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A 12 year review of capital vs. the people who formerly occupied East Palo Alto (and some who still do). ( @ushanti @gilbazoid )
In 2006, Page Mill Properties created a new real estate fund and raised a $100M from CalPers (i.e., sold shares to a key state worker pension fund).
In 2007 they bought up 70% of the rental properties in East Palo Alto (the "Woodland Park" portfolio).
Rent hikes and evictions began to take off. They were loosening the soil.
At the same time, Page Mill took on $50M in debt backed by these properties. The lender was Wells Fargo.
At the same time, Page Mill took on $50M in debt backed by these properties. The lender was Wells Fargo.
In 2008, a newly hired analyst at CalPERS noticed this and started asking questions -- the Page Milll portfolio didn't seem to be on a sound fiscal basis.
Page Mill responded by asking CalPERS for another $25 to $40 million. CalPERS said no.
In 2009 Page Mill just walked away. There were no building managers. Trash went uncollected, etc.
In 2010 Wells Fargo foreclosed.
Note what happened so far: a lot of people displaced; rents raised so that remaining tenants are in a precarious place; the Page Mill folks did all this and got their fees and salaries off of $100M in CalPERS money and a defaulted $50M loan. So what next?
2011: Equity Residential (Zell's company -- pretty big in the Bay Area) bought the entire portfolio from Wells Fargo -- over court challenges even.
Concurrently, Facebook announced its move to the former Sun Campus, right next door to East Palo alto. Facebook ... ready? ... get a state pension fund to buy the campus and lease it to Facebook, giving FB an option to buy in 5 years if everything works out.
Equity Residential allows units to deteriorate and continues to raise rents. It raises late fees to brutal levels. Displacement in East Palo Alto intensifies.
Facebook offers employees a $10K/year stipend if they will move to East Palo Alto.
Finally, a new holding company -- is formed: Woodland Park Properties -- which buys out Equity Residential, giving Zell a nice exit.
At about the same time, FB goes ahead and buy the HQ buildings.
The new owners say they have no immediate development plans, but that some of the buildings are "near end of life" (after years of neglect) and will need to be replaced.
FB more recently filed plans to build three office towers in East Palo Alto. You may have heard about this. It was associated in the press with the eviction of homeless RV dwellers from near one of the proposed sites.
Development in E. Palo Alto has been blocked for years and years because the E. Palo Alto allocation of water from Hetch Hetchy is too low. How can FB (or Woodland Park Properties) build?
MIRACLE! Just in time, the powers that be get the city to drill a single test well and, lo, there's lots of ground water! Who knew!
It is just icing on their f'ing cake that if (when?) SB827 passes, it will allow the BY RIGHT redevelopment of every inch of Woodland Park, with no density or floor area ratio constraints and with heights not less than 45', and in some cases 85'.
So again: upzoning doesn't cause speculation. The speculation started years in advance.
And if SB827 fails? Don't worry, Woodland is backed by a sovereign wealth fund from the middle east. They have all the time in the world to complete this play.
So ends another tail of why YIMBYs are mostly a sideshow, when they aren't busy being useful idiots to capitalists like those.
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