Gilroy
– The American dream is ringing hollow for residents of a gated
community in north Gilroy.
Gilroy – The American dream is ringing hollow for residents of a gated community in north Gilroy.
Nearly two years ago, renters in Crestwood Manor were promised the chance to buy their homes for as little as $260,000. Plus, everyone living in the 56 homes at Welburn and Kern avenues were promised low-interest mortgages, and the chance to transform their security deposits into down payments.
Those promises were a major selling point for city council in July 2005, when they agreed to let owner Albert Fortino put the homes up for sale.
Now, after two years of struggling with a regulatory and tax nightmare, Fortino is thinking about scrapping the whole plan. And if he does sell the homes, residents shouldn’t expect to get the deal they were promised in 2005.
“That was three years ago, and now they want exactly what I said I was going to do then,” Fortino said.
“I’ve got to be honest,” he said. “I’ve got to ask more than $260,000.”
He has no idea where the new appraisals will fall, but he said one resident has threatened to sue him if he reneges on the original offer.
“He said he kept the unit because he was going to buy it at $260,000 and then sell it at $325,000,” Fortino said. “You see how some people think?”
Unlike the resident who wants to “flip” his unit, Mark Button does not expect Fortino to cede profits so residents can make a quick buck. But he does wish the process had moved along faster, and that Fortino had been more forthcoming with information.
“We understood that there was no way it was going to be ($260,000),” Button said. “We were thinking low three hundreds maybe. The only negative point we have is the time it’s taken … We just want to get on the property ladder.”
The Buttons aren’t the only ones who feel they’ve lost precious time and money that could have been spent building equity in a different home.
“It all sounded too good to be true,” said resident Margie Pennucci, whose suspicions grew last month after a vaguely worded letter arrived from Fortino.
The conversion passed muster with state regulators, he informed residents, and they would have a chance to buy their units at rates “at least as favorable as those which will be offered to the public.”
The letter included no mention of the original $260,000 sale price or the low-interest mortgage.
“We’ve gotten tired of having to wait,” Pennucci said. “We also have been discouraged by the letter coming out, so we’ve taken it on ourselves to purchase a home (elsewhere).”
At the end of the month, Pennucci and her husband will move to a three-bedroom house in the Summerhill community. They paid $401,000 for the north Gilroy home.
“I think at this point (Fortino) should stick by the (prices) for those who he verbally spoke to two years ago,” Pennucci said. “People may have given up opportunities to move someplace else while waiting for this to come through. We gave up an opportunity to manage an apartment complex and live rent free while we waited.”
Fortino, 72, said the letter was unintentionally vague because he sent it off in a rush. He said he plans to communicate more clearly with residents in the future, especially if he decides not to sell.
When city leaders approved the conversion from rental units to for-sale homes in 2005, rents for the 52 townhouses ranged from $1,295 to $1,350 a month, and four free-standing homes rented for $1,400. New residents now pay $1,400 a month for rented townhomes, according to the property manager.
Two years ago, council expressed concern about the loss of rental housing, but welcomed the chance for so many people to buy homes on such favorable terms.
Those terms may grow even less favorable if the conversion drags on for several years. Fortino is only two years into a city approval that can be extended up to five years, according to the city’s planning department. Meanwhile, figures from the city housing department show that a two-bedroom home designated as “below market rate” now sells for up to $390,000.
“I haven’t set a price yet,” Fortino said. “The bottom line is, if I do sell them, I’m going to give them the deal of their life. I’m going to treat those people good.”
