Photo: A two-unit residence at Redbank Village in South Portland from the complex’s website.
Originally published in the Beacon on July 26, 2022
A few months after property management firm JRK Property Holdings of Los Angeles took over Redbank Village, a 500-unit apartment complex in South Portland where some tenants pay subsidized rent, they began sending out notices that rent would be going up.
JRK is a large corporate landlord with a portfolio of over 80,000 units across 30 states. The firm has been accused of several practices that large rental companies often use to maximize their profits, including hiking rents, displacing long-term tenants through evictions, and tenant harassment.
Housing advocates warn that this growing category of landlord has made displacing tenants part of their business model.
“The corporate consolidation of housing is really the greatest threat to the housing market today,” said Katie Goldstein, the director of housing campaigns for the Center for Popular Democracy. “We’re seeing corporate landlords who are responsible to investors to return as much profit as possible. The way to do that is through evictions, tenant turnover, raising rents and reducing services.”
She added, “Corporate landlords are able to buy up huge swathes of properties and units. That’s why you have a Los Angeles company buying up properties in Maine. They’re really looking for places that have weak tenant protections to extract as much profit as possible.”
In May, JRK began notifying Redbank residents that it would be raising rents in 2023 up to $2,400 per month, which represented as much as a 35% increase for some tenants who, just five years ago, reported paying $750 a month for a two-bedroom apartment. JRK also began eviction proceedings, threatening to make some residents homeless as rents and housing prices across Maine continue to climb.
This prompted the South Portland City Council to step in. In June, the council initially planned an eviction ban and rent freeze. However, they struck a deal with JRK for a 10% year-to-year rent increase cap. Now, residents are calling for a longer-term solution.
“How many people can afford a 10% increase every year?” asked Lado Ladoka, a leader of the Maine Immigrant Housing Coalition. Ladoka has been meeting with several Redbank residents who are recent immigrants.
While large corporate landlords are nothing new in Maine, they have taken over an alarmingly large share of the rental market across the country since the 2008 foreclosure crisis.
For Ladoka and other housing advocates, the growth of corporate landlords pose a unique threat to a worsening affordable housing crisis in Maine, where policymakers continue to grapple with a shortage of about 20,000 affordable housing units with an estimated 27,000 Maine households on the waitlist for Section 8 vouchers.
“The issue facing Redbank tenants is not new nor will it be the last,” Ladoka warned.
Corporate landlords evict, raise rents more than average
Redbank was built in 1942 as a federal public housing project but has been in private hands since 1956 while maintaining a percentage of its units to be affordable for low-income Mainers. About 50 of the complex’s units are home to residents who pay a portion of their rent with support from Section 8 vouchers.
In November, JRK paid $110 million for Redbank and Liberty Commons, a six-building apartment complex in South Portland with 120 units. Both properties were previously owned by Portland Portfolio II LLC, an entity controlled by Jones Street Investment Partners, a Boston-based real estate firm backed by private equity.
JRK’s website for Liberty Commons advertises “Multi-million dollar renovation — coming soon!” As the Center for Popular Democracy’s Goldstein explained, corporate landlords often justify rent increases through upgrades whose costs they pass onto tenants. Others tools for squeezing profits from renters include increasing fines and fees for things like parking, utilities, late rent payments, or pets. At Redbank, JRK justified its initial call for a 35% increase by alleging rising labor costs and the need for a storage shed. The company said they have plans to spend $6 million to repair and upgrade the property.
While rents are on the rise nationally, growing 5% in May, tenants of large corporate landlords have frequently faced even higher rent and fee increases. They also have faced higher rates of eviction. A recent 15-year study in Boston found that large landlords evicted tenants of single-family homes at two to three times the rate of smaller landlords.
JRK is no exception. In 2020, the company agreed to pay their Washington tenants $350,000 to settle a lawsuit for violating that state’s eviction moratorium during the COVID-19 pandemic.
“JRK Residential unfairly and deceptively pressured residents to pay outstanding rent by sending numerous threatening emails and notices, sometimes multiple times per day, and making harassing phone calls to tenants or tenants’ workplaces,” read a release from Washington Attorney General Bob Ferguson.
The need for stronger renter protections
The rise of large corporate landlords stems from the financialization of the economy that accelerated after the 2008 recession and bled into the rental housing market, explains Mathilde Lind Gustavussen, a PhD candidate in sociology at the Free University of Berlin who researches housing and displacement.
“The post-2008 era has seen the increasing consolidation of rental housing into corporate hands — not just through well-known conglomerates like Blackstone Group and American Homes 4 Rent — but also through smaller investment firms backed by private equity, including investment banks, hedge funds, college endowments, insurance companies, and pension funds,” she wrote in Jacobin in June. “The foreclosure crisis entrenched global finance’s colonization of residential real estate, focused initially on single-family homes but expanding eventually into multifamily rentals.”
Goldstein said the Center for Popular Democracy and its affiliates are trying to organize the tenants of corporate landlords into an organization called Renters Rising to push federal, state and local policymakers for protections.
“We see the solutions as universal rent control and tenant protections and also mass investment in social housing,” she said. “We really need to have government step in to protect tenants from corporate landlords. It’s only going to get worse if we don’t do something really major and transformative.”
Ladoka worries that state and local policy makers in Maine are not up to the task of meeting these powerful economic forces head on. He believes local officials should have never let the formerly federally-subsidized Redbank Village fall into the hands of a corporate landlord, particularly as a major goal for Maine lawmakers is to build new affordable housing.
“It is something we knew very well yet turned a blind eye to,” he said. “My frustration comes when city leadership knows very well these mortgages are about to expire and they do nothing about it and allow those properties to turn into market-rate rentals. Why can’t we retain what is already in the public domain and keep it in the public domain?”
The South Portland City Council is currently working on a rent stabilization ordinance regulating year-to-year increases. The ordinance has reportedly prompted pushback from some landlords and corporate lobbyists.
Ladoka has been urging Redbank residents and other renters in South Portland to push the city council to pass much needed policies like rent control, banning application fees and barring “no cause” evictions.
“We have to be on our toes to ensure that their policy is right,” he said. “Corporate America doesn’t want us to be in the room when these policies are being decided. If working families are not at the table then they will be eaten for lunch.”
Dan Neumann studied journalism at Colorado State University before beginning his career as a community newspaper reporter in Denver. He reported on the Global North’s interventions in Africa, including documentaries on climate change, international asylum policy and U.S. militarization on the continent before returning to his home state of Illinois to teach community journalism on Chicago’s West Side. He now lives in Portland. Dan can be reached at email@example.com.