Derelict Luxury Hotel Reborn as Affordable Housing in Los Angeles

Wilshire Boulevard, stretching from downtown Los Angeles through Beverly Hills to the Pacific Ocean, is one of the world’s great streets. It is a street renowned for luxury. Who would expect to find innovative affordable housing on Wilshire? Now one of Wilshire’s historic buildings, the former Sheraton Townhouse Hotel near downtown Los Angeles, has been reborn as just that: highrise affordable housing.

Skepticism meets imagination and determination. When developer Rob MacLeod first approached the Los Angeles city government about the 14-story Townhouse project, both its highrise and affordable aspects raised questions. City officials wondered whether low-income families accustomed to lowrise Los Angeles, where relatively few people on any income level live in highrise apartments, would be willing to live in vertical housing. People do not want their children to have the run of a highrise, they reasoned, and kids want yards to play in.

The rich heritage of the Townhouse building also made it hard for the city to envision it as affordable housing. The landmark Townhouse, built in 1929 as a luxury apartment building, once hosted movie stars. It had one of the city’s first Olympic-sized pools. Later, it became a luxury hotel for many years until shifting fashions left it to decline.

Now, thanks to the entrepreneurial energy of MacLeod, the Townhouse again has become an apartment building. It has 142 one- to three-bedroom units for low-income seniors and families with children, renting for $400 to $700 a month.

The Townhouse caught MacLeod’s imagination when he saw a newspaper article on how the building was going to be torn down. Instead, MacLeod had a vision. “It will become the premier low-income development in the West,” he recently told the Los Angeles Times. “It will offer amenities unavailable elsewhere, and its good people and their good vibes will radiate to enhance the entire Lafayette Park neighborhood.”

As MacLeod’s vision has become reality, the Townhouse, an $18 million project, has become the center of a square-block project, led by the MacLeod Partnership, that includes stores and offices. MacLeod’s partner is the Pacific Asian Consortium in Employment, and the Los Angeles Housing Department (LAHD) has loaned $5.7 million to assist with permanent financing. The Townhouse opened for occupancy last December.

A pathbreaking project. With the rebirth of the Townhouse, the city’s initial skepticism has been transformed into enthusiasm, and the project is beginning to be seen as pathbreaking. In fact, other similar adaptive-reuse projects are beginning in and near downtown LA. As the city’s already legendary sprawl and congestion have continued to worsen, walkable neighborhoods like those around the Townhouse are becoming attractive.

One person who was involved with the project on behalf of the city, former LAHD finance officer Jean Mills, explained its significance. As she told the Los Angeles Times, she saw “the uniqueness of MacLeod’s vision. He offered so many things unusual in urban Los Angeles housing: the huge swimming pool, a charter school onsite, a complete vision for how he wanted the place to look and to enhance the lives of tenants.”

Jumping through hoops, making an impact. Before MacLeod and his partner could get their job done, however, they had to jump through more financing hoops. But jump he did. MacLeod was able to qualify for an LAHD residual receipts loan because he demonstrated that he could find retail tenants. He also was able to get California state low-income housing credits. Capital Vision Equities coordinated permanent financing and tax-credit investors for the project, and the Federal Home Loan Bank’s Affordable Housing Program also participated.

Since the project’s completion, MacLeod is beginning to see the positive impact he first envisioned. “We believe the resurgence of the Townhouse will have an extremely wholesome effect on the surrounding neighborhood. Good things are beginning to happen on this stretch of Wilshire,” he told Design/Build Business magazine. For instance, the Southwestern School of Law recently renovated the nearby art deco masterpiece, the Bullocks Wilshire building, to use as its library. “This is going to be an area that truly reflects old Los Angeles as well as the new Los Angeles.”

For city officials, the questions have been answered, and they have come to share MacLeod’s vision. “The Townhouse is an excellent project, which not only fills a critical need but also reflects the city’s concern for the preservation of landmark buildings,” LAHD finance officer Bill Harris explained to Design/Build Business. “The city will be increasingly concentrating on renovation of existing buildings rather than undertaking construction of new buildings.”

For more information, contact: Roberto Albelda, Los Angeles Housing Department, 111 North Hope Street, Los Angeles, CA 90012; e-mail: ralbelda@lacity.org.