LA City Council Considers Using COVID Funds To Buy Chinatown Apartment Building

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Despite objections from city staffers, L.A.'s City Council is considering a proposal to use federal coronavirus relief funds to purchase an apartment building in Chinatown.

Dozens of tenants in the building -- known as Hillside Villa -- are facing steep rent hikes because of an expired affordable housing covenant.

The 124-unit complex was built in the 1980s using city loans in exchange for an agreement to keep rents affordable for 30 years. But that covenant has now lapsed, and the owner has notified tenants that they will be charged market rate rents starting next February.

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With landlord Tom Botz unwilling to sell the property, Councilman Gil Cedillo -- who represents the area -- has been trying since January to get the city to acquire the building through eminent domain.

The city has appraised the building's value at nearly $46 million. Cedillo hopes to put $43 million in unallocated funds from the federal CARES Act toward the acquisition of the building.

"I don't think we have to wait until these people are evicted," Cedillo said during a council meeting on Tuesday. "We should seize upon this moment."

LAist reached out to Botz by email but did not receive a response.

UNEMPLOYED TENANTS BRACE FOR LARGE RENT HIKES

Hillside Villa tenants are hoping the city moves quickly.

Alfredo Espinosa lives in a two-bedroom apartment with his 75-year-old mother, who suffers from dementia.

Like many service workers in Los Angeles, he became unemployed due to the pandemic. He was furloughed from his full-time job as a hotel worker and also lost his part-time job as a food vendor at Dodger Stadium.

Espinosa said his unemployment benefits will run out in February, the same month his rent will be raised from $1,000 per month to $2,500.

"If [the landlord] goes on with this rent increase, I definitely won't be able to make it," Espinosa said. "I don't want to say I'm going to be homeless, but I don't know what's going to happen."

CITY STAFF SAYS THE PROPOSAL IS AN 'INELIGIBLE USE' OF FEDERAL FUNDS

However, the city's Administrative Officer said in a recent report that the city's unspent COVID relief money can't be used to acquire Hillside Villa because, under federal guidelines, the funds must be "limited to that which is necessary due to the COVID-19 public health emergency."

The report says the Hillside Villa issue predates the pandemic, and therefore doesn't qualify. City staff also questioned the likelihood of acquiring the building before the year-end deadline for spending those federal funds.

The report recommended that the council table Cedillo's motion, concluding that "the proposed use of [federal Covid] funds for this purpose is an ineligible use and the City cannot complete the property acquisition prior to the December 30, 2020 deadline for eligible expenditures."

But a majority of council members voted Tuesday to reject the report and move forward with Cedillo's proposal. Only councilmembers Paul Krekorian, John Lee and Monica Rodriguez voted to accept the report. The vote came on the same day that the council addressed the city's huge budget deficit. The city is also looking to apply those unused federal funds toward the deficit.

Calling the report "unsatisfactory and inadequate," Cedillo said he now plans to introduce another motion to explore further options for acquiring Hillside Villa. During Tuesday's council meeting, he warned that this issue extends far beyond one property in Chinatown.

"This is the first of many buildings for which covenants will expire," Cedillo said. "There are perhaps 10,000 units in the city of Los Angeles. We have to prepare for this."