OAKLAND — A lawsuit filed Thursday claims that low-income tenants of California Hotel are being illegally evicted from their studio apartments as the owners of the 150-unit complex attempt to violate agreements with the state and city by remodeling the decrepit building to attract a higher-paying clientele.
"They care nothing about these people," said John Murcko, an attorney representing 75 tenants of the building. "These people will be out in the streets, and they can't take care of themselves."
The lawsuit was filed by Murcko and Stephen Perelson against Oakland Community Housing Inc., Cahon Associates, John Stewart Company and a number of individuals who run those companies.
Eleanor Piez, community relations manager for Oakland Community Housing Inc., declined comment Thursday. Others named in the lawsuit either declined to comment or could not be reached for comment.
Not only does the lawsuit claim an illegal eviction and a violation of a state contract, it also claims that the building's owners have purposely failed to repair deficiencies and allowed decrepit conditions to exist in hopes of forcing tenants out.
The lawsuit seeks an injunction to prevent the owners from evicting tenants, and it seeks $2.5 million in damages related to the conditions in which the tenants have been forced to live.
"The place is terrible," Murcko said. "They have bed mites, broken windows, mice, roaches and garbage piling up everywhere."
Murcko said the building's owners began ignoring maintenance and tenant complaints last year when it stopped offering apartments for rent. Since then, roughly 75 tenants found new homes, leaving 75 still living in the building.
Those 75 tenants were given notice June 20 that the building would be closed on or shortly after July 15. In the notice, Cahon Associates cited an operating deficit as a reason for the closure.
"Cahon Associates, Inc., the owner of the building, cannot afford to hire another management company to operate the California Hotel or subsidize the operating deficit that exists at the property," the notice states. "Tenants should begin to look for another place to live and plan to vacate the building."
Current tenants pay on average $500 a month for their studio apartments, each of which has a private bathroom. Some units have private kitchens, but community kitchens are available on every floor. California Hotel, at 3501 San Pablo Ave., is advertised as a residence for "very low-income" people on Oakland Community Housing's Web site.
Murcko believes Oakland Community Housing and the other owners want to remodel the hotel to make it attractive to tenants using Section 8 vouchers, a move that will result in the company being able to charge a higher rent.
But Murcko claims in the lawsuit that Oakland Community Housing and Cahon Associates cannot follow through with that plan because it signed a deal with the state in 1990 agreeing to keep the building available for "very low-income" tenants for 30 years. In exchange, the state gave Cahon Associates $7 million in tax breaks.
Under the contract, a low-income tenant was defined as anyone earning less than 60 percent of the area's median gross income.
In addition, Cahon Associates received a $4.8 million loan in 1990 from the Oakland Redevelopment Agency to rehabilitate California Hotel and make it available to tenants earning less than 80 percent of the area's median gross income.
While the company's agreement with the state allows it to rent apartments to tenants with higher incomes, it can only do so if it is operating the property at a loss.
Murcko, however, claims that Oakland Community Housing and Cahon Associates are making money on the venture. With 150 tenants paying on average $500 a month in rent, Oakland Community Housing and Cahon Associates should be receiving at least $75,000 a month in rent, Murcko said.
"Based on information and belief, the operating expenses for the California Hotel were under $75,000 a month, including expenses for the managers, security, desk clerks, janitors, maintenance, garbage disposal, electricity and water," the lawsuit states.
Reach Paul Rosynsky at email@example.com or 510-208-6455.