Getahn Ward

USA TODAY NETWORK – Tennessee

Marshall Friskics-Warren is making plans to leave the one-bedroom apartment unit in East Nashville, which he shares with his wife, Scarlett, and their cat, Butters.

For the 25-year-old social worker, the decision to move in with his parents is a no-brainer.

Through management company Brookside Properties, Howe Garden Apartments' new owners gave the couple a choice: pay nearly double their $524 monthly rent or by March 28 turn in the keys to their apartment home of more than a year.

"We can't afford it," Friskics-Warren said, adding that the couple already pay roughly a quarter of their combined income as rent under their month-to-month lease.

"We’re lucky that my parents can take us in for a while," he said, adding they weren't given a long-term renewal option after their previous lease expired. "A lot of the people who live at our apartments are young, from out of town and don’t have any resources to like go to somebody else and live with them for a while. That’s what I'm worried about."

The situation playing out at Howe Garden has become more common around Nashville, although largely under the radar. Many investors snapping up older apartment complexes amid the city's real estate market boom are pursuing renovations and then hiking rents, forcing working-class people that can't afford the new rates to exit.

"This is just another cut in the series of a thousand cuts Nashville is experiencing with gentrification and the erosion of affordable housing that we as a city have to get a handle on,” said Tracey McCartney, executive director of the nonprofit organization Tennessee Fair Housing Council.

In conjunction with investment partnership Middle Farms Capital LLC's $7.5 million purchase of Howe Garden in mid-January, some residents, including those with leases, were notified that the new owners won't be assuming their leases and that they had a month to move out of certain buildings.

The reason given was planned renovations, which are to begin with three of the 12 buildings at the roughly 44-year-old, 165-unit complex at 1921 Greenwood Ave. Brookside now claims an error in sending residents with leases required minimum 30-day advance notices to find alternative housing when those were only intended for those with month-to-month leases.

In a prepared statement, the property manager said it has extended to dates ranging from March 1 to March 28 for residents on month-to-month leases to move out of buildings targeted for renovations.

Upon completion of renovations, rent at the upgraded units are expected to increase to $1,099 for a one-bedroom apartment, $1,299 for a two-bedroom unit and $1,499 for three bedrooms. New information Brookside just provided residents said existing Howe Garden residents will receive a discounted rate starting at $999 a month if they choose to move back into renovated apartment homes.

Eventually, all 12 buildings at the complex are expected to undergo the estimated six weeks of repairs and upgrades, including to boost energy efficiency. While their units are being upgraded, residents can transfer to other available units, according to information Brookside provided.

Most recently, Howe Garden tenants included 16 people with Section 8 rental assistance vouchers who pay $499 a month for one bedroom and $575 for two bedrooms, according to the Metro Development and Housing Agency. In 2012 the complex's previous owner terminated its contract with the U.S. Department of Housing and Urban Development to provide 67 rental assistance units.

Most Howe Garden residents such as the Friskics-Warrens aren't on any assistance program. They pay out of pocket the total rent, which Brookside claims range from $549 to $1,100 a month before the planned post-renovation hikes.

Most recent preliminary year-end data from the Greater Nashville Apartment Association shows a record $1,034 a month average rent for the overall Nashville area, up just more than 8 percent from December 2014 and up about 33 percent from that same month in 2010.

The rising rents are drawing investors from near and far, including California, to buy once relatively more affordable apartment buildings, including near downtown's urban core. Other properties to change hands over the past year include downtown's Metro Manor, which has been rebranded as The 500 Fifth Apartments. Another is the former James Robertson Apartments, which the local buying investor upon closing that deal said it was exploring converting into a boutique hotel or higher-end residential units.

At The 500 Fifth Apartments, where Nashville-based Brookside also took over management after the ownership change, Rosie Padgett is preparing to move out of her longtime apartment home. If she stayed, Padgett said, she would have to pay roughly $1,500 a month, or about 80 percent more than before that complex at 500 Fifth Ave N. changed hands.

"It's like a heartless owner and manager," Padgett said, attributing her departure more to attitude of Brookside's on-site management staff than rent about to go up on her one-bedroom unit that includes a den. "They’re not trying work with people, they’re trying to work against them."

In the apartment industry, new owners raising rents after pursuing renovations to a complex is a natural part of the business model, although leasing rate hikes are also occurring more in a market with high occupancy rates and other strong fundamentals.

"If the seller is selling it based on current rents, the only way you can add value typically is to improve the property and produce a different product that you can get more rent for," said Woody McLaughlin, a member of the local apartments association statistics committee and industry investor/owner.

For apartment property owners, having tenants with expiring leases go to month-to-month leases in advance of selling the complex could increase value to the buyer depending on its plans.

"If the lease is in force, contract law says it has to be honored," McLaughlin said.

Bruce McNeilage, a Nashville-area buyer and seller of relatively affordable apartment complexes, said Howe Garden's location on a large parcel of land in the heart of East Nashville makes the property attractive from an ownership standpoint.

"If I would've bought it, I would've done the same thing — renovate, rehab and raise the rent," he said.

East Nashville resident Nell Levin, who sits on the executive committee and affordable housing task force of the Nashville Organized for Action and Hope (NOAH) organization, is concerned about longtime neighbors in that fast-growing area being forced out by gentrification.

"We're losing affordable housing every day in this city," she said. "We're in a crisis and we're not moving fast enough."

Levin referred to the Howe Garden complex as workforce housing.

"The residents who live there, several of them are social workers," she said. "These are people who are making contributions to our city but don't make a lot of money. These are the kinds of people who we’re concerned are being pushed out.

In an apartment unit at one of the first three Howe Garden buildings targeted for renovations, the Friskics-Warrens and seven other complex residents ranging in age from 23 to 35 huddled Wednesday to prepare for a community meeting, which was held the next day.

Metro Councilman Brett Withers and representatives from NOAH and the Tennessee Fair Housing Council attended Thursday's meeting at Eastwood Christian Church. A representative of Nick Ogden, co-founder of Howe Garden's new owner, Middle Farms Capital, attended.

The nine at Wednesday's smaller meeting included student Savannah Hollis, who said she's living off student loans because under her graduate program she's required to hold a full-time internship. Some participants haven't yet been notified about having to move out or pay more, but they saw the need to rally around their initially affected neighbors.

Resident Amanda Edgerton said she already pays 34 percent of her income as rent. She made that comment after another meeting participant, Christy Lynch, roughly estimated that a single person would need to earn a gross salary of $65,000 a year to afford the planned $1,099 monthly rent for renovated one-bedroom units at Howe Garden without being rent-burdened.

"Even the two of us are nowhere near that," Marshall Friskics-Warren said about him and his wife, who works at an ice cream shop.

Reach Getahn Ward at 615-726-5968 and on Twitter @getahn.

If you go

What: Housing fair to help Howe Garden residents with relocation

When: 11 a.m. to 2 p.m. Thursday

Where: Howe Garden Leasing office