Los Angeles: To Keep Rents Low, Make Owners Sell their Buildings to the City

As part of a strategy to keep rents affordable in Los Angeles, City Councilman Gil Cedillo is trying to force landlord Thomas Botz to sell his 124-unit apartment building.

“We will use all of the resources of the city, both legal and fiscal, to protect these tenants,” argues Cedillo. “The city is in crisis…with respect to housing and affordability.”

The building, known as Hillside Villa, was constructed in 1986 using nearly $5.5 million in loans from the city. In exchange, developers promised to keep rents at affordable prices for the next 30 years. That agreement expired in 2018.

“If the city goes and expropriates buildings from private developers like us, who have made their 30-year deal…just to have the building taken away at the end, no private developer would build another unit of housing in cooperation with the city of LA ever again,” argues Botz, who rejected a proposal from Cedillo last year. 

Now, Cedillo hopes to acquire the building using the LA Board of Public Works’ power of eminent domain.

The Board of Public Works has long used eminent domain to buy private property for public infrastructure projects such as schools, bridges, and fire stations. The city’s housing department lacks this authority, however, and Cedillo will need to prove that he can legally force Mr. Botz to sell Hillside Villa to preserve affordable rent. If he succeeds, the city will need to pay fair market value for the building – a price that could take years in court to determine. 

If Cedillo fails to obtain Hillside Villa, tenants will face rent increases of up to 50% later this year. In at least one unit, monthly rent is expected to jump from $889 to $2,500.

Cedillo has broad support from tenant rights groups, who insist the acquisition of existing buildings is a better way to prevent homelessness than building affordable housing from scratch.

Author’s Note:

Housing and homelessness are real problems in California, but forcing landowners to sell their apartment buildings is not the answer, nor is it legal.

Cedillo’s proposal is actual socialism: the forced sale of private property to a city for the city’s own purposes, the assumption by government of the means of production.

This is not the same thing as eminent domain, wherein land is purchased for projects in the public right of way, but an attempt to compete with private industry. If Cedillo is successful, we can expect the city to establish a price advantage for the next forced sale, and the next, until the city eventually takes whatever property it wants without paying landlords a dime.

Editor’s Note:

California’s propensity to socialism is not the solution to this problem, it is the actual cause of the problem. California may find that if it leaves the free market alone and focuses on its own responsibilities which are infrastructure needs, that the housing industry would balance itself out and many problems would solve themselves.

As for attacking a building owner who has lived up to his agreements? The building owner should sue the city’s butts off.