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Squeezed In and Squeezed Out of L.A.’s Koreatown

Disappointing numbers call into question the state’s market-based prescription for resolving the housing shortage.

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Illustration: Define Urban.

 
Los Angeles’s Koreatown is a sprawling and electric 2.7 square miles full of traditional Korean cook-at-your-table barbecue restaurants, tofu houses, spas and 24-hour karaoke joints. Revived in the late 1960s and 1970s with a wave of immigration from South Korea, Ktown is a mix of languages and cultures. Classic mid-20th century watering holes like the HMS Bounty, where an episode of Mad Men was filmed, mix with markets that draw Korean immigrants from across Southern California. More than an eighth of a million people — many of them Latino or Asian immigrants with little political power — are crammed into about 150 blocks between Downtown L.A. and Hollywood. Many live in cramped, subpar apartments they can barely afford because of a lopsided mismatch between wages and rents.

Co-published by LAist

Enter two city programs — density bonus and Transit Oriented Communities. Both are aimed at easing the affordable housing shortage by incentivizing private developers to include affordable units in pricey market rate buildings. The programs have sparked a building boom in Koreatown, and they’ve made the neighborhood a proving ground for the state of California’s market-based approach to solving the housing crisis: Build dense housing, remove barriers to development, then get out of the way and let the market take over. The city of Los Angeles reports that in 2020 fully two-thirds of its affordable housing was permitted through the TOC or density bonus programs.

But that only amounts to 3,101 units, a tiny fraction of what the city needs.

Capital & Main’s reporting shows that at the city’s current pace, it would take 54 years to meet Los Angeles’ 2029 state-mandated affordable housing goals.

Those disappointing numbers from California’s largest city call into question whether the state’s market-based prescription for resolving California’s housing shortage can work.

TOC has actually produced fewer homes than the city has reported because it counts affordable apartments built with state and federal subsidies and only minimal city assistance.

Moreover, the stats don’t take into account the demolition of rent-controlled buildings to make way for the new apartments — gleaming monuments to the city’s stratification of wealth and poverty that, despite a handful of affordable spaces in each, largely leave out neighborhood residents like 55-year old Eduardo Jarquin, who is clinging to his crumbling one-room apartment like a life raft in a storm.

Inside the single room Jarquin shares with a roommate, two beds — a double and a bunk bed — take up nearly all their living space. Jarquin has plugged in a hotplate to heat his food; there is no oven, and splotches of black mold sprout in the shower despite his best efforts to eradicate it.

Koreatown resident Eduardo Jarquin. Photo by Ted Soqui.

Jarquin is short, squarely built with thick salt and pepper hair, and has lived in his room for 11 years. Under L.A.’s rent control law, he pays $900 a month.

So, when his landlord offered him $20,000 to give up his keys and move on, Jarquin agreed, but then changed his mind. “I thought about it with a cool head,” he says. Then, the offer increased — to $50,000 — but Jarquin still passed.

“The money would go like water,” he says.

Jarquin is unemployed, so it would be difficult for him to rent a new place. But even if he did, he’d be unlikely to keep up with rent once the money ran out, he says.

*   *   *

Both of the city’s developer incentive programs — density bonus, which was established pursuant to state law in 2007, and Transit Oriented Communities, which was created after voters approved local measure JJJ in 2016 — let developers make the most of the city’s expensive acreage: They can build more living space on less land, build less parking and offer less open space in exchange for including a percentage of units affordable to low, very low or extremely low income people or those who learn less than $66,250, $41,400 or $24,850, respectively, for a single person. Such units must remain affordable for 55 years. For those who build within a half mile of train stations or major transit stops, TOC allows even denser housing, more flexibility and quick building plan approvals.

“It is simply too good of a deal to pass up,” says Adam Peterson, a senior vice president for the real estate firm the CBRE group, who works in Koreatown.

The program received national attention this year with a study in Cityscape, a publication of the federal Department of Housing and Urban Development. The authors wrote that in some cases, developers preferred participating in TOC to building 100% market-rate apartments.

Since 2015, the density bonus program has generated 35,243 units, while 25,059 have been approved under TOC since its inception in 2017. One in five is affordable.
 


Contrary to the state of California’s theory that more densely built housing will rent more affordably because of economies of scale, in Koreatown, tiny market rate units command big prices.


 
TOC, in particular, “makes significant strides on some of the city’s most important goals, including housing, mobility and sustainability, by producing significant amounts of dense, infill housing near high-quality transit,” wrote L.A. City Planning Department spokeswoman Nora Frost.

“It’s a win-win,” Peterson suggests, for builders and the city, because the more market units that go up, the more affordable housing is created. Maybe the bigger win by far goes to developers, due to the very small number of affordable apartments provided to city residents. Moreover, the city’s production numbers include 100% affordable apartments, which use federal and state funding. Many of these would have gone up anyway without TOC or density bonus assistance. City officials, however, point out that additional density has made some of these projects viable, and note that quicker approvals and other benefits ease the way for building both 100% affordable and mixed income projects. Still, the numbers also fail to take into account the living spaces that were demolished to make way for the new buildings.

For example, the city planning department reports that between 2017 and 2020, of the 25,000 units approved between 2017 and 2020, under the TOC program alone, roughly one in four were affordable. Removing 100% affordable buildings, except units added because of TOC incentives, the number of affordable units drops to slightly more than one in six, or 4,245, compared to the 6,103 the city claims.

More than 779 dwellings — many of them rent-controlled units — were knocked down to accommodate the new buildings, and subtracting those, the city netted just 3,466 new affordable apartments approved under TOC since 2017.

And, contrary to the state of California’s theory that more densely built housing will rent more affordably because of economies of scale, in Koreatown, tiny market rate units command big prices.

*   *   *

Take for example, a six-story sleek black and white building with wood trim at 966 S. Kenmore, a few blocks from Eduardo Jarquin’s home. Under the TOC program, Koreatown’s most prolific developer, Jamison Services, was allowed to squeeze 50 apartments into a space zoned for just 30. The company provided half the parking spots and less open space than the law normally allows. In exchange, the developers reserved five units for extremely low-income people.

Market rate units range from $1,600 for a 530-square-foot studio to $3,199 for a two-bedroom, according to the building’s website.

Nearby buildings built with density bonus incentives like the Audrey, which invites prospective tenants to “live radiantly in the soul of K-town,” command even higher rents — $3,015 for an 895-square-foot one bedroom and as much as $4,000 for a two-bed, two-bathroom apartment.

Before the Audrey was built, a seven-unit apartment building was demolished to clear a path for the new construction.

City records show more than seven times as many affordable units have been permitted than were razed. But that is cold comfort to those who are losing their homes to the program.

Vanessa Dofni’s home of seven years is about to be torn down to make way for a new TOC building. Before she found out about the owners’ plans, she wondered why, with the building practically falling down around her, she couldn’t get them to fix anything.

Last spring, a fire ripped through the apartment downstairs and Dofni’s neighbors packed up and moved. The owners boarded the windows, making the building look abandoned. The building has mostly emptied by attrition — Dofni, 32, her two teenage kids and a 6 year old, and one other tenant remain. When tenants in the rear units moved out, squatters moved in.
 


City records show more than seven times as many affordable units have been permitted than were razed. But that is cold comfort to those who are losing their homes to the program.


 
“I can’t leave my kids alone,” Dofni says. “My anxiety is through the roof. I call the cops and [the squatters] come back the same day.”

For a while, Dofni says, mice overran her apartment and she couldn’t use her oven because they nested inside. Now she can’t reach building managers or owners to ask them to make repairs. (A city housing inspector cited the owners in late April and gave them until May 24 to repair leaky plumbing, deteriorating walls, ceilings and doors, and windows and cabinets that don’t open and close properly. The work has been completed, but the building remains dilapidated.)

Now if Dofni stays in her apartment until she’s forced to move, city and state law entitle her to relocation funds and the right to return to a newly built unit set aside for low-income tenants in the new building. But it could take years, and she and her kids will have to settle somewhere else, likely making it impractical for her to exercise that right.

The owner of the building, Rachel Choi, registered with the California secretary of state as RKC Dewey LLC, didn’t return phone calls. Heagi Kang, an architect with Andmore Partners, whose name appears on the city planning department’s project approval document as Rachel Choi’s representative, said he couldn’t answer questions about the condition of the building. He also declined to ask the Chois to contact Capital & Main. “I am not a messenger,” Kang said.

*   *   *

“These decision makers seem to think poor people are interchangeable,” says Claudia Medina, a landlord-tenant attorney in Los Angeles. “You get rid of these low income tenants and just replace them with other low income tenants.”

Koreatown’s building boom, spurred in part by the city’s developer incentive programs, has encouraged vulture owners, Medina says, who scoop up rent controlled buildings, hoping to take advantage of rising rents by using carrots and sticks to oust longtime tenants — like Eduardo Jarquin and his neighbors.

City records show the owners of Jarquin’s building — Mariposa 20 LLC — paid nearly $843,000 to 28 former tenants in so-called cash for keys move-out incentives. But Jarquin and seven other tenants have resisted the owners’ entreaties and remain in the building in a low-key war with management. Some 30 units were being remodeled even as the old tenants remained, dealing with the noise, dust and debris of construction, says one holdout, 52-year-old Lilia Pineda, an in-home health care worker who is raising two sons in a single apartment.

One of the newly redone units — a 475-square-foot studio — is listed on apartments.com for $1,425 a month.

Pineda has hung two signs outside her door, one telling construction crews that her apartment is occupied and the other warning that tenant harassment is illegal. She said many of her former neighbors took the owners’ offers because they were threatened or intimidated.

Mariposa 20 LLC is run by K3, a limited liability company, which controls at least nine other Koreatown buildings, and at least one in Highland Park. K3 is operated by 20-something brothers Nathan and Michael Kadisha, who paid a total of $4.3 million in move-out incentives to tenants of those buildings between October 2019 and January 2021.

The Kadishas didn’t return calls, but reached at software company Treedom, which is operated by Michael Kadisha, a man who identified himself only as James denied the tenants’ allegations before saying he wouldn’t comment further.

“There is a market for middle class people to pay a ton of money for relatively small apartments,” said Rose Lenehan, a volunteer organizer with the Los Angeles Tenants Union.

And they can make twice as much on any given unit if they force the current residents out.

Those who do leave are unlikely to benefit from the city’s efforts at creating low-income housing. Many are undocumented workers who power the neighborhood’s cafes, night spots and hotels and don’t want to submit official paperwork. But even if they otherwise qualify, the odds are against them because the sheer number of spaces created is so small.

Activists are increasingly pointing to the European model of social housing — publicly owned housing controlled by nonprofits or community groups — to fill the gap. Groups like the Alliance of Californians for Community Empowerment currently back AB 387, a bill authored by Assemblymember Alex Lee (D-San Jose) that calls for an analysis of the state’s affordable housing needs and the role social housing could play.

“It’s indisputable that there is no way for L.A. to meet its affordable housing goal without a dramatic increase in publicly funded housing,” said ACCE Campaign Director Amy Schur.

Meanwhile, tenants Eduardo Jarquin and Lilia Pineda vow to hold on to their rent-controlled Koreatown apartments for as long as possible, because even the $50,000 their landlord has offered in exchange for their keys won’t last long in the city’s current rental market.

 


 

A note about our methodology: Capital & Main determined how many units were added to 100% affordable housing projects through use of TOC density bonuses. We did this by reviewing the city planning department approval letter for each project, which either specifies the number of units added or the density increase TOC provides.

In the case of by-right projects, in which developers used only the TOC incentives specified in city guidelines — either 50, 60, 70 or 80% depending on the project’s proximity to a major transit stop — Capital & Main estimated the number of units created by TOC by applying the average density bonus of 65%.

Copyright 2021 Capital & Main.

 

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