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How a rent increase puts ‘affordable’ out of reach

July 15, 2018

Joyce Wilson

Jared Ludowese is having trouble affording “affordable.” In the seven months since landing a new job as a machinist, he’s been able to end his reliance on Medicaid and food stamps, but a $300 rent increase hit him hard this month.

Ludowese is among several tenants of Villages at Essex Place who received notices in May announcing July 1 rent increases to the maximum amount allowed according to the Low-Income Housing Tax Credit Program.

“This is 50 percent of my net … and that’s working some overtime,” Ludowese said of his new monthly rent payment, which jumped from $636 to $937.

At the same time, he said he can’t afford to move from the 41st Street Northwest complex he has called home for nearly five years. Since he doesn’t drive, the four-block bicycle commute from his home to work makes his apartment ideal.

Until December, he made ends meet by working up to three part-time jobs at $10 per hour. Then, he landed a $15 per hour full-time job he’d be reluctant to give up, which would likely be required if he moves.

His downstairs neighbor, Joyce Wilson, shares a similar story, even though her rent increase wasn’t as drastic. Her monthly rent went from $845 to $987, which includes an extra $50 for her pets.

“I can’t afford it,” she said, noting the increase also means half of her monthly paycheck as a service driver is dedicated to keeping a roof over her head.

“This building — I was told — was supposed to be affordable housing,” she said.

By government definitions, it is. The federal tax-credit program that Villages at Essex Park operates under provides tax incentives to encourage developers to create affordable housing. As a condition of the tax incentive program, rent levels are limited.

For Essex Park, it means all units must be deemed affordable for anyone earning 60 percent of the area median income. The federal Department of Housing and Urban Development uses the median income level to define the maximum allowable rent.

For Ludowese, Wilson and their neighbors, that means $937 for a one-bedroom apartment, or $1,119 for two bedrooms, which allows for an $81 and $103 utility bill, depending on apartment size.

Owen Truesdell, a spokesman for Plymouth-based Dominium Apartments, said the company decided this year to equalize its Essex Place rents after years of having units available at less than the maximum allowable rents, citing a strong local apartment market.

“Some residents were at the published allowable rent and some were under,” he said. “We decided based on the strength of the market to take everyone to the allowable rents, which is well documented by the HUD established changes in area median income.”

The new rents are in line with some of the newer apartments built in Rochester using the tax-credit program. They face the same rent limits.

Essex Place was built in 1997 and rehabbed in 2012.

Before the recent change, Ludowese said he saw quarterly rent increases and decreases, but never by more than $10 at a time. Truesdell said that was the result of a software program used to adjust Essex Park rents based on supply and demand.

“This meant rents and lease terms could fluctuate the way airlines price travel,” he said.

The Essex Place leases include a provision that states the company has the right to increase rents to the maximum allowable amount when that amount changes. HUD reviews and revises the figure annually, but Essex had not enacted the lease option on Ludowese’s apartment until this year.

The recent change, which occurred mid-lease for some residents, has spurred at least one court filing. Southern Minnesota Regional Legal Services filed a court case on behalf of a tenant who faced a $244 monthly increase four months into a 14-month lease.

Other tenants have decided to look for housing elsewhere.

“They raised it to more than I actually make in a paycheck,” said Laura Critten, who works in Rochester as a customer service representative.

Unable to meet the increased rent, Critten found a one-bedroom apartment in a fourplex at $850 a month to replace the two-bedroom unit she had at Villages at Essex Place for $880.

Ludowese said an employee at the apartment complex told him approximately 45 apartments were emptied before the July 1 rate hike, but Truesdell did not return the Post Bulletin’s call to confirm the number.

In an earlier email, Truesdell did say the complex was 94 percent full on July 2. The Villages at Essex Place website displayed 11 vacancies Thursday.

While Truesdell said all tenants were allowed to break their leases without penalty due to the increased rents, Critten said she received notice after moving out that her security deposit would not be returned since she broke her lease. Additionally, the notice said she owes $853.

Calling the tax-credit supported housing “a scam,” Critten said it fails to consider workers of income levels that fall between the 60 percent median income and those eligible for assistance programs.

“Those people deserve to have a decent life, too,” she said.

Ludowese said he’s worried about people like Critten, who had to look for other places to live in a market that’s already pricing them out of options. He said in many cases, it will have people turning to options that aren’t as well maintained or as safe as Villages at Essex Place.

“That’s the unfair and unethical part of this,” he said.

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