said, “The City of Alameda would be unwise to engage in litigation. The money and energy spent on litigation would be better spent helping the tenants.”
However, the city’s stated intent of passing the November 4th urgency ordinance and proposed December 1st amendment is to create a defense for tenants in eviction proceedings in court.
Short of a city-initiated lawsuit, tenants at 470 Central Avenue who want to fight the early-January notice date would be on their own, or have to turn to tenant-support groups for help, in the event their landlord initiates eviction proceedings in court.
Warmerdam hadn’t responded by press time to a follow-up e-mail asking about the legality of retroactively nullifying termination notices that were legal under the November 4th ordinance.
Councilmember Marilyn Ashcraft deferred that question to the City Attorney.
Asked to set aside the nullification question in a follow-up e-mail, and focus on the question of the City of Alameda forcing Sridhar to continue losing money on the property by virtue of the proposed December 1st ordinance, Ashcraft had not responded by publication time.