Evicted Tenants in N. California Gain Time
Japanese real estate tycoon Genshiro Kawamoto has agreed to give 570 renters he’s booting from whole neighborhoods in Northern California more time to relocate, but will still sell their houses to make investments in New York.
The tenants in Sacramento and Santa Rosa will get 90 days--triple what’s prescribed by law--before they’re uprooted under an agreement reached with Kawamoto, who last month created an international stir with the evictions and has since been buffeted by legal and political pressure.
In a 30-minute interview Thursday, Kawamoto denied that he is heartless and greedy or that he needs the cash to prop up failed investments elsewhere, although at least one Japanese real estate expert suggests his company “brand” may well be lagging.
The real estate investor blamed California lawmakers for crafting an eviction statute that gives tenants only 30 days.
“I just followed the law,” he said. “This one-month notification period obviously doesn’t make sense for people’s lives. It’s a ridiculous law. The legislators are the ones at fault.”
That said, he stopped short of fully explaining why he was in such a rush to sell.
A spokesman for the international multimillionaire has repeatedly said that the sale of the houses, including another 80 in Hawaii, was necessary to finance a potentially lucrative investment that comes along only once in a generation.
Kawamoto said that investment opportunity is in New York, though he didn’t offer any details about how he planned to spend the money--be it in real estate or the stock market.
In Sacramento, renters and tenant rights groups declared victory after Kawamoto agreed to let them stay put into June. The agreement came after a Superior Court judge this week set a March 20 hearing on an injunction blocking the evictions.
Housing officials say about a third of the residents in the half a dozen neighborhoods owned by Kawamoto are interested in attempting to purchase their homes, and the 90-day reprieve will help give them time to raise money. It will also allow those who wish to move more time to find property in the region’s tight housing market, where the vacancy rate hovers around 3%.
“I’m very grateful,” said Margret Hefley, 75, one of the tenants who joined in the legal fight against Kawamoto.
Private sector and nonprofit groups have rushed to help.
On Thursday, Sacramento-based Nehemiah Corp. of California announced its intent to acquire as many as 40 houses from Kawamoto and lease them back to the neediest tenants. The nonprofit organization then will work with the tenants to purchase the homes or to find another to rent or buy.
So far, only about one in 10 residents have moved, in part because rentals are so hard to come by, local housing officials say. When the 420 tenants in Sacramento were hit by the eviction notices Feb. 9, only seven available rental houses were listed in the local newspaper, said William C. Kennedy, managing attorney for Legal Services of Northern California.
Kennedy and others said that while pressure has been eased on Kawamoto’s tenants, problems remain in a state dealing with both a crowded rental market and ever-higher prices for new homes.
Freshly emboldened activists plan to push anew for legislation requiring that landlords state a valid reason for an eviction. State Sen. Deborah Ortiz (D-Sacramento) is pushing legislation that would give tenants more time in mass evictions.
“I think Mr. Kawamoto has given the tenants’ rights movement the biggest boost we’ve seen in a decade,” Kennedy said.
Such critiques have stung Kawamoto, whose business has in the past largely maintained a low profile in the United States.
He isn’t the greedy, arrogant person some have made him out to be, Kawamoto said, but rather is patient, makes long-term investment decisions, and has amassed a fortune from almost nothing by following his instincts.
“I’m sure there are some evil investors who would have kicked them out already,” he said. “If I filed a lawsuit, they’d have to leave within two weeks. But I don’t want to do that.”
Kawamoto said he was somewhat surprised by the uproar his move engendered.
After his agents began handing out eviction notices in early February, the media latched onto the story, and California politicians jumped on board. Lawmakers ranging from Gov. Gray Davis to U.S. Sens. Dianne Feinstein and Barbara Boxer wrote letters to the Japanese ambassador asking that pressure be put on Kawamoto to relent.
Politicians and journalists, he said, only confused the situation, and he didn’t understand why they had to get involved.
Kawamoto said he was shocked because the United States is a nation of laws, and he was simply following the rules.
“I would understand if this sort of response happened in a developing country, but this is the U.S.,” he said.
Kawamoto said he has sent four teams to interview the residents and explore whether they need the eviction deadline extended and whether they are interested in buying the property.
Kawamoto also disputed rumors that he needs to sell the property quickly to prop up his real estate empire back in Japan.
Though real estate experts in Northern California have pegged Kawamoto’s property as worth perhaps $75 million, the Japanese businessman estimated that his Sacramento-area holdings could fetch about $215 million given the region’s strong residential market.
Details on the size of his privately held fortune or the extent of his losses over Japan’s past troubled decade of deflation and sinking asset values aren’t available.
“I’m not telling,” he said, when asked what his net worth was. “If I disclose it, people get jealous and think I’m arrogant.”
Forbes magazine, in a 2001 ranking of rich individuals, pegged his assets at $770 million.
Other real estate officials in Japan said his Marugen Co. has taken a much lower profile in recent years compared with a decade ago.
“I haven’t heard much of them for awhile,” said Tomonori Fujikawa, president of Aplex Co., a commercial and residential agent. “I don’t think the brand is as strong as it was before.”
Takanobu Kojima, an author and real estate tycoon who has lost most of his empire under a mountain of debt, said Kawamoto is an outsider in Japan’s tightly knit real estate world.
Kawamoto built his empire by focusing on a few areas of Tokyo he knew well, Kojima said, a break with others who expanded from neighborhood to neighborhood as their fortunes ballooned during the late 1980s.
While Kawamoto may plan to invest some of the Sacramento proceeds in New York, Kojima said he expects some of it is needed in Japan, where developers face an increasingly difficult environment.
Land prices have fallen for 10 straight years, on average, and there’s no end in sight, Kojima said.
Kawamoto was born in Kitakyushu City in 1932, the son of a kimono shop owner.
After World War II, he audited classes for a year at prestigious Keio University. He planned to register as a regular student for a second year when his father called him back to Kyushu to run the family business, which he built into a network of Western apparel shops before selling it off in the late 1950s. Kawamoto then turned his attention to real estate, first in his local area and then in Tokyo after moving there in 1972.
From a base in Tokyo’s prestigious Ginza district, he expanded his holdings into the nightclub area of Roppongi, the more upscale Akasaka neighborhood and the Kabuki-cho entertainment district, emerging in a 1989 Nikkei Venture magazine ranking as Japan’s fifth richest individual. By 1991 he was ranked third with $2.3 billion in assets.
Kawamoto said he owns 800 properties in Hawaii and California, has submitted plans to build another 1,050 houses on Maui, and owns 3,500 properties in Tokyo and the Kyushu area where he grew up.
Kawamoto waxed eloquent when asked what made him successful. He looked where others didn’t see value, he said. “I’m the only Japanese to make money in U.S. residential property,” he said.
Kawamoto said he has no plans to stop wheeling and dealing, despite being 70, unmarried, without an heir and in possession of more money than he could reasonably spend. “I keep doing this to maintain my health,” he said. “It’s fun. I like to buy and sell.”
Magnier reported from Tokyo and Bailey from Sacramento. Hisako Ueno in the Tokyo bureau contributed to this report.
