LA K-Town Apartment Building Owner Agrees to Pay $2.5M in Lawsuit Settlement

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Real estate investment firm, Optimus Properties has agreed to shell out $2.5 million to settle a federal lawsuit that claims that the company pressured Latino and mentally disabled tenants to leave its rent-controlled buildings in Los Angeles’ Koreatown so it could raise rents, the Los Angeles Times reported yesterday.

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The Century City-based firm and five affiliated limited liability companies that are registered owners of the buildings agreed to operate in accordance with fair housing laws, including making physical repairs to tenants’ apartments as part of the settlement. The buildings at the center of the suit are 1423 South Magnolia Avenue, 837 South Normandie Avenue, 238 South Mariposa Avenue and 756 South Normandie Avenue and 250 South Kenmore Avenue.

Though denying they had done anything wrong, the Times reported the Optimus and the five affiliated LLCs agreed to reserve the next seven vacancies in its buildings for tenants receiving rent subsidies under the federal Section 8 program.

“My clients are looking forward to continuing their commitment to fair-housing practices, while implementing new policies to provide superior protections for residents,” Thomas Citron, the lead counsel for the defendants with Citron & Citron said in a statement about the settlement. He didn’t respond to Commercial Observer’s request for comment.

The 2016 lawsuit was filed on behalf of 15 tenants in five buildings by the pro-bono law firm Public Counsel and the nonprofit law firm Public Advocates Inc..

Deepika Sharma, the lead attorney for the plaintiffs with Public Counsel , told Commercial Observer “We brought this case because we wanted to make an impact in the city of L.A., and we feel this settlement does that because it both protects existing affordable housing, but it also has a novel term that expands the supply of affordable housing by carving out a set aside for seven future vacancies for Housing Choice Section 8 Voucher Holders.”

The 92-page complaint contains a section on each of the 15 plaintiffs, outlining instances of rent increases and eviction notices that it described as unlawful. Four of the plaintiffs were described as people with mental disabilities. The others were Spanish-speaking tenants, either couples with children, single parents or elderly.

The settlement covers four of the initial five buildings cited. In the nearly two years since the case was filed, three of the tenants dropped out, two of the buildings were sold and an additional tenant in a sixth building was added, according to the Times.

The lawsuit alleges Optimus and the LLCs violated state and federal anti-discrimination and fair housing laws by pushing out “undesirable” tenants to facilitate rapid resale by what the defendant firms have termed their “Koreatown strategy”—“a complex scheme in the rapidly gentrifying Koreatown neighborhood of Los Angeles, to purchase buildings, displace the existing tenants, renovate vacated units, market the renovated units at much higher rents to young, childless, English-speaking professionals, and ‘flip’ … the buildings at a massive profit.”

The lawsuit alleges explicit discrimination by representatives for the defendants who “have said, in so many words, that ‘regular tenants’ should not have to live near tenants with mental disabilities with their ‘symptoms’ and ‘issues’; that they will call immigration on Latino tenants who challenged eviction notices; that the smells of Latino cooking are ‘disgusting’ and ‘foul’; and that families whose children use common areas will be evicted.”

Optimus also agreed to accept late rent payments from three disabled tenants who had received multiple eviction notices for delaying payment, which several plaintiffs alleged was part of their rental agreement, up to five days until they received their Social Security checks.