Upscale apartment makeover forces hundreds to move in Richfield

When Ralph "Gil" Gilbertsen retired from his job as a Wal-Mart greeter three years ago, he moved into the Crossroads apartments in Richfield. One of the largest apartment complexes in Minnesota, with 700 units, the Crossroads was inexpensive and convenient to bus lines.

Gilbertsen, 74, lives on about $900 a month from Social Security and pays around $250 for his one-bedroom apartment. The balance of his $750 rent is covered by Section 8, a federal government program that provides housing subsidies to low-income people.

But Gilbertsen, along with hundreds of other residents, will have to find a new home. The Crossroads has been sold to a developer who's spending millions of dollars to bring it upmarket.

With a new name — the Concierge — along with granite countertops and a clubhouse spa, the complex is being positioned to attract a more upscale set of tenants. The new owner is raising the rent and won't accept Section 8 vouchers and some other forms of government assistance.

It's a scenario being played out across the Twin Cities, housing advocates say. With apartment vacancy rates in the metro area hovering around 2 percent, landlords have the market clout to raise rents and refuse vouchers, both steps that tend to force out low-income residents.

"Crossroads is a huge example of this happening, and I think we're going to continue to see it across the metro area," said Eric Hauge, an organizer with Home Line, a nonprofit tenant advocacy group. "It's not illegal to discriminate against poor people."

Jim Soderberg, new owner of the Concierge, said his company is making a valuable investment in the future of Richfield. The city's more than 7,000 apartment units, most of them built in the 1950s and '60s, are tired and run down, he said.

"If I were going to name the biggest challenge to Richfield in the next five years, it would be renovating these 50-year-old apartment buildings," he said. "We think this will have a more positive impact on Richfield than the Best Buy headquarters."

Redevelopment of the Concierge has galvanized housing advocates. As many as 2,000 people lived at the complex, an estimated 40 percent of them Latino.

Concierge residents "are people who are working hard to provide for themselves and their families," said Melissa Melnick, leader of Tapestry, a multicultural and bilingual ministry housed at nearby Woodlake Lutheran Church. "Simply because people are poor doesn't mean they don't make good neighbors. Jesus was a refugee and an immigrant."

There's little that can be done legally to help current Concierge residents, housing advocates said, and more than half of the residents have already moved out. The city can't do much either, said Mayor Debbie Goettel.

"This is a private real estate deal," she said. "They are asking for no zoning changes or any other exceptions. They were informed of grants available for affordable housing and they weren't interested."

But Goettel also appreciates the upgrade to one of the city's signature properties. Richfield — along with Brooklyn Park and Brooklyn Center — is actively pursuing a complaint with the U.S. Department of Housing and Urban Development.

The cities allege that affordable housing rules have pushed an excess of low-income residents into their communities, while other suburbs take less than their fair share. Richfield, for example, has about 40 percent more Section 8 vouchers per resident than neighboring Bloomington — and six times as many as neighboring Edina.

"This is the kind of investment we want," Goettel said. "We are getting investment in a complex that has not had it in decades — not in years, but in decades."

The man making that investment said things will sort themselves out eventually.

"I've been in the business a long time," Soderberg said. "People will find new places to live easier than everyone realizes." He said when he started in the apartment business more than 30 years ago, he specialized in taking Section 8 tenants.

"At first, that's all I took," he said. "For various reasons I don't really want to get into, I'm not really thrilled with the program. It's a voluntary program and we've decided not to volunteer." In fact, a 2010 decision by the Minnesota Court of Appeals explicitly upheld landlords' rights to decline participation in Section 8 housing.

Soderberg, who specializes in "problem properties and rundown properties," said his post-renovation monthly rents of around $900 will still be in the affordable range for the Twin Cities rental market. All but two of the 700 apartments at the Concierge are one-bedroom units.

Soderberg said he's worked with residents and advocates to make the change easier. Most of the residents were on 30-day leases, but he's given them extra time to find new housing.

"We could have gotten them out by Halloween," he said. And after meeting with the Richfield schools superintendent, he agreed to give families with children in the Richfield schools until May 31 to vacate — although they'll be charged the new, higher rent.

Soderberg promises a "spectacular, condo-quality renovation" that will bring lasting benefit to the city.

"When you get to the point where things are so rundown, you attract undesirable residents," he said. "You get to the point where good, responsible people don't want to live in these apartments."

John Reinan • 612-673-7402