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Housing and Homelessness

LA Approves ‘Unprecedented’ Plan To Take Over Chinatown Apartment Building, Against Owner’s Wishes

A crowd in red holds signs that read "Familia" and "Approve the loan."
Hillside Villa tenants urge City Council members to vote in favor of a plan to acquire their building.
(Phoenix Tso
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With one council member calling the move “unprecedented,” L.A.’s City Council voted Friday to start the process of acquiring an apartment building in Chinatown where low-income tenants have faced large rent increases.

The city’s plan to take over the building is still in early stages, with many details yet to be hammered out. But renters and tenant advocates praised the vote, saying their years of organizing have led to a significant step toward preserving affordable rents in their building.

"It's still sinking in," said tenant Leslie Hernandez. "After three years of hard work, the outcome is in our favor."

The property in question, the 124-unit Hillside Villa apartment building, was developed in the 1980s as affordable housing. For decades, Hillside tenants paid rents that were capped to reflect their low incomes.

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But the 30-year agreement to keep rents low expired a few years ago, allowing the owner to raise rents to market rate. Tenants in the building say their rents have since increased by as much as 300%.

Many tenants took the lectern during the meeting's public comment period to discuss their inability to afford the rent hikes, as well as their fears of eviction and homelessness.

Tenant advocates were optimistic about the city’s initial steps toward taking over the building and preserving affordability for dozens of vulnerable households.

“This is the biggest step” so far, said volunteer tenant organizer Annie Shaw in an interview before the vote. “It's a real commitment to allocating funding and making this preservation happen.”

The council members’ vote instructs the city to take out a reserve fund loan of nearly $46 million to initiate the process of inspecting, acquiring and renovating the building. The city’s ultimate goal is to reinstate the building’s affordability covenant for another 55 years.

Landlord Doesn’t Want To Sell The Building

The council vote follows a long-running saga pitting tenants against Hillside Villa’s owner, Tom Botz. For more than two years, Hillside tenants have been urging the city to seize the building from Botz. The City Council briefly considered using COVID-19 relief funds to acquire the building.

But there’s one major hurdle to the city’s plan: Botz does not want to sell.

Friday’s 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 — similar to the process local governments have used for seizing homes to make way for freeways and sports stadiums.

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

The city’s previous estimate pegging the building’s value at close to $46 million is now outdated, Leifer argued, claiming Hillside’s current value is closer to $57 million. He said if the city factors in additional costs — such as the expense of relocating tenants during costly renovation work — taking over the building could set the city back more than $90 million.

L.A.’s Vanishing Affordable Apartments

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

Patrick Hennessey — another attorney for Botz who delivered public comment at the often raucous council meeting — 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 said. “You can’t take all of them.”

Councilman Gil Cedillo, who represents the district where the Chinatown apartment building is located, said he approached 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 eminent domain.

“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.”

Tenants Say They Can’t Keep Up With Market Rents

Marina Maalouf, 66, said she and her husband have lived in the building for nearly 25 years. She said they paid around $950 in monthly rent before the affordability covenant expired. Now, she said, Botz has raised their rent to $2,660 — plus fees for parking and storage.

Maalouf said the new rent far exceeds their entire monthly income, and they’ll be forced to leave if the city doesn’t intervene.

“When my grandkids say, ‘Grandma can we go to your house?’, what am I going to say?” Maalouf asked. “‘I don't have no more house?’ I don't want to say that.”

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

Could Vouchers Solve The Problem?

Botz has said the majority of Hillside households currently use federal Section 8 housing vouchers to offset the cost of their rent. Most landlords in L.A. refuse to accept these vouchers, but Botz says he does not discriminate against voucher holders.

“[Hillside] is a Section 8 welcoming property and has been for decades,” Leifer wrote in his letter. “If the City truly thinks there are any [Hillside] tenants facing homelessness, providing these vouchers is the simplest, most obvious, and most cost-effective solution.”

However, vouchers are not easy for tenants to obtain — and even those in the building who have vouchers say they’ve faced large rent increases.

Yasser Nokoudy said when his family first moved in back in 2017, their portion of the monthly rent under the voucher program was less than $500. The rest was covered by the city of L.A.’s Housing Authority, which administers Section 8.

But as the overall rent on his unit has risen, Nokoudy said his portion increased to nearly $1,500 per month.

“This all happened during … the pandemic,” he said, adding that his mother died after contracting COVID-19.

“It became a very kind of hostile environment during a time when everybody needed some peace,” Nokoudy said.

Tenants in the building have tried to obtain Section 8 vouchers. But the wait for L.A. renters is frequently more than a decade, and the waiting list is currently closed to new applicants.

L.A. housing officials said they cannot simply give vouchers to tenants currently living in the building when there are thousands of others already on the waitlist.

While it remains unclear how much the city would need to acquire Hillside Villa, a report from the city’s housing department claims the city could repay a reserve fund loan within four years through a mix of tax-exempt bonds, Low Income Housing Tax Credits and funding from the city’s Affordable Housing Managed Pipeline program.

Tenant Nancy Ramirez urged the city to move fast on the acquisition.

"We want them to do something more about it, not wait another year, another two years," Ramirez said. "We want them to do it as soon as possible."

What questions do you have about housing in Southern California?

Updated May 27, 2022 at 1:33 PM PDT
This article updates with additional context about the history of this conflict.
Updated May 27, 2022 at 12:59 PM PDT
This story was updated with the results of the vote.