Developer sued by DTLA artist collective over rent-restricted building

Fifteen Group bought the building, whose residents are part of Santa Fe Art Colony, then switched it to market-rate and jacked up rents

TRD LOS ANGELES /
Dec.December 06, 2019 03:49 PM
(Credit: Courtesy Santa Fe Art Colony Tenants Association and iStock)
The building at 2345 South Sante Fe Avenue. (Credit: Courtesy Santa Fe Art Colony Tenants Association via Los Angeles Magazine and iStock)

An artist collective is suing Fifteen Group, a month after the real estate investment firm jacked up prices on their rent-restricted Boyle Heights apartment building.

The Santa Fe Art Colony Tenants Association filed the suit Monday, claiming Fifteen Group illegally refused its effort to buy the property outright after switching the building to market-rate and dramatically raising rents.

The tenants association is part of the Santa Fe Art Colony, which was established in 1986 with city funding. It calls itself L.A.’s only rent-restricted artist-in-residence complex.

Miami-based Fifteen Group purchased the building at 2345 South Santa Fe Avenue last year. The resulting rent hikes took effect Nov. 1, and in some units went as high as three times their previous amount. For example, one unit went from $,1,400 per month to $4,500.

The lawsuit escalates a public battle pitting developer against artists. The Santa Fe Art Colony wants to preserve a piece of a neighborhood that has served as a hub of art studios. The lawsuit also makes use of an arguably obscure part of the state housing code.

According to the lawsuit, Fifteen Group, led by brothers Mark and Ian Sanders, purchased the property for $15 million in June 2018 from the city’s Community Development Agency. It had a 30-year agreement with tenants that expired in 2016, which had set rent restrictions on 85 percent of the units.

After Fifteen Group purchased the property, tenants made an offer to acquire it themselves for $16.8 million.

The tenants association alleges that Fifteen Group demanded $22 million, then did not negotiate in good faith with tenants over finding an agreeable purchase price.

By not negotiating, Fifteen Group allegedly violated state housing law saying that for rent-restricted properties, landlords must negotiate in good faith with “certain entities” who are interested in buying the property and retaining rent controls.

The tenants association is represented by Sheppard, Mullin Richter & Hampton. The white shoe firm usually represents developers and investors in real estate disputes.

Messages left Friday with Fifteen Group, which has a satellite office in Downtown L.A., were not returned.

The real estate investment firm has grabbed headlines for its Miami deals, including making a $20 million profit in 2014 from flipping a FedEx building.


Related Articles

arrow_forward_ios
The coronavirus pandemic could worsen California’s affordable housing crisis

COVID-19 exposes the utter dysfunction plaguing affordable housing development in California

COVID-19 exposes the utter dysfunction plaguing affordable housing development in California
From left: Neil Shekhter and Governor Gavin Newsom (Credit: Kevin Scanlon, Justin Sullivan/Getty Images, and iStock)

Tenant group calls for CA rent strike

Tenant group calls for CA rent strike
Skid Row Housing Trust CEO Lee Raagas and a rendering of the project (Credit: Michael Maltzan Architecture via Urbanize)

Skid Row Housing Trust, Michael Maltzan Architecture plan mass-timber housing tower

Skid Row Housing Trust, Michael Maltzan Architecture plan mass-timber housing tower
EKN Development Partner’s hotel rendering

Developer seeks to build hotel near Echo Park

Developer seeks to build hotel near Echo Park
Los Angeles City Attorney Mike Feuer (Credit: iStock)

City Attorney Mike Feuer will run for mayor. Here’s what it means for LA real estate

City Attorney Mike Feuer will run for mayor. Here’s what it means for LA real estate
Hobart Garden Apartments at 1344 N Hobart Boulevard (Credit: Google Maps)

Reiner Communities pays $48M for 142-unit East Hollywood complex

Reiner Communities pays $48M for 142-unit East Hollywood complex
Steve Ballmer, Mayor James Butts and the Forum (Credit: Jeff Gross/Getty Images, Frederick M. Brown/Getty Images for WE Day, and Ritapepaj/Wikipedia)

Clippers could sail into Inglewood buoyed by Ballmer’s billions

Clippers could sail into Inglewood buoyed by Ballmer’s billions
From left: Renderings of La Veranda and The Chesterfield (Credit: Abode Communities/Urbanize)

Developers land $43M to construct affordable housing projects across LA County

Developers land $43M to construct affordable housing projects across LA County
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...