Continued: 'Low-income' has its limits

When Kari Thomas learned that the new owners of her Roseville housing complex planned to raise rents -- owners who had been awarded $12 million in tax exempt bonds and authorized to receive low-income housing tax breaks -- she organized a tenant meeting.

About two weeks later, Thomas received a letter from management at Centennial Commons Apartments ordering her to leave the apartment that she'd lived in more than a decade. So did 20 other renters. And residents of the 190 apartments were put on notice that rents for many would go up between $75 and $150 a month, more than a 20 percent increase for some.

The irony did not escape attorneys at the Housing Preservation Project in St. Paul, who asked the Minnesota Housing Finance Agency to investigate whether the actions violated policies for housing tax credits. This week, the agency agreed to do so.

However, the developers of the project, Gardens East Limited Partnership, said they are in compliance with all regulations. The rent hikes and orders to leave are the result of converting the apartment complex into lower-income housing, which requires them to link rent to renters' incomes.

"I don't understand it," said Elaine Bryne, a senior citizen whose rent went up $150 a month over the summer. "A lot of us have lived here for years, paying our rent on time and not causing trouble. Now when you see people in the hall, everyone asks 'How much is your rent now?' or 'Did you get evicted?'"

Jack Cann, an attorney at the Housing Preservation Project, said his organization plans to use the Roseville complex as a "poster child" at the state Legislature for the need to better regulate the millions of dollars in low-income housing tax credits awarded across the metro area.

Centennial Commons Apartments are a cluster of brick apartment buildings on a tree-lined street just west of the Hamline Shopping Center on Hamline Avenue N. Although it previously was not classified as a low-income housing development, the rents had been affordable and the apartments in reasonable shape, residents said.

When the complex went up for sale last year, Gardens East Limited Partnership purchased it with the help of $12 million in tax-exempt, multi-unit housing bonds, approved by the Roseville City Council. That opened the door for developers to apply for federal low income housing tax credits, which the City Council recommended authorization for $423,000 each year for 10 years.

The bonding and tax credits are important tools to spur investment in older housing stock in Roseville and other first-ring suburbs, the Roseville staff said. The application for Centennial Commons met the criteria for those incentives, said City Manager Bill Malinen. Although the rents were raised, they still met federal "affordability'' guidelines, he said.

G. Terry McNellis, one of the two partners behind the project, added that 19 new renters with Section 8 housing vouchers now live in the complex, up from one. And nearly $3 million was pumped into improvements such as kitchen repairs, landscaping, a new office and play ground. Rents went up, in part, because they were lower than comparable local apartments, he said. Of the 190 apartments, 161 are now earmarked for lower income residents.

"Income levels and rents are set by federal and state law," said McNellis. "We didn't have a choice."

But Bob Odman, an assistant commissioner at MHFA, said he was concerned.

"This project is not the norm; it's an anomaly," Odman said. "What's unusual is the amount of rent increases for existing residents and the hardship it causes for current tenants."

Thomas, for example, has been on medical leave from work as a legal secretary since July, hospitalized three times for ulcers and depression. Standing in her dining room stacked to the ceiling with packed boxes, she said it's been hard to find an apartment that would allow her 7-year-old daughter to stay in the same school, and at a price she and her husband can afford on one income.

"Even if we made too much money, why didn't they just move us to a different apartment" not for low-income people?" Thomas wondered.

Meanwhile 67-year-old Byrne, who lives near Thomas, said she must now move in with her son and his family. Her rent had been $625 a month for several years, she said, but jumped to $775 a month in August. Byrne held the paperwork she submitted to housing management, indicating she earned about $1,100 a month in Social Security and another $1,100 a month as a part-time cook in a nursing home.

McNellis didn't know the details of the women's cases, but he said that sometimes the financial information that renters submit, and what housing staff learn after contacting their employers and financial institutions, is different.

Thomas, meanwhile, was among 22 residents who had month-to-month leases, and who either earned too much money to qualify for the apartments designated for low-income renters, or they didn't submit financial documents to hotel management to make such a determination. Rather than pick and choose who could stay, the management company asked all of them to leave, he said.

"We have to be fair and consistent in how we treat all tenants," McNellis said.

Jean Hopfensperger • 651-298-1553