Los Angeles city officials are challenging the plans of a Hollywood nightlife impresario who wants to convert downtown housing for the poor into a cushy boutique hotel.
The L.A. Community Redevelopment Agency filed suit late last month against Adolfo Suaya, who is proposing to convert the Bristol Hotel, a downtown single-room occupancy hotel, into an 84-room high-end boutique hotel.
The agency is asking a Superior Court judge to block those plans and force Suaya owner of the Gaucho Grill chain, and a partner in L.A. hot-spots such as the restaurant Dolce to re-open the property as an SRO, a set-up where tenants rent furnished rooms without kitchens.
The CRA loaned the prior owners of Bristol Hotel $850,000 nearly 20 years ago to renovate the rooms and the three ground-floor storefronts in exchange for a commitment to keep the property as rent-restricted affordable housing until 2015.
City officials fear that if restrictions like ones on the Bristol aren’t rigorously enforced, downtown could lose much of its affordable housing stock.
“The objective is to protect the sanctity of affordable housing covenants,” said Councilwoman Jan Perry, whose 9th District includes the Bristol. “As downtown goes through a renaissance of market-rate housing, the covenants are a hedge to protect our stock of affordable housing.”
Suaya and several investors purchased the hotel, near the intersection of Eighth and Olive streets, from the owners Chae Kum Ro and Chin Deung Ro in October 2003 for about $8 million.
The new owners planned to spend $3.5 million on a hotel conversion that would include a Japanese restaurant on the ground floor, a basement nightclub and a rooftop bar. They submitted the plans for city approval in May 2003.
Though Suaya didn’t return calls seeking comment, he has previously said he was unaware of the property’s affordable-housing covenants. When he took possession of the Bristol, he said there were no tenants in the building.
In the suit, the L.A. City Attorney’s Office alleges Suaya conspired to illegally evict the hotel’s residents many of them living in extreme poverty without giving proper notice or paying relocation fees. The building was then boarded up.
However, the suit doesn’t ask the court to fine Suaya or the prior owners for the alleged evictions or to pay relocation fees to the city as a penalty. Instead, the office argues the new owners shouldn’t be allowed to pay their way out of providing the affordable housing.
“The harm caused by the removal of over 100 units of affordable housing cannot be compensated in damages, and any amount of damages sustained would be extremely difficult to ascertain or compute,” city attorneys wrote in the complaint. “No monetary damages or other legal remedy can adequately compensate the general public for the irreparable harm defendants’ conduct has caused already and threatens to cause the public.”
Industry Gets More Industry
Two leases for a cumulative 1.3 million square feet have been signed in the City of Industry, where industrial space has become sparse and rents are rising.
The Home Depot Supply Inc., a Home Depot Inc. division servicing building and property managers and maintenance professionals, inked a 650,000-square-foot lease with Majestic Realty Co. for a new facility at its Grand Crossings project at 21535-21651 Baker Parkway.
Construction on the facility is expected to be complete by the end of the year. The five-year lease Home Depot signed for the space, which will be used as a warehouse and distribution center, is worth approximately $13 million, according to CB Richard Ellis Inc., which represented Home Depot in the deal.
CBRE Senior Vice Presidents Frank Geraci, Walt Chenoweth and Laird Perkins, along with Vice President Dan de la Paz, represented Home Depot Supply in this transaction. Majestic was represented internally.
Meanwhile, Chicago-based Four Seasons General Merchandise Inc. inked a six-year lease for 613,375 square feet at Southwest Carpenters Pension Trust/SC Title Holding Co.’s Gateway Pointe Industrial Park, a 1.6-acre master-planned industrial park located at the intersection of the 60 (Pomona) and 605 (San Gabriel River) freeways.
The lease signed by Four Seasons General Merchandise, a trafficker in dollar-store merchandise, is valued at more than $20 million, according to Cushman & Wakefield Inc. brokers who worked on the deal.
John McMillan of Cushman & Wakefield and Dave Hess of Trammell Crow Co. represented Four Seasons General Merchandise and Stu Milligan and David Hasbrouck of Cushman & Wakefield represented the landlord.
The City of Industry submarket is one of the few industrial markets in L.A. County that has experienced four consecutive quarters of positive absorption, with a total of 2.2 million square feet taken, dating back to January 2004, according to a Cushman & Wakefield report.
Legal Wrangler
Jim Thomas has lured yet another law firm to his City National Plaza.
Last week, New York-based Wilson Elser Moskowitz Edelman & Dicker LLP signed a 10-year lease for 41,441 square feet in 555 S. Flower St. worth about $15 million.
Wilson Elser is decamping from its current digs at 1055 W. Seventh St. for City National Plaza, formerly Arco Plaza. Thomas, whose Thomas Properties Group Inc. bought the black twin towers at a bargain-basement price, has been able to undercut other downtown landlords on rents and attract tenants to the complex, which still has about 1 million square feet of vacant space.
Thomas has recently lured law firms such as Jones Day, Janofsky & Walker LLP and Fulbright & Jaworski LLP from other downtown locations. Thomas again used low rents as a means of capturing Wilson Elser as a tenant.
“We were able to negotiate a lease deal for WEMED, which was extremely well-priced yet still provided a great deal of flexibility for expansion and contraction,” said Mark Sullivan, a Studley executive vice president, director and branch manager, who helped represent the law firm in the deal.
Along with Sullivan, Studley managing directors Will Adams and John Carrick also represented Wilson Elser in the transaction. Thomas Properties was represented internally by Managing Director Kent Handelman.
*Staff reporter Andy Fixmer can be reached by phone at (323) 549-5225, ext. 263, or by e-mail at
[email protected]
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