LA City Council begins process to buy Chinatown building amid rent increases

LOS ANGELES - The Los Angeles City Council voted Friday to try to buy a 124-unit housing development in Chinatown in an effort to keep some of the tenants housed amid rent increases by their landlord, who does not want to sell the building to the city.

Councilman Gil Cedillo, who represents the neighborhood, said the vote is "a major step" in the acquisition of the building and a "part of the very extensive process of eminent domain."

Council members voted 12-0 to begin the process.

Residents of Hillside Villa Apartments in the 600 block of North Hill Place have lobbied since 2020 for the city to use eminent domain to purchase the building, saying that the landlord increased some rent prices by as much as 300% after the building's affordability covenant expired.

The apartments were constructed with loan assistance from the then-Community Redevelopment Agency of Los Angeles. In exchange for the loans of about $5.5 million, a 30-year affordable housing covenant was negotiated with the property owner. That agreement expired in August 2020.

Some tenants were paying around $900 to $1,200 a month, but some saw rent increases of up to $3,200 a month, tenants say.

Nancy Ramirez, who has lived in the building for 26 years, told City News Service on Friday that her mother Luisa Ramirez started the tenants' organizing effort three years ago before her death last year.

"We've been fighting for three years. It's been hard, it's been very stressful, but we're here and this is our final moment," Ramirez said.

She said her household -- which at the time included her mother and her son -- was paying $1,333 and $50 for parking before it was increased to $2,600 and $100 for parking.

"We're struggling. We're living paycheck by paycheck, and my anxiety is horrible, because what am I going to do? What is my son going to do? We used to have my mom's income too, but now it's only two incomes, and they're not even full time," she said.

During Friday's City Council meeting, organizers and tenants, many of whom have lived in the building for decades, chanted the rallying cry "Sí, se puede" and pleaded with council members to intervene and purchase the building.

Alejandro Gutierrez told council members that his $1,063 rent was increased to $2,660, with parking fees increasing as well from $50 to $100.

He said the landlord told him that if he can't afford the rent he should seek rental vouchers through Section 8, a federal rental assistance program managed by the U.S. Department of Housing and Urban Development.

"Does he know that there's years of waiting to get a voucher? The only thing he knows is that he can get money out of the government," Gutierrez said.

Amy ZJ, who said she is an urban planner and affordable housing developer in San Francisco's Chinatown and a former resident of Council District 1, told council members:

"Los Angeles City Council here today has an opportunity to do right. ... These 124 units are representative of the more than 10,000 units with covenants that are expiring in the next few years. Voting no would be telling these landlords that they can do whatever they want. Voting yes would actually support these tenants and keep families together."

In September 2020, the Department of General Services commissioned an appraisal of the property that established a hypothetical market value leased fee at $45.695 million.

Following Friday's approval of the motion, the council will now instruct the City Administrative Officer to prepare a reserve fund loan proposal of up to $45.695 million to initiate the purchase. The loan funds would be repaid within two to three years by a developer or nonprofit entity selected through a bidding process.

Based on the initial appraisal, the cost would be about $362,000 per unit, and it is easier for families already living there to remain rather than build new affordable apartments, Cedillo said last year -- adding that the potential purchase is "probably one of the most cost-effective purchases that we will engage in."

However, the City Administrative Officer estimated last year that the total cost to acquire, rehabilitate and adequately relocate existing tenants on a temporary or permanent basis to comply with affordability requirements would cost nearly $60 million. The City Council's vote Friday includes a request for an updated appraisal.

A woman named Annie, who said she is an organizer in Chinatown and a member of the Hillside Villa Tenants Association, told the City Council on May 18: "There's no more waiting."

"At Hillside Villa, our community made anything from $3,000 to $20,000 last year," she said. "Many are one step away from being unhoused, many have experienced homelessness and finally found refuge at Hillside Villa only to wonder how they're going to survive a 300% rent increase."

Landlord Tom Botz told City News Service on Wednesday he does not plan to sell the property to the city. According to a report by the Los Angeles Housing Department, if he does not sell, the City Council and the mayor would have to approve the initiation of the eminent domain process in order to purchase the property.

Attorney Patrick Hennessy spoke at the meeting on behalf of Botz amid boos and chants of "shame" and "get out" from tenants.

He said that he believes Section 8 vouchers "are the best way to keep people housed at Hillside Villas."

Botz's other attorney, Michael Leifer, sent a letter to council members Monday saying that "there are a maximum of 37 households at HVA that are at risk of being displaced as a result of the rent increases to market that were effective on Feb. 1, 2021, after HVA's 30-year covenants expired."

"The city should simply give these 37 households Section 8 vouchers, which the LAHD Report suggests they are eligible for, and HVA would be happy to have them stay. The problem would be solved," Leifer said.

According to Leifer, 71 of the units are occupied by tenants with Section 8 vouchers and already pay market rate rents. He said only people who do not have Section 8 vouchers faced rent increases in 2021.

Leifer added that the city failed to prepare for the affordability covenant expiring, and that considering eminent domain "would have a chilling effect on any developer ever trusting the city again to live up to it's end of the bargain when constructing affordable housing with rents restricted for an agreed-upon term."

He also said the $46 million appraisal is a "lowball" and an updated appraisal could come out to $700,000 per unit.

Cedillo said he previously came to an agreement with the owner to stop rent increases for another decade but the owner withdrew from the agreement after it was announced to the public.

"From that point forward my office has pursued the various procedures that are involved to prepare for eminent domain," Cedillo said.