After years of organizing their building in Chinatown, tenants say the city is proposing a $15 million-dollar bailout for their landlord, while saddling them with rent debt that would leave them even more vulnerable to eviction.
On Friday, in a report submitted to the LA City Council, housing officials officially came out against seizing the low-income apartment complex Hillside Villa through eminent domain to keep rents affordable — something tenants have long advocated for. Instead, the LA Housing Department submitted a plan where the city would pay the current landlord Tom Botz almost $15 million to keep rents on some of the units affordable. The deal would also give tenants six years to pay any back rent that they owe in monthly installments.
The city would give Botz ten years —until 2034 — to pay back more than $5 million worth of money loaned for Hillside Villa’s construction. The loans were originally due March 1. The deal also refinances the loans so that he doesn’t have to pay interest on one of them, while paying 1% on the other.
Hillside Villa tenants have been fighting unaffordable rent increases since 2018, when Botz tried to raise rents, in some instances by 300%. Around 60 tenants formed the Hillside Villa Tenant Association and went on rent strike during the Covid pandemic. Over the past six years, they have also advocated at City Hall for eminent domain — when the government seizes private land for public use — which tenants say is the best way to keep their housing affordable in the long term.
Hillside Villa tenants say the back rent arrangement under this new deal could add hundreds of dollars a month to their monthly rent. “We cannot afford that rent,” said tenant Alejandro Gutierrez. He and other tenants are calling on City Council members to cancel this debt.
“If they are asking us to pay the debt that we have, it’s gonna increase about four or $500 each month.”
Gutierrez also expressed disappointment in city officials, including LA Housing Department General Manager Ann Sewill and Councilmember Eunisses Hernandez — who represents the tenants at City Hall. “[Hernandez] hasn’t fought enough for us to get a good deal.” The Hillside Villa Tenants Association posted to Twitter on Monday, proclaiming, “BOTZ GOT BAILED OUT! WE GOT SOLD OUT!”
“Councilmember Hernandez is reviewing the report and seeking additional clarity on several points contained in it,” said her spokesperson Chelsea Lucktenberg via email.
“She is eager for the tenants — who are the directly impacted parties — to have an opportunity to weigh in and for this to be discussed in a public forum at Council.”
LA Housing Department General Manager Ann Sewill declined to comment, while Hillside Villa landlord Tom Botz did not respond to a request for comment.
The City Council discussed the deal behind closed doors last Friday, with the Council’s Housing and Homelessness Committee expected to hold a public hearing this Wednesday afternoon. Once voted on in committee, the deal could go back to full Council as soon as this Friday.
If approved by the Council, the deal would extend Hillside Villa’s affordability covenant — a contractual agreement for rents to be kept affordable in exchange for certain government subsidies in building an apartment complex — by 15 years and two months on 38 units, retroactive to Jan. 1, 2019. Botz would be able to raise rents once a year on these units provided the rents are within limits set by California’s Department of Housing and Community Development.
The deal could force tenants to pay both their current rent and their back rent at the same time, which Gutierrez says they cannot afford. If they were to pay anything less than their full rent plus the monthly installment on their rent debt, the payment would first be credited to their rent debt, which could open them up to eviction for non-payment of rent. Botz is also allowed to collect up to 3% interest on back rent payments.
What the housing department says about eminent domain
The report released by LA housing officials claims that the tenants’ plan to use eminent domain on Hillside Villa would cost too much money.
According to the report, an appraisal of Hillside Villa values the building at almost $45 million. However, the Housing Department asserts that the purchase price could jump as high as $93 million, in part because the city would have to pay an “acquisition settlement” to Botz, who has indicated that he won’t sell Hillside Villa.
Governments have used eminent domain in the past to build projects like highways and Dodger Stadium. These developments have historically displaced thousands of residents, many of whom were low-income people of color. Hillside Villa tenants argued that the city should exercise eminent domain on their behalf to keep their housing affordable. On May 27, 2022, in a widely-celebrated vote, City Council members stopped short of endorsing eminent domain but directed the LA Housing Department to conduct an appraisal of the building and possibly make an offer on it.
The appraisal took almost two years to complete, with Botz refusing to grant the city permission to enter Hillside Villa and then successfully moving proceedings to San Bernardino, after the city filed for a court order to enter the property. LA Public Press obtained emails of tenants accusing city officials of allowing Botz to delay the process, including agreeing to the move to San Bernardino.
Tenants first got wind of a secret deal between the city and Botz two months ago, during a meeting with officials from Councilmember Eunisses Hernandez and Mayor Karen Bass’ offices. Tenants then protested twice in front of Housing Department General Manager Ann Sewill’s house — who is thought to be primarily responsible for negotiating the deal with Botz — calling on her to disclose its terms. In March, Sewill turned in her resignation, saying she would leave her post in July.