Burbank Tenants Face End of Subsidy Deal

For 10 years, the Promenade apartment complex, one of the most prominent buildings in downtown Burbank, has set aside nearly 80 units for poor and moderate-income residents as part of a deal in which the city helped finance construction.

But as of this month, notices have gone out that the owner will exercise its right to end the arrangement, leaving residents with a grim choice: Come up with more rent or move out.

Residents in 27 of the units, the poorest of the tenants, will probably be forced out. They will not be able to use their federal rent subsidies at the complex.

“I’ve been crying a lot,� said Rene Kirkpatrick, 76, who said she had planned to stay in the complex the rest of her life.

Kirkpatrick lives on Social Security payments of $644 per month, and pays 30% of that for her one-bedroom unit at the Promenade, which advertises itself as a luxury complex complete with pool, spa and gym. Federal rent subsidies make up the remainder of her rent.

Rents for tenants receiving subsidies under a federal program called Section 8 are based on personal income. Most Section 8 units are one-bedroom and go for between $600 and $650 per month--far less than the those units on the open market.

Tenant Tanya Kleiman, who has diabetes and rheumatoid arthritis, pays 30% of her $668-per-month disability check in rent. She wants to stay not because of the pool or gym, she said, but because she fears being forced to move alone into a dangerous neighborhood.

Before she moved to the Promenade, she said, the best Section 8 housing she could find was in a neighborhood where gunshots rang out often at night.

“Everyone knew I was by myself. I was very afraid,� said Kleiman, who walks with a cane. “I would walk up and down in the apartment at night checking windows and doors, waiting for someone to throw a rock through my window.�

Rents for the 53 units set aside for moderate-income residents are to be raised in stages beginning next March until the market rate of up to $950 for a one-bedroom apartment is reached. These tenants have the means to move--their median family income is about $28,000 per year, she added.

Others--tenants such as Kleiman, who are lowest on the income scale--will continue to receive help from the federal program but must find new housing by April.

The Burbank City Council has hired a consultant to help with relocations, and the city and the apartment owner, PMG Properties of Chatsworth, will split the cost of $500 grants to each of the Section 8 tenants to help them move.

That hasn’t stopped tenants from mounting a crusade to stay in the Promenade, in the 300 block of South San Fernando Road.

Emphasizing that many of them are elderly or disabled--and underscoring the point by appearing before the City Council in wheelchairs or carrying oxygen tanks--the tenants have persuaded city leaders to look into alternatives to moving them out.

While the city cannot violate its agreement with the apartment owner, it may be able to use city funds to help some Promenade tenants stay, or offer additional assistance, said City Councilman Dave Golonski. The council has voted to consider other solutions in coming months.

“I think this is kind of a travesty,� Golonski said. “Here we are looking for low-income housing, and clearly this is working well.�

PMG did not return repeated phone calls. But no one in the city disputes that the company has a legal right to opt out of the agreement.

PMG inherited a deal struck with the developer of the 400-unit Promenade in 1985 to set aside 20% of the units for low- and moderate-income housing for 10 years, starting in 1988.

In exchange, the city helped the developer finance construction with $36 million in tax-exempt city redevelopment bonds, providing favorable financing terms. The bonds are secured by a bank’s letter of credit and the city is not a guarantor, said Stephen Helvey, assistant city manager. But the developer benefits from the tax exemption on interest payments, and so has been obligated to provide a public benefit--until now.

At the time the arrangement was made, city officials saw it as a convenient way to encourage residential development in downtown Burbank. But today, a new council is facing the consequences.

Close ties among the long-term tenants have helped them mount a challenge to the city’s plans.

Just hours after one tenant learned of the relocation plans, her neighbors had posted fliers throughout the building. Tenants met in worried discussions and peppered each other with phone calls, they said. “I want to keep my home,� said Margaret Stephens, who lives in a moderate-income unit.

“A 20-year agreement would have been better,� said Mayor Bob Kramer, who has suggested relocating some Promenade tenants in senior citizen housing units.

What was not foreseen 10 years ago was that many of the low- and moderate-income tenants who moved in when the building opened would still be there a decade later. Many said they had no idea the building would eventually cease to offer affordable-housing assistance.