Rents soar in Sonoma County

?Humberto and Maritza Hernandez were stunned when they learned the rent for their two-bedroom apartment in east Santa Rosa would jump nearly 50 percent this month, to $1,450.

And such a rent hike won’t just mean fewer extras for his family, said Humberto Hernandez, a warehouse supervisor with three children. It also ripples out to the local businesses where he no longer will be spending money.

“I don’t think it’s healthy for the economy of the county,” he said.

The dilemma facing the family and other residents of their 10-unit apartment complex offers a glimpse of the turmoil in Sonoma County’s rental market, especially for lower-income families. Significant job growth and a wobbly homebuilding sector have teamed up to create the tightest rental market in decades.

Rents have risen faster in Sonoma County this year than almost anywhere else in the United States, according to several industry surveys. Rents have climbed 30 percent over the past three years in Sonoma County, reaching an average of $1,579 this summer, according to Real Answers, a Novato firm that tracks larger apartment complexes.

The increases are affecting a broad section of Sonoma County, where more than four in 10 families - or 78,000 households - live in apartments or rented homes, according to U.S. Census estimates.

Renters, said Santa Rosa apartment and office developer Hugh Futrell, are “utterly being hammered.”

Countywide shortage

Landlords say rents are rising because there is a shortage of housing in Sonoma County. Over the past three years, the county has added 18,000 jobs. Since 2008, only about 70 unsubsidized, “market-rate” apartment units have been built, according to Real Answers. As a result, fewer than 3 percent of the county’s apartments are vacant.

“These are the circumstances that we’re stuck with,” said Scott Gerber, a landlord and real estate broker who specializes in apartment properties.

Landlords have become more picky about their tenants, and buyers are purchasing older complexes and making significant renovations. Such developments are discomforting or displacing existing tenants, especially families of limited means.

Matt Schwartz, president and CEO of the nonprofit California Housing Partnership Corp. in San Francisco, said the situation for tenants is bad statewide and “getting worse with each passing day.” In areas with higher-cost housing, he said, “we’re losing income diversity by basically driving out low-income workers.”

But Gerber, a senior vice president for Cassidy Turley in San Rafael, suggested it’s wrong to point fingers at landlords, many of whom continue to charge below- market rates. He contended that the rental market won’t improve until local governments reverse course by cutting development fees and making it less difficult to construct new apartments.

“I talk to people who want to build new units all the time,” he said. The problem in Sonoma County, he said, is “the hurdles are so high that builders just go somewhere else.”

Tenants withhold rent

At the Bennett Valley Townhomes at 4050 Hoen Ave., rents jumped 45 percent in December to $1,450 a month from $1,000 in November after new owners took over the property. In response, tenants - represented by California Rural Legal Assistance and private attorneys - jointly withheld their rents this month. They contend the new owners aren’t entitled to collect the money until they first fix such longstanding health and safety problems as mold and rat infestation, code violations that were documented in a Jan. 21, 2014, letter from the city to the former owners.

The new owners, RHC-4050 LLC, said they sent maintenance staff and a variety of licensed professionals to the property early this month and fixed all problems where tenants provided access. The tenants’ attorneys dispute that assertion, and on Thursday the Hernandezes told a visiting reporter that they still are battling mice and rats at their apartment in the complex.

As well, the city of Santa Rosa recently received a new allegation of rat infestation at the complex and will conduct an inspection there, senior code enforcement officer Michael Reynolds said.

Sought middle ground

David Silver and Jamie Clifford, two of the partners who purchased the property in September, said market-rate rents in Bennett Valley for a comparable two bedroom, 1½- bath unit would be about $1,800. They said they sought a middle ground at $1,450 a month.

“We hope the tenants appreciate this and stay long-term residents at the property,” Silver said.

The cost of rental housing typically stayed flat in Sonoma County during the recession. But demand for units increased as unemployment declined. In the past three years, local employers have added 18,000 jobs, more than a 10 percent jump in employment.

What makes this economic recovery unique is a scarcity of new residential construction. A few hundred affordable housing units built in recent years and two rental projects now under construction in Santa Rosa and Rohnert Park aren’t expected to bring much relief.

The lack of new single-family subdivisions and new multifamily complexes has increased demand and sent rents soaring.

For example, a three-bedroom, two-bath house in west Santa Rosa that rented for $1,500 in 2011 now rents for $1,850, according to DeDe’s Rentals in Santa Rosa.

And the two-bedroom, two-bath condominium that Sean Love rents in Santa Rosa will increase to $1,450 in January from $895 in late 2011. Each year has brought a rent increase and “this year I got two of them,” said Love, the owner of All American Carpet Care.

As a result of the increases, a bigger portion of renters’ budgets now goes for housing.

In 2000, 30 percent of families with very low incomes - those earning up to $41,300 a year for a family of four in Sonoma County - spent at least half of their monthly income on rent, according to a study issued in February by the California Housing Partnership. By 2011, that figure had grown to 53 percent.

In a time of high demand, landlords have become more selective in their tenants. Five Santa Rosa apartment complexes or mobile home parks this year stopped accepting new tenants who received government rental subsidies that are commonly know as Section 8 vouchers, a city official said. And one of those places, the Maribelle apartments on Dutton Avenue in Santa Rosa, had notified roughly 30 tenants that they would have to vacate their units when the leases expired.

Among the tenants was Marie Leal, a 53-year-old disabled woman who has custody of a 13-year-old granddaughter. Leal said she has tried hard to find a new place to live but likely won’t have secured one by the Dec. 31 deadline.

“What it feels like is I am being drove out because I’m low income,” Leal said. “I’m being drove out of the county.”

But on Friday, an official for the property manager, San Diego-based FF Properties, L.P., said the tight rental market had caused the company to re-evaluate its policies. As a result, Leal and the other current Section 8 tenants could stay.

“We’d absolutely put her on a new lease” for six months or longer, regional vice president Paulette Green said.

“Boy, that’s huge,” Leal responded when told the news. “At least we know we’re not going to be out on the street.”

Data from the Section 8 program underscores the difficulties that low-income renters are experiencing in today’s rental market.

In 2014, 79 of the city’s Section 8 program members have asked to take their rental vouchers elsewhere - nearly all leaving the county. That is considerably more than the average of about 20 requests a year, said Carmelita Howard, a housing manager with the Santa Rosa Economic Development and Housing Department.

As well, 82 of the 274 families that received a new Section 8 voucher from the city this year were unable to find a landlord who would rent to them. Those in the county’s Section 8 program had even more difficulty, with 198 of 427 clients unable to secure a rental unit.

A typical wait for a voucher in Santa Rosa is eight years, Howard said. For residents who waited that long to get the aid and then failed to find a place, she said, “it’s pretty sad.”

The search for housing remains especially hard for those of lesser means. This fall half the residents at Catholic Charities’ family homeless shelter had the income needed to qualify for affordable housing, if only they could find a place, said Jennielynn Holmes, the agency’s director of shelter and housing. Similarly, she said, Catholic Charities has received enough government funding to subsidize about 200 people in rental housing, “but we can’t find the properties.”

Making improvements

The rising rents have attracted new buyers, some who are making significant investments to improve the complexes.

At the 17-unit Casa de Sonoma apartments on Sonoma’s First Street West, Kim Orellana and her 18-year-old daughter, Alicia, are among the tenants who have been told they must move out to allow long-deferred repairs.

Orellana, 51, who uses a wheelchair and has lived since childhood with diabetes and multiple sclerosis, said she has been unable to find a place that will accept her Section 8 voucher. She understands the new owners want to improve the complex. “It just doesn’t help me much,” she said, and the uncertainty about where she will live next spring feels “just terrifying.”

Kimberly Buchanan, who helps manage the complex, said her company is working with tenants to allow them to stay until they can find new rentals. Orellana has received back her security deposit and an additional $500 to help her move, she said.

“We’re not going to kick her out on the street,” said Buchanan, property manager with Sonoma Management in Sonoma.

Few expect renters to find much relief soon.

“This is the new normal,” said Keith Becker, owner of DeDe’s Rentals.

You can reach Staff Writer Robert Digitale at 521-5285 or robert.digitale@pressdemocrat.com. On Twitter @rdigit.