WASILLA — Wasilla Area Seniors Inc. is the target of an investigation by the state’s Office of Long Term Care Ombudsman involving what some residents call unfair rent increases.

The investigation comes on the heels of a state assistant ombudsman’s report regarding how WASI handled the complaint of an elderly couple who sparred with management over a maintenance issue.

According to the most recent report, the state agency found rent increases attributed by WASI to residents as a rise in utility costs were unjustified because no substantial rise in utility costs were found. Since Oct. 1, 2007, rents at the WASI complex have risen by $175 a month for each of its 129 units — $75 on Oct. 1, 2007 and $100 on Aug. 1.

Lisa Merrill, an assistant ombudsman and author of the report, says in the document that Matanuska Electric Association revealed electric charges for the senior housing campus have actually decreased over the last 12 months. Four of the five senior housing buildings saw an overall monthly decrease of about $199 while the fifth rose by about $74 a month.

In regard to natural gas costs, Merrill’s report cites ENSTAR quoting a $550 rise in monthly 2008 charges for the housing campus. In 2007, natural gas costs at the complex rose by $1,722 a month.

“Many of the senior residents, both low-income and residents on fixed incomes paying the market rates, are understandably upset over these increases,” Merrill says in the report.

Merrill’s report also faults WASI for failing to file an appeal for two buildings on the campus to receive low-income housing tax credit. That, the report says, caused a 50-percent increase in tax for both properties — the Eagles Nest and Knik Manor buildings.

What could be the most damaging issue cited in the report comes in the form of a notice sent to residents in May announcing the Aug. 1 rent hike. In that memo, it is explained rent was being increased “because of the cost of utilities, insurance and/or taxes.”

That claim troubles many residents who say those reasons for an increase differ from what’s on rental contracts. The Frontiersman reviewed one rental contract provided by a resident that states rent can only go up if utilities increase. The agreement makes no mention of insurance or taxes as issues that could raise rent.

The notice also instructs those who cannot afford to pay the higher rent to provide management with a letter of termination 30 days before rent is due.

Officials with WASI, including executive director Robin Hall, did not return repeated calls or e-mails seeking comment. A receptionist at the senior center said she believes management has been instructed by an attorney to not comment.

Seniors living at the WASI campus, who did not want to be identified, said keeping up with rent increases is difficult because they live on fixed incomes

The report

In the OLTC report, the office’s main ombudsman, Robert Dreyer, poses a list of questions to Wasilla Area Seniors Inc. Board of Directors Chair Betty Ward.

In one of those questions, Dreyer points out that if utility increases are the only valid cause for rent hikes, as outlined in tenant contracts, previous rent increases should have generated more than enough revenue to cover those types of increases.

“In light of this information, the OLTCO would like the WASI Board of Directors to address the rational and justification of the last three rent increases levied on the residents of WASI senior housing residents,” Dreyer writes.

In her response, which is included in the report, Ward says the rent increase was an “owners’ requirement.”

This is where reasons for a rent increase can get muddled.

Dreyer had asked for liability and assets balance sheets from all five senior housing complexes on the campus for the past two years. From those documents, Dreyer said he wanted to see what the revenues and expenses were to see if they justified rent increases. But Ward said she will not provide financial disclosures because some of the buildings on the campus are privately owned by a company called The Richman Group.

That company, a nationwide residential property owner, owns the Eagle’s Nest, Raven Tree Court and Susitna Place buildings on the WASI campus.

“Therefore, your office understands it is the duty of Wasilla Area Seniors Inc. to honor the instructions from the owners, The Richmond Group, and understands that we cannot provide or release any information pertinent to their private business,” Ward says in her response.

But asking for financial information from each building might be a moot point.

Terry Gentry, a vice president at The Richmond Group’s Portland, Ore., office said the company doesn’t explicitly tell WASI to raise rents.

“We don’t specifically say you have to raise rents,” Gentry said. “We say, ‘Don’t jeopardize our investment by creating negative cash flow.’”

That means management is expected to maintain the buildings to prevent financial losses that could lead to foreclosure, Gentry said. The Richman Group doesn’t seek to make money from the buildings it owns, Gentry said. Instead, it acts as a facilitator for a range of investors who put money into senior housing to benefit from a federal tax credit.

He added the group is only a limited partner at the Wasilla seniors campus, calling WASI the general partner and the entity responsible for setting rent structures.

As of Monday, it’s unclear what impact, if any, the state ombudsman’s report will have on rent at the WASI campus.

There could have been a better explanation from management as to why rent increased, Dreyer said.

Dreyer also said he’s handed the report over to some residents at the senior center, and that’s as far as his agency goes.

“All we can do is present the facts to the residents,” Dreyer said. “They can do with it as they please.”

Contact Michael Rovito at michael.rovito@frontiersman.com or 352-2252.