After rent hikes up to 300%, LA considers buying Chinatown building – Daily News
LOS ANGELES — The City Council on Friday will consider trying to purchase a 124-unit housing development in Chinatown in an effort to keep some of the tenants housed amid rent increases by their landlord.
Residents of Hillside Villa Apartments at 636 N. 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.
“It’s not that we don’t want to pay rent or that we’re denying to pay rent, but we want a rent that is fair,” a Hillside Villa tenant named Mario said through a translator during public comment in a May 18 City Council meeting.
“Everything, all the prices are going up, the food, the living situation, the rent, everything, all the prices are going up and increasing. But we are not getting any increase in our salary. So how are we going to survive in this situation? And that’s why we’re asking for this help, and we need this help now so that we don’t become homeless.”
Several tenants spoke during the meeting, pleading with council members to intervene and purchase the building.
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.
If the City Council approves the motion Friday, it will 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, Councilman Gil 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.
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 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.
Botz’ 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 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.
The City Council will consider initiating the process to purchase the building during its 10 a.m. meeting Friday. People can attend in-person at City Hall, 200 N. Spring St., or watch online at clerk.lacity.org/calendar.