Steven Tsegay is on the front lines as economic forces transform downtown Los Angeles from a haunt of the down-and-out into what could become a bustling residential district.


Arriving in L.A. six months ago from Washington, D.C., without a job and a spotty credit history, the 47-year-old Tsegay managed to find a room at the Cecil Hotel, a 640-room lodging in the heart of downtown.


But as residential hotels throughout downtown begin to disappear as they are converted into lofts, Tsegay feared the Cecil would be next, until the Los Angeles City Council enacted a moratorium on the conversions.


A month later, Tsegay's fears have returned.


The owners of the Cecil Hotel, along with the owner of the nearby Frontier Hotel, are trying to get their buildings exempted from the Council moratorium.


"I'm absolutely concerned that if they get out of this ordinance, I will be forced out onto the street," said Tsegay, who pays a weekly rate that works out to be about $740 a month.


With high price condo construction and loft conversions exploding in the area, Cecil Hotel owners John Deluca and Dale Lohrer are claiming that the majority of the occupants of the hotel, which was renovated in 2003, are tourists and not permanent residents.


That claim, if it is upheld by the city's Housing Department, would exempt the hotel from the moratorium and allow the two owners to push forward with a remake of the 1920's-era hotel while the weakening housing market and interest rates are still favorable enough to justify construction.


And while the area's business district, the Central City Association, has not taken any stand on the owners' application for an exemption, there is clear opposition to the moratorium from developers, hotel owners and the Central City Association, who fear that it could cripple the revitalization of the area.


"We have no problem with a truly interim ordinance that gives everyone a bit of breathing room to craft a more comprehensive policy," said Victor Franco, senior vice president of government affairs for the Central City Association. "But nearly every (interim ordinance) that's been implemented throughout the city has become a de-facto permanent ban on future development."


Deluca could not be reached for comment, and calls to Lohrer were not returned.


Tourist or resident?


The conversions have alarmed the non-profit organizations that cater to the needs of lower-income people living in residential hotels, also called single room occupancy, or SRO, hotels. These include groups like the Los Angeles Community Action Network, the Legal Aid Foundation of Los Angeles, the SRO Housing Corp. and the Southern California Association of Non-Profit Housing.

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