Towbes Group traces erroneous rent hike to old letter

SANTA BARBARA, Calif. - Rent hikes are a hot-button issue in our high-end housing market, especially when they come in the form of triple-digits. That's what appeared to have happened to dozens of senior citizens in Carpinteria until someone did a double-take.

"My reaction was utter shock," said Vivian Sherwood.

Sherwood lives at Shepard Place Apartments in Carpinteria off Casitas Pass Road and is one of 60-tenants living there with help from the Housing Choice Voucher Program (Section 8) under the Federal Housing and Urban Development Program (HUD). Sherwood said she's lived there for 20-years. 

"We've had increases every year but never like this," Sherwood said. "$5 dollars, $10 dollars, $15 dollars, $20 dollars a month."

The longtime tenants received notice September 1 on Shepard Place Apartments letterhead, informing them that their rent would jump, in most cases, from just over $1,500 dollars to $1,834 dollars a month, starting December 1.

"You're a woman in your 90s," said reporter Beth Farnsworth.

"92," Sherwood answered.

"And being asked to pay almost $300 dollars more a month .... what does that do for you financially?" Farnsworth asked.

"Means I don't eat," Sherwood stated.

Delores Vicari received the same letter with the same increase.

"I already was raised through Section 8 for my annual and that was $20 dollars. And now, this one (from Shepard Place Apartments) is $46," Vicari
said.

Vicari calculated the new numbers and said overall, she was stunned by the math.

"As far as they say it's considered Market Value. That's what they have to reach up to," Vicari explained.

Vicari was right.

"The one bedroom payment standard is $1,834 dollars a month," said Rob Fredericks, Executive Director/CEO of Housing Authority with the City of Santa Barbara.

Fredericks explained that is the max amount HUD allows the local Housing Authority to pay per voucher tenant. Of that amount, tenants cannot pay more than 30% percent of their incomes toward their monthly rent. Housing Authority makes up the different. However, Fredericks said a triple digit hike is not out of the ordinary in our communities.

"Unfortunately, we see it far too often," Fredreicks lamented.

In the letter Sherwood and other tenants received, The Towbes Group, the owner of the property, was mentioned. Farnsworth contacted Jim Carrillo, Vice President of Residential Properties.

"I would be concerned about that amount too," Carrillo said. "Those are big jumps."

Carrillo spent the next few days researching the numbers and that letter that went out en-masse.

"An apology letter will be going out to anyone that received this letter to let them know that it was sent out in error," Carrillo explained.

Carrillo said the letter suggested a "large increase was coming when in fact, it was not" and said he was "shocked" that it had gone out without review.

"We certainly acknowledge that we made a mistake," Carrillo said. "The rents that are paid by the Housing Authority are the rents that we accept."

Carrillo explained that the letter template was used as far back as 2015 until The Towbes Group discovered it and discontinued its use. He said he learned that new management recently pulled it out of a file and used it to notify all 60-voucher tenants.

"While it was someone trying to do the best job they could, it wasn't handled properly," Carrillo said. "We are going to be communicating with
each one of those folks (tenants who received the letter) and letting them know."

At the time, Carrillo was under the impression that Sherwood would likely see a $10 monthly increase in her rent, however, the final amount would
be determined by the City's Housing Authority. Jerry Morales, Leasing Agent with the local Housing Authority, believed most tenants could see at least a $46 dollar monthly increase, based on a utility allowance fee that was no longer being absorbed through their voucher amount.

Carrillo also explained that rents do go up each year because prices go up for the Towbes Group properties. He said utilities and insurances fees, among other costs, each go up yearly roughly 7 or 8%.

Days later, Morales confirmed to Farnsworth that after talking with The Towbes Group, none of the voucher tenants at Shepard Place Apartments would see an increase in their rent next year -- not even by $1 dollar. (However, it appeared one exception involved a tenant moving into a new unit.)

"We will keep rents at what they were last year," Morales said. "Voiding all rent increases .... and anything already paid, all being retracted."

Weeks later, Sherwood received a second letter from The Towbes Group.

"Upon thorough review of the situation we have taken steps to insure this will not happen again," Sherwood said, reading the letter out loud. "Please continue to pay your current rent portion according to the Housing Authority calculations."

Sherwood became emotional.

"I never heard of a letter like that, I'm so grateful. It means a lot to all of us."

Morales also echoed what Carrillo stated earlier, that The Towbes Group would step-up training among its management staff at its properties. Carrillo also said that once increases are implemented for their voucher recipients and market rate units, none will exceed 5%. Carrillo explained
that tenants at all of The Towbes Group properties have been capped at 5% for the past two years.

California's new rental law, AB 1482, (effective Jan. 1, 2020) will not apply to voucher recipients living at properties owned by The Towbes Group. The new law restricts rent increases to a maximum of 5% plus the regional cost of living (CPI), which could allow increases up to 6%, 7%, 8% and cap at 10%. Again, Carrillo explained that their properties will remain capped at 5%. Period.