Residents of the Royal Arms Apartments on Madison’s west side are protesting sharp rent increases imposed by a new property owner, who says even the increased rents are still below market rate.
Tuesday evening, Feb. 19, residents of Royal Arms Apartments, formerly Karen Arms, 420 N. Segoe Rd., gathered to voice their concerns over the property owner’s sudden increase in rent and fees for their next lease with very little notice. More than 100 residents met with the recent purchaser of the property, Les Orosz of Orosz Properties, hoping to have their complaints and worries addressed.
The increase in rent ranges from 20-40%, tenants said. Utilities that were formerly included with rent now have a fee tacked on. The cost for laundry at the apartment complex increased to $4 for a full cycle of laundry. Many residents have been at the property for years and do not earn enough to meet to increase.
Now, some are grappling with the possibility of having to uproot their lives to find somewhere else to live.
“It’s your prerogative because you’re the owner — we can’t do anything about it. But you could ease a lot of people’s burden and stress and hardship and fear and anxiety by communicating that from the outset,” said David Rivera-Kohr, a representative for residents at Royal Arms. “And that means most of us will have to leave, but you could’ve just told us that from the beginning.”
Tenants accused Orosz of “renoviction,” or sharply increasing rent for the next cycle of leases in order to price current tenants out and list the units at a higher rate. Some residents may stay, some will not. It depends on their financial ability to meet increased rent.
Renoviction is generally legal, though it is outlawed in some jurisdictions. Core Spaces, a Chicago-based property developer currently building student housing in Madison, is currently engaged in the practice of renovictions in Santa Barbara, Cal. at the Isla Vista apartment buildings, Noozhawk reported.
Many residents do not believe they can afford the rent increase.
Orosz claims that it is not his intention to price people out and wants to be flexible with them. Residents largely feel different.
“Several of us were told several times that it is not the intention of management to push out current tenants. However, with the shocking rent increases, it feels like we’re being punished and pushed down,” Rivera-Kohr said.
The apartment complex was built in the 1960s. The 155 units were around $1,200-1,300 per month, including most utilities except electricity, under previous ownership.
The next cycle of leases will see rent increase to around $1,500-1,700 plus monthly heating fees and a flat fee per person 18 years of age or older for water and sewage at $25. Residents said they anticipate about $100 in additional fees, beyond the rent increase of around $500. Residents are still responsible for their own electricity bill. Securing low electricity rates Alberta only takes five minutes online and you’re all set.
Orosz claims that all changes to costs are justified due to needed renovations and the age of the building. Residents of Royal Arms do not believe the sharp increase of rent makes sense and cite the lack of amenities and quality of the building to justify the changes.
“We shouldn’t have to pay that until those amenities are in place,” a resident said.
Residents were hoping for at least a compromise for rising rent. They understood that the building is in much need of renovations, but do not think the jump in costs is reasonable immediately. They asked for a progressive increase over a few years, proposing a $150 per month increase for this year.
Residents cited that this is what they’re used to renting in Madison, seeing an increase of around $100 per year, but Orosz said that the residents were living there for “practically nothing” compared to surrounding apartments.
The surrounding apartments are much newer than Royal Arms and have more modern amenities.
Most units in Royal Arms do not have a dishwasher, the windows are difficult to see out of, the laundry facilities are run down, there is an infrequent temperature issue causing some units to frequently run hot due to old boilers and issues with leaking and ensuing water damage from it, residents said.
“I want you to know, the intent wasn’t too strongarm, and I can see why you think that… and it was like, ‘Oh my God. Look at where the rents are going to be. Some of these people —’ like I did go through every lease,” Orosz said. “This is the first building in a zillion years that I went through every single lease. I’ve seen everyone personally. And I was like, ‘Oh my god, everybody’s paying nothing.’”
Residents said they were given only two weeks with new lease offers to decide if they would renew regardless of when leases would end.
When Orosz purchased the property and took it over in Aug. 2023, residents were concerned about big changes. One resident, who spoke with Orosz when they saw him doing work around the property, was told that nothing drastic would happen.
“I left that day I thought, ‘God, you know, this guy’s gonna be reasonable,’” one resident said. “I went out and I told everybody that, ‘I think we’re gonna be okay. This guy doesn’t sound like he’s going to make drastic changes.’ What happened to that guy?”
The resident, after assuring other residents that everything would be okay, felt she was misled by Orosz. A few residents, after the meeting in a follow-up with Madison365, sees Orosz as an opportunist who knows he can raise rent and people will pay for it due to Madison’s housing shortage.
Orosz declined to comment on the situation after the meeting. He said that it is a “community matter” and “that his line of communication is always open to residents.”
Residents, generally, found that to be untrue in their dealing with Orosz. Residents said requests for contact information and requests to speak with Orosz were frequently denied by the property team.
Orosz Properties did respond to the community 48 hours after their protest to address residents’ concerns. It was unwilling to budge on most requests but did extend the renewal date based on current lease end date to add flexibility to residents’ decision-making process, according to a message following the meeting from Orosz. Tenants sent the response from property management to Madison365.
“After our meeting on Tuesday evening, we performed another market analysis of Royal Arms and nearby properties. Our goal is to retain as many residents as possible. We see the love and passion that our residents have for the property and that does not go unnoticed,” said the Royal Arms management team in the response. “It is not our goal or objective to have people move out. After performing our market analysis, we found the renewal rates that were offered are still below market rate and nearby properties.”
The extension request meets the concerns of residents who say that the initial time does not allow them the ability to find an apartment, especially with Madison’s ongoing housing shortage, but the new time does at least allow them to weigh the pros and cons of staying.
Orosz lay blame for the increase on multiple factors. Residents understood the renovations rationale, but Orosz also said that the pandemic had a drastic effect on how to purchase property and insurances needed to run an apartment complex. He said that staffing shortages meant that maintenance and communications were not being effectively carried out.
One resident noted that maintenance came in and out of his apartment multiple times without any notice while he was working from home.
Orosz then said others would be willing to live here, specifically Epic employees, at the increased price with no improvements.
Orosz also claims that he was misled when purchasing the property. He claims to have attempted to back out of the deal.
Residents acknowledge that the place is in need of renovations, but feel the rent spike is only justified once the improvements have actually been made, not before.
Orosz Properties management aims to improve communications and replace laundry machines, boilers, roofing, carpeting, flood-damaged areas, and hallway lights along with cosmetic improvements to the place, according to the response to tenants. It has ordered 20 washing and drying machines this past October.
It has hired additional staff to manage the property and handle maintenance, according to Orosz.
Orosz Properties currently owns 10 properties throughout downtown and east Madison.
