Oakland hotel sold to affordable housing developer

A federal bankruptcy court judge has issued an order authorizing the sale of a troubled residential hotel in downtown Oakland to an affordable housing developer to rehabilitate it as long-term low-income housing, the Oakland City Attorney’s Office said Wednesday.

The city’s lawyers said the ruling by Judge Roger Efremsky on March 4 about the fate of Empyrean Towers is a landmark decision because it isn’t based simply on compensating creditors but also recognizes the principle of “social responsibility” in bankruptcy law by guaranteeing that the building will be maintained as affordable housing for at least 55 years.

Empyrean Towers is a seven-story building located at 344 13th Street, between Harrison and Webster streets.

City Attorney Barbara Parker said in a statement:

“The court’s order makes it possible to ensure that this property is preserved as part of Oakland’s critical low-income housing stock, and that the horrendous conditions at the Empyrean Towers are remedied.”

Parker added:

 “One of my highest priorities is to enforce laws that protect Oakland tenants’ fundamental rights to healthy and safe housing; the protection of these rights is vital for Oakland to thrive.” Empyrean Towers was temporarily evacuated last May because the water was unsafe to drink.

The residential hotel has 90 units and city officials estimated that about 50 people currently are living there.

Parker said the court will allow the affordable housing developer, Resources for Community Development, to make millions of dollars in urgently-needed repairs and improvements to the property, which she said has a long and tortured history of substandard and inhumane living conditions.

Parker said the property requires major renovations, including structural, electrical, mechanical and plumbing systems.

She said Resources for Community Development has estimated the cost of the project will exceed $10 million.

Parker said the city has cited the hotel’s owners for numerous and serious housing code violations, including significant electrical, heating and plumbing problems.

In 2011, a prior owner of the hotel, which was called the Menlo Hotel at that time, was convicted in 2011 for attempting to hire an arsonist to burn down the building.

Last April the City Attorney’s Office sued the owners of the Empyrean Hotel in Alameda County Superior Court for allegedly maintaining the property in an uninhabitable condition, for allegedly violating Oakland’s Tenant Protection Ordinance and for allegedly operating the property as a public nuisance.

The suit asked for a court order requiring the owners to bring the building into compliance with applicable building codes and appoint a receiver to manage the property and oversee the repairs.

However, the owner declared bankruptcy after the Superior Court appointed a receiver to oversee the property so the U.S. Bankruptcy Court appointed a trustee for the property.

The trustee and the City Attorney later asked the court to authorize sale of the property to Resources for Community Development.