Los Angeles Moves To Buy Expired Affordable Apartments In Chinatown

Los Angeles city leaders have offered to buy a Chinatown apartment complex for $46 million in a move to spare some tenants the risk of losing their leases––with negotiations expected to play out against the backdrop of a threat of seizing the property through eminent domain.

The Los Angeles City City Council voted to make the multi-million dollar offer to the owner of Hillside Villa apartments at 636 N. Hill Place, LAist reported. But the owner of the 124-unit complex says he doesn’t want to sell.

The complex was built in the 1980s as affordable housing, with capped rents to low-income households. Now the 30-year agreement to keep rents low has expired. And tenants in the building say their rents have been hiked as high as 300 percent.

That has led to what one councilman called an “unprecedented” plan to seize the apartment building against the owner’s wishes. The city’s goal is to reinstate the building’s affordability covenant for another 55 years.

Councilman Gil Cedillo, who represents the district that includes the apartments and is facing stiff challenge as he seeks a third term in next week’s primary election, said he approached Hillside Villa’s owner, Tom Botz, in the hopes of striking a deal to preserve affordability at Hillside Villa.

But he said that deal fell through, forcing the city to consider the eminent domain option after two years of urging by tenant advocates and renters unable to pay market rents.

“It is unprecedented,” Cedillo said. “But we do it for airports. We do it for stadiums. We do it for major public works projects. Now is the time for us to move forward and do it as part of an overall strategy to protect affordable housing.”

The council motion only instructs the city to make an offer to buy the building. But the city has previously discussed seizing the building and compensating Botz through eminent domain.

In a letter to the city, Botz’s lawyer Michael Leifer said the plan is “beyond wasteful and makes no sense whatsoever.”

Leifer said the city’s previous estimate pegging the building’s value at $46 million––roughly $370,000 per unit–– is now outdated. He said its value is closer to $57 million.

He also said there were a “maximum of 37 households” at risk of being displaced because of rent increases; the others receive Section 8 vouchers, or rental assistance. When the city factors in additional costs, such as the expense of relocating tenants during costly renovation work, seizing the building could set the city back more than $90 million.

And if the city would give 37 tenants Section 8 vouchers, “the problem would be solved,” he argues. Furthermore, he said wresting the building away from a private property owner would set a bad precedent.

“The proposed eminent domain proceeding initiated after the end of a 30-year rent restriction period set by the City, to put it in the mildest terms possible, would have a chilling effect on any developer ever trusting the City again to live up to its end of the bargain when constructing affordable housing with rents restricted for an agreed-upon term,” Leifer writes.

L.A. housing officials said they cannot give vouchers to tenants currently living in the building when there are thousands of others already on a 10-year waitlist no longer accepting applicants.

Many tenants in the building are now engaged in a rent strike, refusing to pay the higher rents.

The specter of low-income tenants facing the prospect of losing their affordable apartments has been brewing for decades.

Hillside Villa is among hundreds of buildings across L.A. with expiring affordability covenants. A 2019 report from the McKinsey Global Institute found that 10,000 affordable apartments in L.A. are set to have rents raised to market rate by 2023.

Patrick Hennessey, another attorney for Botz who delivered a public comment, was shouted down by tenants who chanted “shame!” and “liar!” as he voiced his client’s opposition to the vote.

“There are covenants expiring throughout the city,” Hennessey told the council. “You can’t take all of them.”

[LAist] – Dana Bartholomew