As the rush to gentrify downtown San Diego by evicting low-income residents continues apace, the specter of lobbyists pushing clients' projects through city hall and picking up sizable public subsidies is growing.
A prime example is that of the 1920s-era Plaza Hotel on 4th Avenue, between C Street and Broadway, which pensioners and others of modest means have long called home, in some cases for 25 years.
At the center of the controversy is the law and lobbying firm of Procopio, Cory, Hargreaves & Savitch, whose employees, campaign finance records show, have provided a total of $94,400 for city politicos over the past decade, including $10,925 to Republican mayor Kevin Faulconer, $8949 to GOP councilman Chris Cate, and $4600 to Democratic city attorney Mara Elliott.
Procopio, per a March 13 disclosure by the firm, was retained by Hawkins Way Properties, LLC of Beverly Hills to lobby city hall for so-called Single Room Occupancy "conversion permits and construction permits" for the 185-unit Plaza building, in the process allowing the landlord to toss current residents into the street at public cost.
The saga of tenant and taxpayer woe began little more than a month earlier on February 1 with the sale of the Plaza for $13.5 million to a Los Angeles-based entity called 1037 4th Avenue, LLC.
An address listed on the deed is that of Hawkins Way Capital, which according to the firm's website, is a financial management company for wealthy investors, "focused on value-added and opportunistic investments across various asset classes and geographies."
Among its trendy lodging ventures is a chain called FOUND Hotels. "This is our first venture into a shared room, hotel concept, appealing specifically to the aspirational traveler and millennial nomad," FOUND chairman Lew Wolff told Hotel-Online.com last April when he opened FOUND Chicago – River North.
"The FOUND approach blends the affinity for travel with rising generations who live life with a free-spirited attitude in a shared economy. FOUND Hotels takes the classic shared room and private room models and modernizes it to a new frontier of communal hospitality experience.” A FOUND Hotel is already open at 505 West Grape Street in Little Italy.
Last year Hawkins Way became enmeshed in controversy when it bought the Sutter Hotel, one of Oakland's last single-room occupancy hotels, according to a June account by the East Bay Express.
"There was a concerted effort to remove people,” to make way for an upscale remodel, said Michael Wiehl, a Sutter resident evicted by the hotel's prior owner before it was sold to a Hawkins Way-related entity for $12 million.
In the Plaza Hotel's case, agents for the new property owner "issued a 60-Day Notice to Terminate Tenancy to all 185 residents of the Plaza Hotel," on February 1, according to a March 9 San Diego Housing Commission report.
After being contacted by commission lawyers, the owner "agreed to rescind the 60-day notice and is now working with Housing Commission staff on the proper process for moving forward with the [Single Room Occupancy] hotel conversion."
That's when the public purse came into play.
Under city law, ninety-day-plus residential tenants of the building get "two months’ rent plus a rent rebate equal to a maximum of $210," according to the document. Those with less time will receive "technical assistance" from the commission "to help locate decent, safe affordable housing opportunities."
The building's owner is required to come up with some relocation cash, according to the staff report, but that amount, not specified in the document, wasn't deemed adequate.
"It is anticipated that the relocation assistance that is required to be issued to the residents under the SRO ordinance regulations will be insufficient to meet the residents’ need to locate and secure other comparable housing," officials wrote.
"Approving this action will authorize the Housing Commission to expend $500,000 from Housing Commission local unrestricted Real Estate Property Reserves, which will increase the approved 2019 budget by that amount."
“We have a housing crisis, a homeless crisis, and this is the right thing to do,” Jeff Davis, chief operating officer for the Housing Commission, told the Union-Tribune following a 6-0 commission March 8 vote to approve the deal. Procopio did not respond to requests for information.