Contact: Jennifer Cuevas
213-375-8714
jen@jeneratemedia.com
Fifteen Group Appraises Property $7M over Original Purchase Price
Just One Year after Ownership, Without Significant Site Upgrades
Los Angeles, Calif. (July 31, 2019) — Miami-based Fifteen Group — which purchased the rent-restricted, Artist-in-Residence buildings known as the Santa Fe Art Colony (SFAC) in June 2018 — has refused to sell the property to the Santa Fe Art Colony Tenants Association (SFACTA). Rent restrictions expire in November, and under state law, SFACTA has a right to seek to purchase the buildings to preserve affordable rents. SFACTA submitted a fair market value offer in April that met all statutory requirements, which obligated Fifteen Group to negotiate a purchase price in good faith within 90 days. In violation of state law, Fifteen Group refused to negotiate in good faith or meaningfully communicate with the Tenants Association regarding the purchase offer. Instead, in a July 25, 2019, email, Fifteen Group attorney Amy Forbes rejected the $16.8 million offer and demanded $22 million — 47 percent more than the amount Fifteen Group paid for the property a year ago. The response was based on a secret alleged “appraisal” that Fifteen Group obtained contrary to the letter and spirit of state law. SFACTA has not received a copy of the appraisal and does not know if it took into account the City of Los Angeles Conditional Use Permit (CUP), which limits building leasing to artists. Fifteen Group’s leasing to non-artists over the past year may already put it in violation of the CUP.
Nevertheless, SFACTA remains ready, willing and able to purchase the property at fair market value if Fifteen Group will come to the table. Fifteen Group’s refusal to negotiate the purchase price in good faith or, alternatively, record a declaration that Fifteen Group will not sell the property for five years, as required by Government Code Section 65863.11, puts it in violation of state law. The law is enforceable in Court, and SFACTA is exploring its options but prefers a negotiated purchase of the Property.
Devastating rent raises announced by Fifteen Group in April 2019 are about to destroy the Santa Fe Art Colony, a vital artists’ live/work complex in industrial downtown LA. Rent restrictions placed on the property when it was developed with public funds in 1986 expire November 1, 2019, and Fifteen Group has issued notices of rent increases to tenants that in many cases roughly double rents — which will displace many residents from their homes. “Fifteen Group is on the brink of destroying the last large community of working fine artists left in the Arts District. What does it say about LA to have an ‘Arts District’ without artists?,” said SFAC Tenants Association President, Sylvia Tidwell.
To save the Santa Fe Art Colony for current and future artists, SFACTA made the bona fide purchase offer, which the Affordable Housing Preservation Law sanctions when rent restrictions expire.* The tenants’ bid, made in good faith, is a groundbreaking test of the newly strengthened statute, designed to stem the loss of affordable properties amid the current statewide housing crisis. While the law doesn’t require Fifteen Group to sell the property, the Tenants Association urges it to do so, to allow for the preservation of this irreplaceable cultural institution. If the owner chooses not to sell, the State law has a provision that prevents it from selling the property for five years.
The Santa Fe Art Colony, located at 2345–2421 S. Santa Fe Avenue, Los Angeles, was established with public funding in 1986 to develop the creative life of Los Angeles. Through the Community Redevelopment Agency of Los Angeles, the City committed to fostering artists by providing rent-restricted studio spaces, thereby establishing Los Angeles’ only rent-restricted Artist-in-Residence property and the largest government-sponsored artists’ community in California. For over 30 years, its residents have played a critical role in shaping LA’s cultural landscape and contributing to the renaissance of downtown, now a primary driver of the city’s economy.
The Art Colony’s historic 1916 brick buildings were once an upscale furniture factory built on a three-acre plot where a famous boxing arena had burned to the ground. The factory buildings now house 72 artists who host a yearly fine-arts “Open Studios” event that has attracted tens of thousands of visitors to DTLA, providing sustained outreach to the public. SFAC is home to a dynamic community of artists at all career stages that is gender-balanced, intergenerational, and ethnically diverse.
The SFAC Tenants Association is calling on the public to take action by contacting these key elected officials to support its purchase bid, helping to preserve this important cultural asset: Mayor Eric Garcetti, Councilmember Herb Wesson, Councilmember José Huizar, and Councilmember Marqueece Harris-Dawson.
###
* California Government Code sect. 65863.11, as amended by AB 1521