Villa Carlotta, an ornate 1920s apartment building in Hollywood’s Franklin Village, is returning to the rental market—and it might have found a loophole in rent control law to set higher rents.
The formerly down-on-its-luck rental property will make its debut in the coming weeks not as a hotel, as was once planned, and not as traditional apartments, but as upscale Airbnb-type lodging.
Once known for its low rents and a tight-knit community of artists and writers, the Villa Carlotta will now be an extended-stay property that caters to affluent visitors as well as longer-term residents.
The remodeled property will continue to be subject to LA’s rent stabilization law, which is designed to protect households with lower incomes from steep rent hikes. But the law might not have much effect under Villa Carlotta’s new business model.
In the city of Los Angeles, most multi-family buildings constructed before 1978, Villa Carlotta included, have limits on how much rent can be raised every year. But when a tenant voluntarily moves out of a rent-stabilized apartment, the landlord can raise the rent by however much he wants.
At Villa Carlotta, apartments will be available for stays of 30 days or more. That means, depending on the length of the leases, the property owner could choose to move the apartments to the free market every month, according to the the Housing and Community Investment Department.
That could even happen at the 20 units that were occupied in 2014 when the owners applied, under the Ellis Act, to remove Villa Carlotta from the rental market. At that time, owner CGI Strategies had plans on file with the city to turn the building into a full-fledged boutique hotel. (It dropped those plans two years ago after failing to win the support of the Hollywood United Neighborhood Council.)
When Villa Carlotta returns to the rental market, which it’s expected to do in the coming weeks, those 20 units will have to be rented at their 2014 rates, plus allowable increases. Those amounts will range from $859 to $1,461, city records obtained under a Public Records Act request show.
But how long will they stay that way? The law doesn’t dictate how long a unit has to be rented out before it can reset to market rate.
CGI, a real estate firm based in Woodland Hills, declined an interview request. But a spokesperson confirmed that “Villa Carlotta is now a fully furnished extended stay rental property to meet the demand in the market.”
Its website says it will provide “five-star service” with the “sophistication of a landmark boutique hotel” and the “modern conveniences of a well-appointed condominium,” “welcom[ing] stays of 30 days or more.”
Rates for a two-month stay will be $6,700 for a studio, $7,800 for a one bedroom, and $11,900 per month for a two bedroom, according to an inquiry from a prospective visitor.
Villa Carlotta sits squarely at the nexus of the housing crisis and Hollywood’s hotel boom. Across Los Angeles, rents are skyrocketing, residents are struggling to keep up, and landlords are removing sorely-needed affordable units from the market. Meanwhile, dozens of new hotels are cropping up across Hollywood, and some of them are annihilating rent-controlled apartments in the process.
In 2014, three days before Christmas, CGI gave eviction notices to tenants of the remaining 20 units (at that time, the occupancy rate was low), a fraction of of the 260 rent-regulated units removed from rental the market the city of Los Angeles that year. That number has increased every year since, ballooning to 428 in 2017, according to the Coalition for Economic Survival.
Those numbers add up year after year. The coalition estimates that since 2001, 3 percent of the city’s rent-controlled housing stock has been removed from the rental market under the Ellis Act.
The tenants who were booted have the right to return to their units at the low rates and under the terms of their original leases. It’s unclear how many will do so.
On May 3, the city’s housing department notified CGI that the company hadn’t properly informed tenants of their rights to return. Michael Wilson, an attorney for CGI, disputes that—he says the company has gone “above and beyond” to work with tenants.
Sylvie Shain is a former tenant who is interested in returning. If she does, she won’t find the same Villa Carlotta that she left behind, as tenants will likely be cycling in and out every month or so.
“There is my personal sense of loss of home and community, and there is the larger public interest at stake with respect to the Ellis Act,” she says. “But the bottom line is... the Carlotta was my home and my heart still lives there.”