Amid a housing crisis, renters challenge firms they say are being exploitative

Kathleen Hernandez, her fiancée and his family, moved into what they thought was their dream rental home in June 2020 in Las Vegas. Their nightmare began a month later.

"The downstairs bathroom overflowed, twice," Hernandez says. A few weeks later, she adds, "I noticed this foul and dirty water was flowing onto our front yard. It was waste water. You could see toilet paper coming out of the pipe."

She says her landlord is Progress Residential LLC, but Pretium Partners LLC is also listed in the property's records as a having an ownership stake. Hernandez didn't know that. "No wonder I didn't know who to contact," she says.

The flowing waste water problem isn't fixed, she says. "It comes and goes. We try to avoid using the downstairs bathroom."

"We've never been behind in rent, even though our rent went up last June when we renewed our lease," she says. "But many things are broken in the home – the dishwasher doesn't work, the upstairs shower doesn't work, we don't use the disposal for fear that it will brake and we'll be liable."

The lease says the landlord is responsible for repairing larger items, but Hernandez says the company is not interested in fixing the problems.

NPR contacted Progress Residential's media office via email, but got no response.

Hernandez is a member of Renters Rising National Tenant Association, an alliance of people who live in corporate-owned properties.

On Tuesday, Hernandez shared her story at a U.S. Senate Committee on Banking, Housing, and Urban Affairs hearing, along with six other renters. People talked about living under "hazardous conditions," "flooded basements," "constant rent increases," "eviction threats," and landlords who are experts at "exploiting legal loopholes."

But Joel Griffith disagrees. He's a Research Fellow with the Institute for Economic Freedom and Opportunity at The Heritage Foundation, a think tank in Washington, D.C.

Renters have a myriad of rental choices, he writes in an email.

"Renters enjoy thorough legal protections against wrongful eviction, and unsafe living conditions," he says. "One of the biggest concerns are cities that make it difficult for landlords to evict tenants who erode the quality of life of their neighbors."

Grifftih is testifying in the Senate Committee on Banking, Housing, and Urban Affairs today, Thursday, as a follow to Tuesday's session.

Corporate landlords take value out of their buildings

Ellen Davidson is a housing attorney with the Legal Aid Society in New York City, where 66% of households are renters. Davidson says that LLCs, or the limited liability company model, is used by large corporations to protect themselves against liability.

"It is very difficult to complain to their landlord about repairs because tenants get retaliated against for basically asking for safe and decent places for them and their children to live," she says.

She adds, "The government should focus on building, developing, finding safe, decent and affordable housing."

Davidson says corporate landlords often take value out of a building. "You raise rents, you cut costs as severely as possible, which usually means deferred maintenance, neglect, failure to make repairs, making buildings more dangerous, code violations, not dealing with problems with heat," she says.

The deadly fire last month in the Bronx in New York that killed 17 people and injured dozens has highlighted housing advocate concerns. Many say the partly government-funded real estate deals ensure enriching some landlords, while little attention is paid to ensuring these housing units are safe.

The Bronx fire was sparked by a malfunctioning portable space heater in an apartment, and it spread largely because of failing safety doors, according to New York Fire Department Commissioner Daniel Nigro.

Mamadou Wague, his wife and their eight children lived in the apartment where the fire began, and like many other residents, they are immigrants from West Africa. Wague told NPR that the family used portable heaters because the apartment was cold and it was difficult to sleep.

The country is in the middle of a housing shortage, especially affordable housing, both in rentals and home ownership. According to the National Association of Realtors, there is one affordable listing available for every 65 households and the shortage is driving up prices.

U.S. Senator Sherrod Brown (D-OH), chairman of the Senate panel, has hosted a series of listening sessions on housing and corporate landlords in recent years. In 2020, he called on Fannie Mae and Freddie Mac, the country's government-funded largest housing financier. In a letter to CEO Hugh Frater, Brown expressed concerns about giant private equity firms buying up affordable housing buildings in large amounts to make profits.

"More and more wealthy, deep-pocketed investors are buying up the homes that serve as the foundation for families' lives," he wrote. "They see these buildings as nothing more than an annual return on equity."

Renters fight back for their rights

Joseph Donahue, a lawyer with the Donahue Law Firm in Annapolis, is co-counsel in a class action lawsuit filed in the U.S. District Court for Maryland last summer against Arbor Realty Trust Inc. and its subsidiaries.

Arbor Realty Trust owns the Bedford and Victoria Station complex, a multifamily residential property in Langley Park, a densely populated neighborhood in Hyattsville, Md. An amended complaint was filed last month.

According to the complaint, Arbor controls approximately 139 multifamily developments with about 17,000 apartments across 12 states.

"If the government is going to lend money to these huge corporations who are in many instances publicly traded, then they need to guarantee that the conditions of the properties are safe," he says.

Corporate landlords are not accountable, Donahue says.

The Bedford and Victoria Station complex is managed by the Ross Companies. NPR placed several calls and left a message for Ross's public relations office in Bethesda seeking comment. NPR got no response.

NPR also reached out to the Bedford and Victoria Station apartments for comment on Juan Cuellar's testimony on Tuesday about unsafe living conditions. The company declined to comment.

"The government doesn't fully understand how bad this industry is taking advantage of people and then raising their rents year after year," Donahue says.

The complaint alleges violations of the Fair Housing Act, including intentional discrimination based on race and national origin.

During the 2008 Great Recession more than 3.7 million households lost their homes to foreclosure, according to DSNews, an online group focusing on housing.

That's when these corporate landlords and private equity firms started buying foreclosed properties with government tax breaks, Donahue says.

"There are folks who live in these properties who are fumigating the properties themselves," Donahue notes. "They're buying space heaters just like what went on in the Bronx because their heat doesn't work. They're maintaining and updating the properties themselves because the owners aren't doing it."

Moving is often not an option

Juan Cuellar is an example. Cuellar works as a house painter and handyman and often fumigates and does repairs in his apartment. He has lived in the Bedford Victoria Station complex with his wife, his 18-year-old son and three grandchildren for a decade. Cuellar is a member of the tenant committee in his building, and though he's not a member of the class action lawsuit, he supports it.

"We need to win in court, we deserve better housing conditions," he says.

"The floor is buckling, we don't have heat, there are cockroaches and mice," he told senators in his native Spanish through a translator, "The A.C. units don't work, the refrigerator doesn't work."

Cuellar said that rent has gone up and he now has to pay water fees.

CASA, a nonprofit immigrant advocacy organization based in Hyattsville, is a plaintiff in the class action suit and has been working on behalf of tenants to secure rent assistance. Arbor has gotten about a million dollars in rental assistance via the Prince George's Emergency Rental Assistance Program (ERAP) during the pandemic.

Cuellar said most of the tenants, and people in the area, are immigrants from Central America.

"I came to this area in 1997," Cuellar says. "I feel fond of the area, my wife doesn't drive and she can walk to Latino shops."

It wouldn't be easy to move, he says.

"We are low-income people who don't make enough money to move," he says. [Copyright 2022 NPR]