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Conrad Prebys Estate Putting Thousands Of Low-Cost Apartments Up For Sale
Tuesday, February 9, 2021
Photo by Andrew Bowen
The estate of deceased real estate mogul and philanthropist Conrad Prebys is looking to sell a massive portfolio of low-cost apartments in San Diego County, according to documents reviewed by KPBS. Affordable housing advocates and elected officials are sounding alarms over the move, saying it could lead to low-income renters being forced from their homes.
The sale could unlock more than a billion dollars for the many charitable causes supported by the nonprofit Conrad Prebys Foundation. Past grant recipients include San Diego Zoo, La Jolla Music Society, Scripps Health, San Diego State University and KPBS.
But experts say the sale could also result in a devastating loss of affordable housing. While the nearly 6,000 homes included in the sale are not publicly subsidized, many are still affordable to low-income households because of their old age. Advocates fear a new owner would renovate the homes and raise the rents, thereby pricing out low-income tenants.
Those concerns were enough to motivate San Diego Mayor Todd Gloria, County Supervisor Nathan Fletcher and state Senator Toni Atkins to write a letter to the foundation's board president and executive director urging them to seek out buyers committed to keeping rents on the properties low.
"Never in our history has having access to safe and secure housing been so important," said the Feb. 6 letter. "It would be a devastating blow to the San Diego region if these apartments were to become economically out of reach for so many. We ask that when considering potential buyers, you take into account future plans to maintain affordability for these units."
The homes are scattered throughout San Diego County in communities including: San Ysidro, Imperial Beach, Chula Vista, National City, Lemon Grove, Lakeside, Spring Valley, Pacific Beach, Ocean Beach, El Cajon, Escondido, Ramona and Santee.
One building in the portfolio, Conrad Villas, located on Conrad Drive in Spring Valley, is currently renting two-bedroom apartments for between $1,775 and $1,825. This would be considered affordable for a three-person household — say two parents and one child, or a single parent with two children — earning about $72,000 per year, which is roughly 70% of the county's median income.
The purpose of the sale is to ensure that the foundation will continue to be able to adequately fund its good works, said Dan Yates, president of the foundation's board of directors.
"The move will provide a more sustainable source of funding, reduce risk by diversifying assets and allow the board to focus on the transformational grants that are consistent with Conrad Prebys' philanthropic legacy," Yates said in a written statement to KPBS.
Yates added that the bidding process for the portfolio was complete and the foundation was now working to select a buyer. He also downplayed the risk that the sale posed to those currently living in the homes.
"Since the winning bid has not yet been selected, we cannot speculate regarding the intentions of the future owners of the portfolio, but believe the current laws and regulations, including the California Tenant Protection Act, provide clear guidance to the future owners, safeguard the portfolio’s residents and provide value to the future owners," Yates said.
Stephen Russell, executive director of the San Diego Housing Federation, said the foundation should be as concerned about the wellbeing of the tenants living in the homes as it is about its own finances and philanthropic activities.
"As a charitable philanthropic foundation, the Conrad Prebys Foundation has its interests in improving public welfare, public health," Russell said. "They could do that better than anything else by making sure that the folks who are living in these homes aren’t forced out on streets, aren’t forced away from schools where their kids are going."
The potential to flip the homes for profit is an explicit selling point. Marketing materials for the sale, portions of which were seen by KPBS, describe the portfolio as "an opportunity to gain scale instantly in the San Diego market, and to boost net operating income by updating unit interiors and amenities."
The marketing material goes on to say: “The listing is expected to attract strong interest, in part because the pandemic has increased tenant demand for less-expensive apartments."
Russell said this kind of "trading up" of housing can be necessary when the homes are in very poor condition, but that it's best done slowly so there's no shock to the housing market.
"It's when you do a very large complex at once — or in this case an enormous portfolio maybe staged over several years — you're going to see major displacement," Russell said.
The loss of unsubsidized "naturally occurring affordable housing" is a big concern for local government officials. A report released last year by the San Diego Housing Commission estimated that more than 25,450 of these low-cost units in the city would be lost to market pressures over the next 20 years.
The study recommends policies that would give local governments or affordable housing providers the first right purchase when affordable homes are put on the market.
Russell said Conrad Prebys himself did exactly that in the late 1990s when he sold a portion of his properties in the Mid-City area to a nonprofit affordable housing provider, guaranteeing they would remain affordable.
"I would think that (Prebys) would be horrified to see that in his name we are selling these properties and that the benefits are going to entirely accrue to a foundation and not to the families that are here," Russell said.
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