Developer: The Cecil Hotel will be ready for full occupancy by mid-September

After spending tens of millions of dollars to convert the troubled Cecil Hotel in Downtown L.A. into homeless housing, Simon Baron Development has faced headwinds in trying to fill the units. Now a new threat has materialized in rumors about canceling the company’s 99-year lease on the property.

But Matthew Baron, president of Baron Property Group, said he is close to delivering on his promise to fill the historic hotel.

By mid-September, all of The Cecil’s 600 units will be ready for occupancy by formerly homeless people and those with incomes 30 percent of the area’s median, Baron said. These units could be leased by the end of the year. The hotel currently houses 73 people who experienced homelessness.

The project at 640 South Main Street is unusual because it used private capital for the conversion costs to provide homeless housing. In contrast, most homeless projects use public money. Baron Property Group together with joint venture partner Simon Development are the developers.

Baron said that The Cecil Hotel will provide an alternative to public financing models.

“The only tools being used are the publicly financed Low Income Housing Tax Credit and project based subsidy models,” he said. “We’re showing people there’s a way to do it with private capital. It’s not easy, but it’s possible.”

Earlier this summer Baron’s management of The Cecil came under criticism from homelessness advocacy Housing is a Human Right, a division of nonprofit AIDS Healthcare Foundation. The group took out a full-page ad in the Los Angeles Times on July 17 with the headline “City Hall: Fill the Cecil Now!” The ad blamed L.A. leaders for dragging their feet on the homelessness issue while The Cecil and other Downtown Los Angeles buildings remained vacant.

Susie Shannon, director of policy for Housing is a Human Right wrote in an email: “We are hopeful The Cecil will be completely filled by the end of the year. The Cecil has been vacant for years while people experiencing homelessness have died on the streets.”

On the occupancy issue, Baron Property Group has been working with nonprofit Skid Row Housing Trust to develop The Cecil into permanent housing for people who have experienced homelessness.

According to a report last week from LAist, the city agreed to subsidize rents of $1,242 per month, a level that was acceptable to The Cecil’s investors. But then it took months for the city’s housing authority to raise voucher rates to that level for the building’s small SRO units and efficiency studios between 160 and 176 square feet. Also, Baron said The Cecil hasn’t received as many tenant referrals from government agencies and local nonprofits as hoped.

However, once rents were finalized in June, non-profit groups sent over a steadier flow of prospective tenants, Baron said. Property managers have been showing units everyday.

Baron’s announcement of the September date comes on the heels of an agenda item scheduled for the July 26 L.A. City Council’s Homelessness and Poverty Committee. The commission’s agenda, written by L.A. City Councilmember Kevin De León’s office, called for a discussion on allowing the city to enter into a master lease at The Cecil in order to build a temporary homeless shelter. The July 26 meeting was canceled.

Baron had previously talked to De León’s staff about a master lease agreement. However, a temporary shelter was never in the plans for The Cecil, Baron said. Baron also noted that there are no current plans to alter his company’s relationship with the city and that financing is solid for the project.

Baron said that the agenda item would be amended and reintroduced at a later meeting. The Real Deal obtained an email thread where Nate Howard, De León’s policy and capital projects director, wrote that the agenda item would be modified and that The Cecil would be used for permanent housing.

Pete Brown, communications director for De León, said the controversy about the master lease was overblown. “We clearly have a crisis in Los Angeles. (The Cecil) is a wonderful asset and we want to take advantage of it,” he said in a statement.

Long before the conversion project, The Cecil fascinated the public with its grim history. A couple of serial killers lived at the hotel, including Richard Ramirez, known as the Night Stalker. A mentally ill tourist died after drowning in a hotel cistern in 2013 when The Cecil ran the luxe hotel Stay on Main. Several television shows, including an episode of “American Horror Story,” as well as horror movies and documentaries were derived from The Cecil’s history.

Stay at Main was closed in 2014. Baron Property Group acquired the building and its ground lease in a joint venture with Simon Development. In June, Baron signed covenants to devote the entire building to affordable housing for the next 55 years.