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Tenants Protest Upcoming Eviction from Rent-Controlled Units

Steven Luftman and his partner moved into an apartment in their rent-controlled building in the Beverly Grove area 18 years ago. Now they and 16 other tenants of two neighboring buildings on Flores Avenue are being forced out to make room for million-dollar-plus condos — by a landlord who chairs a state agency tasked with creating affordable housing.
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June 3, 2015

Steven Luftman and his partner moved into an apartment in their rent-controlled building in the Beverly Grove area 18 years ago. Now they and 16 other tenants of two neighboring buildings on Flores Avenue are being forced out to make room for million-dollar-plus condos — by a landlord who chairs a state agency tasked with creating affordable housing.

“To find anything close to what we have in our neighborhood would be a third more,” Luftman told the Journal. 

He currently pays less than $2,000 for his rent-controlled, two-bedroom apartment, which he has been ordered to vacate by June 5. According to Zillow, rentals for a two-bedroom range from $2,100 to $7,500. 

The buildings’ owner, Matthew Jacobs, is chairperson of the California Housing Finance Agency (CalHFA), whose mission is “to create safe, decent and affordable housing opportunities to low- and moderate-income Californians.” Gov. Jerry Brown appointed Jacobs, a principal at Bulldog Partners, to the board in 2012 

Luftman said Jacobs is “a hypocrite” for sitting on a board dedicated to creating affordable housing while simultaneously evicting current tenants of rent-controlled units he owns.

“We find it pretty outrageous. Here is a person who is supposed to be producing or helping to create affordable housing for the people of the state, and in actuality what he is doing is knocking down existing affordable housing so that he can build luxury units,” said Larry Gross, executive director of the Coalition for Economic Survival, a local tenants’ rights group. 

Jacobs, a member of the Moriah Society of real estate professionals at American Jewish University, did not return multiple phone calls from the Journal. Neither did his lawyer, Rosario Perry. According to a KPCC report, though, Jacobs said his plans — which he still intends to pursue — will add housing units to the market.

A 1986 California law called the Ellis Act gives landlords such as Jacobs the right to evict residents of rent-controlled apartments if they plan to leave the rental business. The law was originally intended to assist small mom-and-pop landlords, but developers throughout California increasingly have used the law to evict tenants and then flip the properties for profit. 

Between 2001 and 2014, Los Angeles lost nearly 19,000 rental units to the Ellis Act, according to the Los Angeles Housing and Community Investment Department. The number of units emptied through the Ellis Act has risen each year since the recession in 2009, reaching 725 in 2014. Los Angeles has a vacancy rate of just 3.2 percent, according to real estate data firm Reis Inc.

“The Ellis Act is really about giving landlords a safety valve,” said a spokesman for the California Apartment Association, which declined to comment on the particulars of this case. “When rent control makes it too onerous to stay in the rental business, which can be the case in rent-controlled cities, the Ellis Act is a necessary law so that they are not forced to stay as landlords.”

In this case, Jacobs plans to tear down nine existing rent-controlled units and build 11 four-story, single-family condos in their place. Jacobs has similar plans for a building in the Fairfax District. 

The two Beverly Grove buildings Jacobs plans to raze were constructed in the 1930s and house long-term, low- and middle-income tenants. 

Although the Los Angeles Department of City Planning estimates that 5,300 units of low-  to moderate-income housing need to be built annually to keep up with demand, a September 2014 study from UCLA’s Luskin School of Public Affairs found the city has averaged far fewer — roughly 1,100 units — per year since 2006.

Luftman said he has not decided whether to comply with the June 5 eviction deadline, though right now he is pushing back. He and his neighbors and friends have protested in front of Jacobs’ Fairfax District home and other of his properties, though they have not seen Jacobs during that time.

As a result of Jacobs’ actions, Gross has called on the governor’s office to remove Jacobs from his role at CalHFA — his term continues through Sept. 26 — but it seems unlikely he will prevail. 

“Under statute, term appointees cannot and would not be removed without legal cause,” Evan Westrup, a spokesperson for Brown, wrote in an email to the Journal. The governor’s office declined to comment further on the situation. 

Melissa Flores, a spokesperson for CalHFA, said the agency has no hand in the matter.

“CalHFA is not involved in Mr. Jacobs’ private development business, as we wouldn’t be with any of the members of our board. Our board of directors are not employees of the agency,” she said. “During his term, he has definitely supported our mission.”

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