The Beleaguered Tenants of Kushnerville

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Tenants in more than a dozen Baltimore-area rental complexes complain about a property owner who they say leaves their homes in disrepair, humiliates late-paying renters and often sues them when they try to move out. Few of them know that their landlord is the president’s son-in-law.
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When Americans were introduced last year to Ivanka Trump’s husband and the nation’s prospective son-in-law in chief, it was as the preternaturally poised, Harvard-educated scion of a real-estate empire whose glittering ambitions resembled Donald Trump’s own. In 2007, Kushner Companies, run at the time by Jared and his father, Charles, bought the aluminum-clad skyscraper at 666 Fifth Avenue for a record-breaking $1.8 billion; they are now seeking partners for a $12 billion plan to replace it with a glass tower that would be 40 stories taller. In 2013 they acquired 17 buildings in Manhattan’s East Village for about $130 million, and three years later they spent $715 million on a cluster of buildings owned by the Jehovah’s Witnesses on prime land in Brooklyn’s fast-developing Dumbo district.

But the Kushners’ empire, like Trump’s, was underwritten by years of dealing in much more modestly ambitioned properties. Jared’s grandfather Joseph Kushner, a Holocaust survivor from Belarus, over his lifetime built a small construction company in New Jersey into a real-estate venture that owned and managed some 4,000 low-rise units concentrated in the suburbs of Newark. After taking over the business, Charles expanded Kushner Companies’ holdings to commercial and industrial spaces, but the company’s bread and butter remained the North Jersey apartment complexes bequeathed to him by his father.

In the mid-2000s, the company began to sell off the more than 25,000 multifamily rental units it owned, culminating in a 2007 sale of nearly 17,000 units for $1.9 billion. The sale — near the peak of the housing boom, just months before the crash — was impeccably timed, but it also reflected a shift in the attentions of what would soon be a three-generation real-estate dynasty. Charles, a major Democratic Party donor, had returned late the previous year from a brief stint in federal prison after pleading guilty to 18 counts of tax evasion, witness tampering and illegal campaign donations. Back at the helm of the company, he began to shift its focus from New Jersey to New York City — and prepared to pass the reins to his son Jared, who had just received a degree in law and business from New York University.

But amid the high-profile Manhattan and Brooklyn purchases, in 2011, Kushner Companies, with Jared now more firmly in command, pulled together a deal that looked much more like something from the firm’s humble past than from its high-rolling present. That June, the company and its equity partners bought 4,681 units of what are known in real-estate jargon as “distress-ridden, Class B” apartment complexes: units whose prices fell somewhere in the middle of the market, typically of a certain age and wear, whose owners were in financial difficulty. The properties were spread across 12 sites in Toledo, Ohio; Pittsburgh; and other Rust Belt cities still reeling from the Great Recession. Kushner had to settle more than 200 debts held against the complexes before the deal could go through; at one complex, in Pittsburgh, circumstances had become so dire that some residents had been left without heat and power because the previous owner couldn’t pay the bills. Prudential, which was foreclosing on the portfolio, sold it for only $72 million — half the value of the mortgages on the properties

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They complained about Westminster Management’s aggressive rent-collection practices, which many told me exceeded what they had experienced under the previous owners. Rent is marked officially late, they said, if it arrives after 4:30 p.m. on the fifth day of the month. But Westminster recently made paying the rent much more of a challenge. Last fall, it sent notice to residents saying that they could no longer pay by money order (on which many residents, who lack checking accounts, had relied) at the complex’s rental office and would instead need to go to a Walmart or Ace Cash Express and use an assigned “WIPS card” — a plastic card linked to the resident’s account — to pay their rent there. That method carries a $3.50 fee for every payment, and getting to the Walmart or Ace is difficult for the many residents without cars.

Tenants who pay after the fifth are hit with late fees that start around $40 to $50 and escalate from there, with court fees usually added on as well. What upsets residents most, though, are not the fees themselves but that the property managers, instead of putting pink or yellow late notices and court summonses discreetly in mailboxes or under doors, post them in public — on the front doors of townhouse units or on lobby walls or lobby doors of apartment buildings. This bothered even tenants who said they always paid their rent on time. “The whole neighborhood knows,” said Marquita Parmely, a truck driver who pays $1,010 a month to rent a townhouse at Essex Park, near Cove Village. Dareck Cromwell, a retiree living at Carriage Hill, told me: “They put them in the windows for everybody to see, to see your business. That’s not right. You don’t put people’s business out like that.”

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On April 17, three cases were being held consecutively in Baltimore’s District Court involving tenants of the Dutch Village complex. One was against Catherine Silver, a Morgan State University student who had given notice that she was moving at the end of March — she was fed up with lousy maintenance (among other things, a perpetually clogged toilet and a ceiling leak in her closet). But when Silver went to Walmart to pay her March rent with her WIPS card, the money mistakenly ended up not in the account for Dutch Village but the one for Kushner Companies’ adjacent complex, Pleasantview.

Westminster Management started eviction proceedings. On March 23, a sheriff’s deputy changed the locks on the unit. Silver was traveling at the time — it was spring break — and it was not until March 31 that she was able to explain to a judge what happened and get her keys back. By that point, it was too late to get her possessions into the moving truck she’d rented, and classes had resumed. She stayed in the unit, in which Westminster had turned off the heat and hot water, trying again to plan her departure. But Westminster was now after her for April’s rent, despite the fact that the company had literally barred her from being able to move before April, as she had intended. On April 25, a judge ruled that she needed to pay half of April’s rent, plus court costs: $471.


https://www.propublica.org/article/the-beleaguered-tenants-of-kushnerville