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Landlords Push Tenants Out to Gentrify Units, Suit Says

June 15, 2006|Cara Mia DiMassa and Ashraf Khalil | Times Staff Writers

Domingo and Esther Chan and their two children have lived for years in a rent-controlled apartment near MacArthur Park, paying $403 a month for the tiny space, dominated by a queen-size bed.

Then last year, their apartment building was sold, and the new owner immediately began pressuring the Chans to move out, they said. A man known to them simply as "Rocky" frequently came to their door, pressing them to take $2,500 to vacate the unit.

"He told me it was my last opportunity," said Domingo, a day laborer. "He said I would end up in the street without money and without the room."

The Los Angeles city attorney's office said Wednesday that it had filed suit against a group of property owners, including the Chans' landlord, accusing them of pushing out rent-control tenants so they could upgrade the units and rent them back out at much higher rates.

For The Record
Los Angeles Times Friday June 16, 2006 Home Edition Main News Part A Page 2 National Desk 2 inches; 80 words Type of Material: Correction
Apartment rents: An article in Thursday's Section A about a lawsuit by the Los Angeles city attorney's office against a landlord for unfair business practices stated that under city law, landlords of rent-controlled apartments can increase rents by 5% each year. In fact, most landlords are limited to a 3% increase (though that number will increase to 4% on July 1). Landlords who pay for their tenants' gas or electric service are entitled to an additional 1% for each utility.

The owners allegedly picked apartment buildings with care, looking in swiftly gentrifying neighborhoods that included Hollywood, downtown, Westlake and Los Feliz. They sought rent-controlled buildings, which yielded low revenue and therefore cost less to buy, authorities said. The firms purchased more than 25 properties in all, then used a variety of intimidation tactics to force the residents out, according to allegations contained in court papers.

The charges come as city officials are grappling with the fallout from the gentrification that is sweeping neighborhoods across the region.

As once-downtrodden districts become hip and desirable, rising rents leave longtime residents at risk of being squeezed out, say city officials and housing advocates.

The City Council is considering rules to slow a recent explosion in apartments being converted into condominiums, particularly in parts of the Westside and San Fernando Valley.

Since the beginning of 2001, more than 11,000 rent-controlled apartments have been taken off the rental market, according to the Los Angeles Housing Department. About 7,000 of those have disappeared in the last 18 months.

Thousands of those units were converted to condos, a perfectly legal process that has prompted protests from some longtime apartment dwellers who are being told they must buy their units or find other housing. Gentrification has also led to significantly higher rents in some newly desirable neighborhoods. In downtown, for example, lofts that five years ago went for $800 a month rent at $1,800 or more now.

"There's a real economic incentive to get these properties and transfer them to 'market rate' units," said professor Raphael Bostic of USC's Lusk Center for Real Estate. But, he added, "you do have to clear out the original tenants to do that."

The city attorney's office filed the civil charges against Van Nuys-based Landmark Equity Management; its president, Darren Stern; and seven affiliated companies. Stern and representatives from the other firms did not return several calls seeking comment.

For the first time the office, in addition to imposing fines, is seeking to seize the landlords' properties, using a statute in the state code normally applied to antitrust cases.

Authorities allege that the landlords sought to circumvent local renter-protection laws by locking tenants out of their buildings, failing to make timely repairs, making false and misleading representations that the building was being condemned and turning off utilities.

At the low-rent Huntington Hotel downtown, electricity and water were turned off for extended periods, according to court documents, and tenants were threatened with violence or the removal of their property unless they vacated their units. At the apartment building where the Chans lived, the defendants started renovation work on the building and allegedly forced tenants to walk through an area open to potentially harmful construction dust.

Ruben Diaz and Maria Hernandez, who had lived with their five children in that same building, at 721 S. Westlake Ave., said they found themselves penalized by the landlord after what they considered an innocent mistake: reversing the "to" and "from" on the money order they used to pay rent.

The company, Diaz said, returned the check with an eviction notice and followed up with an "unlawful detainer" motion.

"They were pushing us to leave," Hernandez said. The couple negotiated with the landlord to stay through the summer, but they must leave by the end of August.

The landlord would regularly "intimidate, harass and threaten the tenant until they leave," Deputy City Atty. Janet Karnaken said in an interview.

The suit, filed in Los Angeles Superior Court, alleges that the defendants' actions were part of a larger pattern and that, ultimately, the property owners would try to sell the buildings at much higher prices because of the elevated rents.

"At several properties," the city attorney's office alleges in court documents, "defendants have caused tenants to vacate the entire building, a feat that is virtually impossible to legally accomplish in Los Angeles."

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