Foreclosure looms for Koreatown affordable housing fiasco

Developer and non-profit investor end up with “plenty of blame to go around”

Renee Kaswan, Jonathan Rose and Eddie Lorin with 167 South Normandie Avenue (KB Visions, Jonathan Rose Companies, LinkedIn, Google Maps, Getty)
Renee Kaswan, Jonathan Rose and Eddie Lorin with 167 South Normandie Avenue (KB Visions, Jonathan Rose Companies, LinkedIn, Google Maps, Getty)

Four months after a dispute between a Wyoming-based charitable foundation and the developer Edward Lorin thrust an otherwise little-known affordable housing project into the public eye, the project’s primary lender has initiated foreclosure proceedings, a move that raises new questions about the property’s future.

The filing, a notice of default, comes while dueling lawsuits over the failed project remain unresolved. The wealthy founder of the Wyoming non-profit, a partner in the project, expressed resignation and disappointment years after a well-intended investment went sour.

“I think there’s plenty of blame to go around,” Renee Kaswan, a former professor and self-described entrepreneur and social rights activist whose foundation loaned millions to the project, told TRD. “There have just been so many insincere attempts to find solutions.”

‘Out of time’

The primary lender, Rose Community Capital, filed the notice in mid-September against Normandie Lofts Ktown LLC, the entity that owns the property, claiming that as of Sept. 12 it was owed just shy of $8 million. That includes $7.6 million in principal that became due in early August, according to the filing, plus several hundred thousand dollars in interest.

Rose Community Capital is part of the Jonathan Rose Companies. An attorney representing the group declined to comment; Jonathan Rose Companies also did not respond to a request for comment.

The property owner entity, Normandie Lofts KTown LLC, was formed in 2018 as a partnership between Lorin’s Strategic Realty Holdings and Kaswan’s KB Visions Foundation. The foundation, based in Jackson, Wyoming, has a stated mission of “empowering the innovators combating our planet’s most challenging problems” and a leadership team that includes Roger Daltrey, lead singer of The Who.

Strategic Realty is the majority partner, with a 54 percent stake. Lorin did not respond to a request for comment on the default notice but in an earlier statement to TRD placed the blame for the failed build, which was intended as a public-private partnership, largely on government agencies.

“Unfortunately, there has been no follow through on commitments made at the state, county or city level to engage with this project to provide the funding,” he wrote. “I’m very disappointed that the political will has failed.”

At the time Lorin also emphasized that he had personally taken on big losses on the project “but the current market conditions continue to erode and unfortunately we are out of time.”

That time is now drawing even shorter. The default filing gives the entity — controlled by Lorin — 90 days to pay its debts before a court could potentially initiate a sale on the five-story, 95-year-old building on Normandie Avenue in central Koreatown.

Multiple lawsuits

At the same time, a bigger legal dispute is winding its way through the courts.

In early June, Strategic Holdings, Lorin’s entity, along with the HAPI Foundation, an affordable housing nonprofit run by Lorin’s wife that is the manager of the Normandie project, filed a complaint against KB Vision and Normandie Lofts KTown LLC that revealed both the project’s long running struggles and the bad blood brewing between Lorin and Kaswan.

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“The company is insufficiently capitalized, and the net cash flow from the apartments at the property is and will continue to be insufficient” to meet its obligations, the suit said. It also put the onus on KB Vision Foundation for failing to change course and repeatedly refusing to either sell or refinance the property.

A few weeks later, in July, KB Visions filed its countersuit, which named Strategic Realty and Lorin along with the HAPI Foundation. That suit accused the defendants of repeatedly deceiving KB Visions over the project’s progress, particularly around promised government funding and grants.

“It wasn’t an out-and-out lie,” Avi Wagner, a lawyer representing the foundation, said at the time. “These were more kind of significant embellishments. And part of that is, you would get these significant embellishments, then you would get radio silence.”

The two cases have been combined, and could see a legal resolution this fall.

Killed by bureacracy

But for everyone involved, the well-intentioned project has turned into a nightmare — and a kind of parable for the difficulties of building affordable housing in L.A.

“It’s amazing how poorly things have gone,” said Kaswan, who four years ago put up more than $3 million as a bridge loan to get the project started.

Kaswan, a veterinary ophthalmologist who took in millions after inventing the chronic dry-eye drug Restasis, which hit the market in 2003, was previously involved in homeless outreach and housing in Malibu. “It made me feel sick,” she said, “that I was living in such a beautiful home and people were living in cars and going through my trash.”

After multiple meetings with Lorin, in 2018 she agreed to bring her foundation in as an investor on the housing plan, which aimed to redevelop the faded Koreatown building into affordable housing at a cost that was far cheaper than typical government-built public housing.

But then, in Kaswan’s telling, the bureaucratic machine kicked in — “the goal posts kept moving,” she said — on issues like elevator compliance and the location of the apartment boiler, and the different state, county and city agencies seemed to undermine each other.

Everything else fell apart, too. Strategic Realty, Kaswan said, was new to the L.A. system and didn’t carefully apply for grants, while Lorin himself was initially heavily involved but eventually grew overwhelmed and gave up. Rose Community Capital was beholden to its profit incentive and only “made minimal effort” to actually help the project. At one point an assistant for then-L.A. County supervisor Mark Ridley-Thomas even advised the project team to donate to his campaign and birthday funds, Kaswan said.

“And we did” — only for the powerful politician to move to the L.A. City Council, a body that suspended him last year amid federal bribery charges related to a ploy to steer county money to USC.

At this point, after four years of headaches and zero units completed, Kaswan seeks control of the property and still has a small amount of hope to execute an affordable housing project, potentially through a sale or with a new partner, she said. But mostly she, too, has given up.

“I just have thrown in the towel,” she said. “I realize I donated $3.3 million to a cause I believed in and it evaporated in bureaucracy.”

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