Condo Pioneers Bitter as Spring Street Rebirth Fails : Housing: Area’s decay worsens, say residents of CRA-backed units. They contend the city let them down.
When musician Forrest Pierson and his wife, salon owner Ratana Tanasaphaisal, moved into a fifth-floor condominium on downtown Los Angeles’ Spring Street five years ago, they believed that the panhandlers and drug dealers would soon be swept away, and that the old, boarded-up office buildings would fill with workers, interesting shops and cafes.
But the street’s only upscale eatery closed two years ago, as did a promising new nightclub. Most of the venerable Beaux Arts-style office buildings still display For Lease and For Sale signs. And the transients and other street people are as visible as ever.
Growing fainter by the day are the young couple’s hopes for the neighborhood’s rebirth. Five years after moving into their one-bedroom unit with a courtyard view, their dream of sophisticated living on Spring Street remains just that--a dream.
Instead of enjoying a revitalized urban landscape, they feel trapped in the ongoing blight. They worry about their $100,000 investment. And they struggle with a sinking feeling that they have been betrayed.
Now, the husband and wife, who have a 1-year-old son, want out of this lonely downtown frontier. And so do most of the 31 other condo owners in their complex.
Their plight is, on one hand, a tale of the perils of homeownership in an unsettled urban outpost. It also illuminates the troubles of the city Community Redevelopment Agency, which sold them on the vision of a new Spring Street.
Pierson, Tanasaphaisal and the other residents plunked down from $70,000 to $135,000 to buy condominiums at Premiere Towers, located at 6th and Spring streets. The 12-story, $12-million redevelopment project, which opened seven years ago, was described by the CRA as “a unique alternative for middle-income households desiring downtown living.”
It was part of a grand design to breathe new life into a street that was known as the “Wall Street of the West” for half a century, until the 1970s when new skyscrapers on downtown’s west side lured the big banks and brokerage houses away.
Built in two adjoining, historic landmark structures--the E. F. Hutton and California-Canadian Bank buildings--the redevelopment project had 120 units, all of which were to be sold as condominiums.
“We felt there was a market for condos there,” said John Maguire, the CRA’s deputy administrator of housing services.
The units were aimed at young professionals, particularly those with jobs downtown. On 18 units, the CRA provided “soft” second mortgages that made the lower-priced condos affordable for people earning about $33,000 a year.
Premiere Towers attracted reservation deposits of $2,000 for each of the 120 units within a week of the first newspaper advertisement in 1981, according to a CRA document.
However, Maguire said, actual sales fell “far short of expectations.” One reason was a sharp downturn in the condo market throughout Los Angeles County.
The other major factor was the glacial rate of Spring Street’s renaissance. The Ronald Reagan State Building, which was expected to give the street a major boost, was several years behind schedule. Meanwhile, downtown’s homeless population was proliferating and drifting onto the street.
Now, the upper floors of half of the office buildings between 4th and 7th streets--the blocks of Spring which comprise a National Register Historic District--are mostly unoccupied.
Both the Stock Exchange nightclub, which opened in 1987 in the architecturally imposing former home of the Pacific Stock Exchange, and Irwin’s, an upscale restaurant that had been aimed at the City Hall crowd, closed within the last two years.
And the CRA’s most expensive endeavor on the street, the Los Angeles Theatre Center, has teetered on the brink of financial ruin, surviving largely on city loans. Aside from Premiere Towers, the street’s only other housing is located in a few transient hotels and a senior citizens’ project.
With pressure mounting from the lender to pay off $9 million of the $12-million construction loan the agency had guaranteed for Premiere’s developer, the CRA board agreed in December, 1984, to sell 36 units to an investment group headed by Beverly Hills accountant Murray H. Neidorf. The next year, the condos were still not moving, CRA officials say, so the agency sold the same investment group an additional 52 units. All 88 units would be operated as rental apartments.
The other owners dispute the CRA’s claim that individual buyers could not be found for the remaining units, and ascribe darker motives to the agency. At the very least, they argue now, the CRA had a responsibility to inform them of the bloc sales. CRA spokesman Charles Sifuentes said he could neither confirm nor deny that any notification occurred.
With three-quarters of the complex operating as rental housing, the owners learned--belatedly--that their resale and refinancing prospects had been ruined.
“Basically, we’re stuck here,” said Eric Egaas, 31, who works in a downtown bank. “We would have been better off putting our money in a savings account.”
Most of the owners have harsh words for the CRA.
“Everything was going to be wonderful,” said Rivalee Korb, 59, who moved to Premiere Towers to end a daily commute from Van Nuys. “And then they (CRA) totally abandoned us.”
Another sore point with the condo owners is the fact that Neidorf, by virtue of his investment group’s holdings, dominates the homeowners board. The other owners are particularly upset about steep hikes in condo association fees--now at $325 a month--which they complain have gone mainly toward upkeep of the rental units.
A CRA agreement to provide up to $1.8 million to cover the rental units’ operating deficit angers them, as well.
“We’re the ones they (CRA) lured down here. They should be subsidizing us,” says retiree Bette Penzell, 67, one of the leaders of the condo owners group.
Neidorf, in a recent interview, said that he has paid for major improvements in the building that have benefited all the residents.
“You have 30 or 32 owners who feel they have been disenfranchised by my ownership of 88 units and who would like to have one-man, one-vote (rule). That is not reasonable,” he said.
To ameliorate the situation, the CRA recently offered to buy back the 32 condominiums at their original purchase price or the current market rate, whichever is higher.
“We recognize that the results of our actions have put (the condo owners) in an untenable position,” said CRA board chairman Jim Wood.
The buyout plan, which must be approved by the City Council, would cost $3.2 million, the CRA says.
The agency is negotiating with Neidorf to sell him the 32 condominiums. As part of the agreement, in about 18 months Neidorf would sell all 120 units to a nonprofit corporation, which would operate the complex as low- and moderate-income rental housing for several years.
After that period of time, the agency might consider converting the apartments back to condos, if market conditions improve, CRA operations director Steve Valenzuela said.
Most of the condo owners say they probably will accept the buyout offer and move. But many insist that they will do so with deep regret.
Part of the reason is that they believe the CRA should pay them more than their purchase price, even though it is likely to be higher than the market rate, given that condominiums in downtown have not risen in value. The pioneers, as the condo owners call themselves, also would like relocation assistance and a refund on condo association fees.
Some of the owners openly resent the renters. Similarly, some renters say they have little sympathy for the condo owners, but are full of compliments for their Spring Street abode.
“We haven’t lived anywhere as quiet and with as good a feeling of security as here,” said Stanley Yon, 41, a real estate consultant, who lives with his wife and two children. “That is due to the management of the building. And to Ray Post,” the affable and resourceful doorman for the complex.
Even many of the pioneers agree that, despite the aggravation and uncertainty they have experienced, there is much to enjoy of life in the shadows of downtown’s skyscrapers.
On a recent morning, the window of Bette Penzell’s cozy one-bedroom unit was wide open, allowing city sounds to drift in--the whir of a helicopter, the whooshing of buses, the honking of horns.
“I find the noise very comforting,” said Penzell, who lives alone in a third-floor unit facing Spring Street.
After more than 30 years in “the barbecue belt” of the San Fernando Valley, where she raised her family, Penzell wanted a radical change--and found it on Spring Street. She prowls for bargains in the nearby garment district, hops the DASH bus to explore Chinatown or reach a favorite restaurant.
“I’ve gone on 30,000-mile voyages,” said Penzell, an avid freighter traveler, “and I always say, why did I go so far away when I didn’t see anything more interesting than what is in my own neighborhood?”
Rivalee Korb, who sells public notice advertising, was attracted to Spring Street because she was tired of commuting. “By the time I’d leave the Civic Center and get back to Van Nuys . . . I was a raving maniac,” she said. “I come from New York City, and living downtown didn’t seem that out of the ordinary to me.”
But now Korb calls her neighborhood “scuzzville.” She complains about poor maintenance of the condo building, drug dealing and other questionable, if not illegal, behavior she has observed in and around Premiere Towers.
Felicia Michell, who lived in the building until last month, recalled that when it first opened, “you could take the trash out and see five or six drug deals” in the back alley.
From their windows, residents would fight the drug dealers by throwing water on them. Finally, they managed to have the alley fenced off.
Other harsh realities of urban street life are encountered on a daily basis.
“You always see people going to the bathroom,” said Eric Egaas, the banker, who has lived at Premiere Towers since 1984. “Just the other evening I saw a guy on the corner by the new state office building wearing a hospital gown with an IV hanging out of his arm. He was screaming that he was just out of the hospital. That kind of topped it.”
Egaas, who says he is weary of downtown now, plans to find another condominium elsewhere.
Pierson, the musician, said he would prefer to stay in the downtown area. But now that he has a child, he probably will look into buying a house, perhaps in Silver Lake.
Spring Street “doesn’t feel like a neighborhood,” he said. “When I lived in New York City, I knew the person who cleaned clothes and ran the deli up the street.
“You needed a lot of insight to make this a vibrant area. I am real angry with the CRA.”
Such disillusionment is felt in other downtown outposts, as well. In South Park, for instance, where the CRA helped build the Skyline condominiums and the Metropolitan apartments several years ago, ground-floor retail space is still covered with signs promising pharmacies, cafes and other services that have yet to materialize.
One lesson CRA officials say they have learned from Premiere Towers is that downtown is not ready for wide-scale homeownership. Thus, most of the housing now planned will be rental.
Some critics cite Premiere Towers as an example of the agency’s misguided strategy for downtown.
The CRA “long had this vision of a downtown where there were people living in a middle-class community,” observed city Affordable Housing Commission Chairman Chuck Elsesser. “They spent an extraordinary amount of money trying to make that happen.” But middle-class people “just don’t want to live there.”
Ironically, the CRA is making it possible for the condo owners to bail out just as it embarks on a new effort to revitalize the street.
Premiere Towers’ pioneers acknowledge that choosing to live downtown may make them unusual. But, they plead, it shouldn’t make them victims.
Maureen Graybeal, who runs a downtown office- and school-supply business with her husband, Richard, says she suspects that some city officials view them as “a bunch of yuppies trying to make money off the city.” That perception is way off the mark, she insists.
“We are downtown people. We are here, and we all like it. We really do want to stay. We can’t afford Skyline. We can’t afford Bunker Hill.
“All we want,” she said, “is our slice of the American dream.”
