Tenants Formed a Union to Fight the 'Google of Student Housing' Trying to Evict Them

A real estate company that aspires to be the “Google of student housing” is trying to evict all of the tenants in a apartment complex in Isla Vista, an unincorporated part of Santa Barbara County, California—including some with housing vouchers for low-income people—to remodel their apartments into luxury student housing. 

Chicago-based developer Core Spaces purchased four buildings in Isla Vista referred to as “CBC and The Sweeps” in March for $91 million, immediately issuing letters labeled as 60-day notices of tenancy termination to current residents. The buildings house nearly 1,000 people, according to housing advocates (Core Spaces’ Director of Communications Kim Lyons told Motherboard that roughly 550 people are listed on lease agreements). Nearly 1,000 tenants would account for roughly six percent of Isla Vista’s population. 

In a statement, Lyons said that not all tenants have to leave in 60 days. “Only a small percentage of residents received 60-day notices. The vast majority—96 percent—of residents have termination dates over 60 days and, on average, residents were given 4 months to relocate,” she said.

Those tenants, who are a mix of families and lower-income students at nearby UC Santa Barbara, have since organized into the Core Spaces Tenant Association (CSTA), a coalition that meets twice a week and strategizes ways to stay in their homes.Waves of tenants have been organizing across the country in recent years as the nation’s housing crisis deepens. Tenants have been organizing across landlord portfolios, including the portfolios of private equity giants. In San Diego, tenants of the private equity giant Blackstone formed a union when the company began ramping up evictions.

“This is a strong community that's been here for decades,” Ananya Kepper, a 32-year-old CSTA member and student seeking a masters at UCSB, told Motherboard. “If this community falls, it will really set a precedent for other companies that they can come in and destroy these communities, for profit, without any regulation, or without being stopped.”

“CBC and The Sweeps” refers to a four-building residential complex in Isla Vista consisting of Cortez, Balboa, Colonial and a fourth building called The Sweeps. The population is a little under half students, many of whom live in the two- and three-bedroom townhouses in The Sweeps. The rest are working families and single adults, including a significant population of renters under Section 8, a program that allows renters to pay 30 percent of their income toward rent with the federal government paying the rest.

In a statement to Motherboard, Core Spaces COO Christine Richards said, “Core Spaces took ownership of CBC & The Sweeps with the goal of making substantial renovations to improve the building’s quality and long-term condition, benefiting the community for decades to come. We understand the hardship of having to relocate, and we are committed to helping make the transition into new housing for residents as smooth as possible.” Richards was hired by Core Spaces in 2021 after serving as an executive at apartment rental giant Greystar and spending 17 years heading up a student housing real estate investment trust.

In March and April, tenants successfully got Santa Barbara’s city council and then the county’s board of supervisors to pass legislation adding stricter requirements to city and county tenant law. The law has a loophole that allows landlords to evict tenants to make major renovations, which tenants refer to as “renovictions.” The newly-revised law requires landlords to secure permits prior to renovictions and demonstrate that the planned renovations cannot be made while tenants are in their homes. 

But after the county’s law was passed, Core Spaces began sending emails and communication to tenants that downplayed the new requirements and argued that they don’t apply to tenants at CBC and The Sweeps since they are not retroactive, according to documentation viewed by Motherboard.

“They're ruthless, and they don't have any respect at all for the communities that they're coming into, and they don't have any respect at all for the tenants that are living in their properties,” Kepper told Motherboard.

The company currently owns student housing in Ann Arbor, Michigan, Tempe Arizona, Minneapolis, Minnesota and West Lafayette, Indiana. Last fall, the company proposed a 26-story apartment tower dubbed “Hub Berkeley” near the UC Berkeley campus which, if built, would be the city’s tallest building. Core also proposed two developments totaling 600-units of luxury student housing near the University of Wisconsin-Madison.

Core Spaces, despite being a real estate company, portrays itself as embodying a spirit of disruption endemic to the highly speculative tech sector. In a bio on its website, Core Spaces frames itself as an innovative housing startup, formed by three men who met in college in the late 1990s. “Our idea was to be the Google of student housing—always progressive, always innovating,” the website states. Initially named “Core Campus,” the company changed its name after expanding into office space, hotels and retail. A Chicago-based firm called DRW, which has a venture capital arm that made recent investments in crypto companies and a bevy of financial tech startups, has invested in "many" Core Spaces projects, although the firm did not invest in the company itself or in CBC & The Sweeps, a spokesperson told Motherboard.

Core adapts many of the strategies of urbanists who favor density and transit-oriented development by building high-rise housing close to college campuses. “When everyone was building miles away, we took an urban planning mindset—density, height, mixed-use—and put up a high rise in the middle of campus,” the company’s website says.

The company specifically caters to students looking for “luxury.” In a bio of CEO Marc Lifshin, a Crain’s article said some of Core Spaces’ student housing has “rooftop pools and restricted-access VIP floors.”

The company found an ideal market at Isla Vista, as apartment vacancy rates in the Santa Barbara area are 1.7 percent according to research firm Hayes Commercial Group, “pushing rents to new heights.” Nearby UC Santa Barbara has struggled to build enough dorm space to house its 23,000 undergraduate students and nearly 3,000 graduate students. 

The school, desperate to address its student housing crisis, received criticism for moving forward with a gargantuan student housing project designed to house 4,500 students dubbed “Dormzilla.” The building’s housing units would have no windows; an architect on the school’s design review committee resigned in protest. 

Sam Szepesi is a 28-year-old student at University of California at Santa Barbara and a tenant at CBC and the Sweeps. Szepesi got notice in March that her building was sold to Core Spaces. By March 17, everyone in the complex received notices that their leases would be terminated and they had to move. 

“It hit everyone really hard,” Szepesi said. “There's been a lot of people that have lived here for 30 years on Section 8 and lower income, lots of families, undocumented workers,” Szepesi said. She says she pays about $2,055 a month for a one bedroom, and the rent was already going up roughly 10 percent a year before the building was purchased.

California has a 10 percent rent increase cap on lease renewals, which Core would be able to get around if they evict tenants and issue new leases.“They don't want me paying $2,000 rent or my neighbor paying $1,000 rent that's lived here 30 years,” Szepesi said.

Szepesi is suspicious that students would be able to afford rents at the renovated units and believes they would only be able to do so if multiple students were crammed into the units. She said this is the case in other student housing in Isla Vista, where students pay $800 a month for a bed in a congregate dorm.

“Unfortunately, there's such low vacancies that they probably will be filled,” Szepesi said. 

Szepesi said she’s delaying her graduation because she otherwise wouldn’t be able to afford to move to a new apartment. Many apartments require three months of rent up front and proof of income, but as long as she’s in school she can pay rent with student loans. She knows this is more expensive in the long run but doesn’t see any other options. 

“Honestly, I have one of the better scenarios. There's multi generational families here on Section 8 paying $250 in rent that live here that have it significantly harder than I do,” she said.

While Szepesi says in general students at the housing complex are less at risk than non-students, she said she has heard stories from students at CBC and the Sweeps who say they’ll have to sleep in their car while attending UCSB classes.

“These are already homes that exist and you're going to take them away for luxury purposes,” she said of Core Spaces’ plan.

Tenants nationwide have found value in organizing across the portfolio of large corporate landlords, including Veritas and Blackstone. 

The Santa Barbara Tenant Union was founded in 2020 to build solidarity among tenants throughout the pandemic. Its members are all volunteers, and it offers regular tenant rights workshops and a weekly “help desk.” 

Max Golding, an organizer with Santa Barbara Tenant Union said the idea to name the Core Spaces Tenant Association after their landlord was intentional. “The vote to name it that was so that other tenants under Core Spaces could join,” he said.

Szepesi estimates there are between 60 and 70 members in CSTA based on intake forms. The group has general meetings every Saturday which draw around 30 or 40 people and a group of about 12 core members meet for a few hours each Tuesday.

In March, the Santa Barbara Tenant Union took their complaints to the city council. Within weeks, the council strengthened the city’s “Just Cause” eviction laws, which had previously allowed landlords to evict tenants if they merely had an intent to substantially renovate the unit, even if they did not supply evidence that the renovation was happening soon or required tenants to move.

On April 6, the Santa Barbara County Board of Supervisors took similar action in an emergency meeting. The updated version of the county law allows landlords to evict tenants if they plan to “totally demolish or to substantially remodel the rental unit,” but only when the landlord has submitted work permits and an explanation to the tenant of why they can not remain safely while work is being done.

The new language requires landlords to present a permit and plans before submitting a notice to vacate or before submitting an “unlawful detainer,” the legal filing that precedes a court-mandated eviction in California. Under California law, when a landlord wishes to evict a tenant they must first submit a notice to vacate, which must be 3-days, 30-days, 60-days or 90-days in advance, depending on the circumstances. If the tenant remains in the rental, the landlord can file an “unlawful detainer” establishing that they wish to retake the property. The tenant can dispute this unlawful detainer in court. If they lose that court case, law enforcement can commence an eviction. 

No tenant has received an unlawful detainer at CBC and The Sweeps as of the date of publication, according to Core Spaces.

A hearing preceding the county’s vote was attended by the Santa Barbara Tenant Union, the NAACP and Habitat For Humanity, who all endorsed the vote. Tenants, neighbors, attorneys and a priest all testified in favor of the ordinance. “Imagine this was your family. Imagine you were in our situation. These people, these people don’t care about us; all they care about is making money,” one tenant, Areli Vasquez-Jimenez, said during the hearing. One attorney emotionally described having to set up a triage center for all the tenants who needed eviction support.

In video of the hearing, Santa Barbara County Counsel Rachel Van Mullem and the county supervisors can be heard painstakingly reviewing the text of the ordinance to ensure that it would pertain to tenants at CBC and The Sweeps. Das Williams, chair of the Santa Barbara Board of Supervisors, asked for the ordinance to be put on screen along with an amended version suggested by Legal Aid attorneys. The amended language states that the ordinance is pertinent for any unlawful detainer action initiated after its implementation.

“I think it goes to the point that we heard from a number of commenters that this would work at each stage of the eviction process. Could you explain how this would work?” Supervisor Joan Hartmann says to the county attorney.

“The requirements would apply in the future including to any unlawful detainer actions,” Van Mullem responds. “Any action, whether it’s a notice or unlawful detainer action, anything that happens after this ordinance... an owner would need to comply with those new requirements.”

“Does this apply to the cases we heard about today in Isla Vista?” Hartmann asks. Van Mullem says it would be “facts-specific,” but repeats that for any future unlawful detainer action, the requirements would apply.

Core Spaces told Motherboard in an email that it has not filed any unlawful detainers at CBC and The Sweeps, but says that this is because, “Our intent remains to assist the residents in every way possible and avoid unnecessary litigation as we move forward with our plans to make substantial improvements to the building.”

The Core Spaces Tenant Association immediately began flyering to communicate the new laws to tenants, but the company intervened with its own interpretation of the laws—namely that the ordinance did not apply to tenants at CBC and The Sweeps. 

In a letter dated April 28, 2023 on letterhead from the law firm Thyne Taylor Fox Howard, attorneys representing Core Spaces, tenants were told “We are aware you have received a letter from the ‘Core Spaces Tenant Association informing you that ‘you do not have to move,’ pursuant to the termination of tenancy notice you have already received. This information is incorrect and may jeopardize your right to relocation assistance and you may incur further damages.” 

The letter from Core’s attorneys states that the county’s ordinance only pertains to new eviction notices and not to residents who have already received lease terminations. “The urgency ordinance that was passed only applies to notices that were served after the effective date of the ordinance.” But the law says that a company must also have all permits before issuing unlawful detainers, which have not yet been sent to tenants at CBC and The Sweeps. 

Core Spaces did not respond to Motherboard when asked if the company has applied for permits for renovations, and the county’s building permit database does not show any new permits for the address.

Under the law, landlords who fulfill all the procedural hurdles for evicting residents before renovating a unit must pay tenants a relocation allowance of fair market rent or $7,000, whichever is greater. The letter from Core’s attorneys says tenants would “jeopardize” their right to this allowance by not leaving their homes immediately, although no such time limit exists under the law. (It is true, however, that tenants would have to return the allowance if Core was unable to evict them, as they would no longer be relocating.)

“We have up until the moment we move to pick up that check, that check is ours,” said Nani Harris, 25, a Core Spaces Tenant Association member on Section 8 who accused the company of misdirection.

Harris, who is disabled, graduated from UCSB in 2020 and now takes community college classes part-time. Her studio apartment rents for $1,861 a month, though she only pays a portion of that due to her voucher. 

“This has been really stressful for me,” Harris told Motherboard. “I have PTSD. And ever since receiving that first notice I've been having flashbacks, and it's just been awful.” Harris said about 5 other members of CSTA are Section 8 tenants. She worries about how hard it would be to find another apartment that accepts Section 8 vouchers; voucher holders face rampant discrimination, despite a statewide ban on voucher discrimination. 

Advocates were quick to address the letters from Core’s attorneys: a notice posted in CBC and The Sweeps by a nonprofit working with the tenant union called “Housing and Economic Rights Advocates” (HERA) clarifies that the law, “prohibits landlords from winning an eviction lawsuit for substantial remodeling if they have not taken specific steps before filing a lawsuit.” 

“As of May 5, 2023, your landlord, Core Spaces has yet to obtain any necessary permits,” the flier said. Another letter sent to tenants on May 6 by HERA and the Legal Aid Foundation of Santa Barbara County quotes Santa Barbara County attorney Rachel Van Mullen’s quote to the Santa Barbara Independent saying that landlords must “obtain all necessary permits to carry out the work prior to serving tenants with written notice terminating tenancy and in any unlawful detainer action initiated after the effective date of this urgency ordinance.”

Szepesi said it didn’t make much sense to tell people to look for new housing when none is available.

“I don't see anyone being able to find a place, these people will either have to fully leave the county and maybe travel 100 miles maybe north or be homeless. There's nowhere to move,” Szepesi said.

In a statement, Core COO Christine Richards reiterated the company’s stance that the county's ordinance is not retroactive, a fact that attorneys and tenants do not dispute when it comes to the termination notices that were already served, whereas unlawful detainers have not. 

“The urgency ordinance was initiated and passed weeks after we took ownership of CBC & The Sweeps and does not retroactively apply. We have acted in good faith throughout this process as have the majority of our residents. Most have taken the steps to relocate on or before their move out date,” Richards said.

Christa Conry, an attorney with HERA, said that Core’s reiteration that the law is not retroactive is an attempt to scare tenants into moving.

“Obviously it can’t apply retroactively to notices that were already issued. And that's something that the tenants all concede, it doesn't apply to notices (to vacate), but it applies to any action to recover the property, which is the ultimate step in the process,” Conry said.

“This stuff is very easy to understand when our housing isn't threatened and we look at the ordinance very objectively, but I think tenants who are like, Oh, am I going to be homeless next week? There's a lot of fear that's kind of clouding their ability to really to feel confident about their decisions and about their protections,” Conry said.

Tenants expressed their concern about Core Spaces’ tactics and fears about looming evictions at a May 16 meeting of the Santa Barbara Board of Supervisors. They called on the county to pass an ordinance that would require Core Spaces to pay for their temporary relocation and grant them a right to return to their previous units at a comparable rent after renovations are completed. 

“I do worry as we get closer to the unlawful detainer phase… and a lot of the families have failed to secure housing, a lot of people are looking at being pushed out of their communities, not just their homes, a lot of people are being pushed onto the streets,” CSTA member Ananya Kepper said at the meeting.

“Core is acting in bad faith. Every law that we’ve had to this point has expected good faith action on the part of the person doing the eviction. And right now they are acting in bad faith,” she said at the meeting.

Another tenant, Rachel Sim, pleaded with the Board of Supervisors to pass a moratorium on renovictions and no-fault evictions as well as a right to return law that would allow tenants to come back to their apartments after renovations are complete and pay the same or similar rent.

“There is virtually no affordable housing for working people across the county,” Sim said. “Core Spaces has been lying to the tenants telling them the law you passed does not protect them.” She said many tenants had moved out of state as a result.

Speaking to Motherboard after the meeting, Kepper said about 35 tenants attended, a good showing but fewer than previous meetings. “As time has gone on, it's become more and more challenging for a lot of us to be present at those meetings, just because we're all dealing with our tremendous amount of life stuff and job stuff and it's 9 o'clock on a Tuesday,” she said.

Kepper acknowledged that getting the county to pass a right to return ordinance could be a harder lift, as opposed to the county ordinance passed relatively quickly in April.

“With the urgency ordinance that they passed, it was the most decisive, quickest action I've ever seen a governing body take. They had an ordinance passed in less than a week,” Kepper said.

But when it comes to a right to return, Kepper said, “They don't want to do anything that oversteps their authority because they open themselves up to lawsuits. So they’re being a lot less effusive with their assurances that we're going to move forward with something. They're being a little more cagey.” She says she’s hoping the county passes a temporary eviction moratorium until a right to return law can be worked out.

Until then, she says Core is “giving out false information to try and get people to self-evict, and it's working,” Kepper said.

In the past week, Core’s attorneys appeared to concede to tenants that they still needed permits to proceed as they again threatened to file imminent eviction.

In a letter sent to a tenant from Core’s attorneys dated May 31 and viewed by Motherboard, Core said, “Because [the] landlord will be conducting the work in phases, we are granting tenants the ability to remain in the property on a first come basis. The residents who are first to request to stay will be given priority. If you do not request additional time, or you do not vacate pursuant to the date outlined in your termination notice, we will file an unlawful detainer action to regain possession of the property as soon as permits are issued. We anticipate permits may be issued at any time.”

In a list of lessons on its website that Core’s CEO said the founders learned while building the company, the importance of relationships was paramount. The group praised its “network of brokers, property owners, investors, and countless incredible hires along the way. Our relationships propel us forward. Building them is everything.”

Core Space tenants, who have gotten to know each other during the eviction process, have also learned about the value of relationships as they fight to keep each other in their homes. Kepper said in speaking to fellow tenants, she learned intimate stories about families, some of whom rely on neighbors and close family in their buildings for child care and would lose out on that network if they were evicted. 

“I got to hear the stories of the people that are living around me and got to know my neighbors in a way that most people in in the Santa Barbara area don't really get to know their neighbors,” Kepper said. “And it's just become increasingly clear how vital it is to allow these communities to stay intact.”

Update: This story has been updated with comment from DRW, which clarified the nature of its investments in Core Spaces projects.

Update: This article was updated with further comment and information from Core Spaces Director of Communications Kim Lyons.