With rent spike, longtime tenants forced to face cost of living in Edina

Kari Lang has lived at the Interlachen Court Apartments, a modest 61-unit complex off Vernon Avenue in Edina, for half her 60 years.

Beige carpeting and plain white cabinets give her 1-bedroom apartment a soft, clean look. It may not be lavish, but to Lang, who is on Social Security disability and pays $740 a month on rent, it is home.

All that will change once her lease is up at the end of August. The complex was recently purchased by apartment trader Scott Weber, and new management is raising rents to Edina market value levels to pay for renovations.

That means Lang's rent could rise to $1,195, a difference of $455, documents show. Others could pay on average $600 extra a month. One tenant could have her rent go up $1,000.

The spike is a shock to the building's residents, especially those who have lived there for decades. About half the tenants are retired and on fixed incomes. Lang has two neighbors in their 90s on either side of her, and her sister, who is 72 and has cancer, lives on the floor above.

"It always has been a very close-knit group of people," Lang said. "And now it's over."

Mann Companies, which manages the building, is giving tenants 60 days before their leases end to decide whether they want to stay in the complex or move. There also are options for them to pay $100 less than the market rate.

Scott Mann, principal of Mann Companies, said that while he realizes the new rents are a dramatic hike, they represent the cost of living in Edina, one of the most affluent suburbs in the metro area.

"If you want to live in Manhattan and your rents are what you would pay in New Jersey, how could you live in Manhattan?" he said.

Judy Utendorfer, who has lived at Interlachen Court for 20 years, said the increase will force many to leave their homes. "I have lived in Edina for 50 years," she said. "It's changed. But there still has to be room for the average person."

Interlachen Court Apartments, built in 1963, is one of the oldest apartment buildings in Edina.

Its previous owner was Ann Krebes, a reclusive millionaire from St. Paul who kept rents hundreds of dollars below market. Some renters paid $840 for a 2-bedroom apartment, hundreds less than the average rent of $1,364 in Edina for a 2-bedroom, according to rentcafe.com.

Krebes died last year at 100. In her will, she put her properties in a trust with U.S. Bank, and tenants took it as a sign that Interlachen Court would soon be sold.

"I guess we thought she was going to live forever, or that it wouldn't be this big of a change," said Donna Besserud, 57, who lives in the complex with her grandson.

Weber bought Interlachen Court for $8.7 million earlier this year, after more than 20 prospective buyers made offers on the property.

In April, Mann Companies sent a letter on the new rents to tenants whose leases were ending or who were paying month to month. "We do understand that these rent increases are significant for most residents, however we feel they are supported by current market conditions in the area," the letter read.

It detailed some of the planned repairs and proposed renovations, including a gym, an indoor dog park and new kitchen appliances.

"We're coming in and fixing the building," Mann said. "You can't pay for those improvements … and have the rents at such a low rate."

Word spread quickly, and many began to look for other apartments in Edina. They found that nearby residences, which include another complex and a senior living facility, all charge market rent or higher.

Utendorfer, who is looking to stay in the neighborhood, said tenants will never find rents as low as what Krebes charged. The average rent in Edina is $1,248, according to rentcafe.com, similar to rates in the surrounding suburbs including St. Louis Park and Bloomington.

The city does not usually get involved in private real estate transactions, City Manager Scott Neal said. Edina, he said, does not have individual tenant protection policies.

"This is a policy area that we're going to have to get serious about," he said.

Mann is expected to give tenants whose leases end in August a 60-day notice of their options.

Lang is looking for apartments for herself and her sister. She said she feels they have no other feasible housing choices in Edina.

"Maybe I will look at this Sunday's paper and it will say, 'Last poor person leaves Edina,' " she joked.

Besserud, on fixed income and working a part-time job, said she is checking Craigslist for apartments every day. She would like to stay in the city so her grandson can continue in the Edina public schools.

"He doesn't know anything other than this," she said. "I don't think it's fair to price people out of the home that they know."

Mann said he is not charging rents higher than those at surrounding buildings and that it was "unfortunate" the previous owner charged such low rents.

"They were very lucky for that many years to get somebody that didn't care what the rent was," Mann said of current tenants. "I can understand their plight … but all I can give them is time."

Miguel Otárola • 612-673-4753