New York Developer Acquires Troubled Chinatown Affordable Housing Complex

Nearly 40 years ago, Cathay Manor rose out of the dreams of Chinatown leaders who wanted to ensure local seniors could live out their remaining years in affordable apartments. They secured federal subsidies to keep rents low even as gentrification in the neighborhood ramped up.

“Ministers, business people, restaurant owners all got together because they thought there was tremendous need in Chinatown,” said local housing activist Phyllis Chiu.

Today the need is still there but Cathay Manor has entered a new chapter. The white 270-unit building towering over North Broadway was sold last month to New York-based Capital Realty Group for a reported $97 million. The acquisition of Cathay Manor expands a company portfolio of more than 17,000 affordable housing units in 27 states.

Broken elevators, moldy walls

The sale takes place after decades of alleged mismanagement by landlord Don Toy. Residents complained of elevators that didn't work, mold that crept up walls and dirty water that dripped from sinks.

In 2021, the city filed 16 criminal misdemeanor charges against Toy and his nonprofit, Chinese Community on Aging Housing Corp., for violating fire code and failing to maintain the elevators in the 16-story building where some residents use walkers.

Residents demanded that Toy be removed as building operator and called for federal oversight.

Now some advocates question what Toy will do with the proceeds from the sale they say was conducted with little transparency. Toy, who is scheduled to appear in L.A. County Superior Court on July 31, has not responded to a request for comment.

New management

Chiu says any entity is an improvement over Toy, and notes the new owner has already been much more responsive to tenants but the sale to an out-of-state developer feels like its own blow.

Cathay Manor has sat at the corner of North Broadway and Cesar E. Chavez Avenue in Chinatown since 1983.

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“It's a tremendous loss for the community because this was a community asset,” said Chiu, a volunteer with the Chinatown Community For Economic Development.

The Capital Realty Group acknowledged Cathay Manor’s troubled history and said it would prioritize fixing plumbing leaks and hot water issues.

The company added it would also modernize units and common areas and offer social activities, help with coordinating health care and educational programs.

"We understand the challenges that the residents have faced due to years of neglect, and we are fully committed to restoring their trust, improving their living conditions, and honoring their cultural heritage,” Capital Realty Group vice president Sam Horowitz said in a statement.

New owner seeks hike in rent subsidies

To make improvements, the company is asking for increased rent relief from the U.S. Department of Housing and Urban Development.

A mandatory notice posted at Cathay Manor shows the developer wants to be able to raise the monthly rent on a 1-bedroom apartment from $1,125 to $2,540 — a nearly 130% bump.

Residents' share of the rent would stay the same under the federal Section 8 program: 30% of their income, or about $330 a month.

HUD said it is currently reviewing the developer’s request for a rent hike. In a statement, the agency noted that the new owner has “already infused millions of their own monies prior to the closing of the sale in order to make the building repairs and address health and safety issues in the best interest of the tenants.”

The proposed rent increase is being met with opposition by advocates such as King Cheung of the Chinatown Community for Economic Development, which lodged its objection in a letter to HUD.

Even though Cathay Manor residents will not have to absorb an increase, Cheung said he is concerned that HUD will approve higher rents on units intended to be affordable and set a bad precedent that other landlords will try to follow.

“That is going to create more gentrification, more evictions for low-income residents, and we don't think that's fair,” Cheung said.