Fresno councilmember says there is a new slumlord in town: nameless Chinese investors
The tweet by Fresno City Councilmember Miguel Arias surprised me.
In the posting made last Monday, Arias announced he would not join other city leaders in meeting with business people from China interested in learning more about opportunities in Fresno. He cited recent COVID protests in that nation, and the reaction of Chinese leaders to the demonstrators, as the reason.
Arias represents District 3, which covers Fresno’s southern and western neighborhoods as well as downtown and part of the Tower District. Those regions are among the poorest and most polluted in the city, as well as the state. Unemployment historically has been high.
So a chance to meet with investors seemed like a no-brainer. To not do so would almost border on a dereliction of duty, given the economic challenges of his district, I thought.
After asking him to elaborate on his reasoning, Arias surprised me again.
He said that over the past two years, apartment complexes in his district have been purchased by firms working for Chinese investors. Two recent cases have been particularly egregious.
On a Friday night in mid-October, Arias had to head off the eviction of families from a complex at Tulare and First streets. If the city had not stepped in, 100 children would have been put out onto the streets, he said.
As reported by Bee staff writer Jim Guy, the evictions only came to light after a 13-year-old whose family lived at the complex told his middle school principal what was happening. She contacted the city.
Arias said the owner’s justification for the evictions of the 400 tenants was “substantial” improvements to be made. But those have yet to be done. The owner? A Chinese investment firm.
In another instance, what had been a well-run Section 8 complex in west Fresno for low-income tenants has slid into disrepair with filthy and unsafe conditions, Arias said.
The new owner got rid of the complex’s maintenance worker because he identified too many fixes that had to be made.
“I am now having to micromanage these apartment complexes because they have no face-to-face owner,” Arias said.
Instead, his staff had to dig through about a dozen different limited-liability corporations to find out the real owner was a Chinese investment firm that is represented by a lawyer in Los Angeles. The same firm has the Tulare-First complex.
“This is what foreign investment is about: taking an existing asset and draining the cash flow from that asset,” Arias said. “They don’t have any interest in the long-term return.
“I am used to dealing with people who expect a 20-year return rate for an apartment complex. These guys don’t have that.”
Arias added that “I don’t see any interest in Chinese investors in the health of my district, or the city. They buy assets and pull money out.”
Slumlords must be held accountable
The interview gave me a fuller understanding of why Arias did not join Mayor Jerry Dyer, county Supervisor Steve Brandau and Fresno Councilmember Mike Karbassi at the gathering, which was held at Chukchansi Park.
While Arias is understandably frustrated with how a Chinese investment firm is handling its new holdings in Fresno, the phenomenon of faceless owners siphoning rental earnings out of town is nothing new. Nor does it require foreign owners — Americans who have local properties have proven quite adept over the years at being slumlords.
Owning apartments is also different than investing in manufacturing, agricultural processing and the like. The Fresno Economic Development Corp. was doing its job in setting up the meet and greet. Having trade partners, especially those along the Pacific rim, is a key part of any good economic policy in California.
If anything, Arias’ experience reflects just another wrinkle in Fresno’s long-running challenges with its rental housing market. The rules that the city has for clean, safe and well-maintained rental housing still apply to all complexes, whether the owners live in town or across the globe.
