Robin Kaiser-Schatzlein
Joselin Hernandez’s family was offered between $22,000 and $23,000 to move out of their rent-controlled apartment.
This article appears in the December 2023 issue of The American Prospect magazine. Subscribe here.
In May of 2020, Joselin Hernandez was sitting alone in the rent-stabilized apartment she shared with her mom, sister, and brother in Los Angeles’s Highland Park neighborhood when she heard a loud thud. It was unusual but not necessarily surprising. Since her apartment building had been purchased by a corporate landlord called K3 Holdings in late 2019, her family had endured a torrent of so-called “cash-for-keys” offers that promised a big payment to move out. But the family turned down the advances, and soon afterward they were enveloped by construction noise, as the new landlords began construction simultaneously on the apartments above and on both sides of their home, whose tenants had taken the money.
Hernandez was in school at the time, studying to be a social worker for children with autism, and working from home because of the pandemic. The construction noise was so loud she couldn’t hear people on phone calls. “It sounded like they had bulldozers going on. Walls were vibrating,” she told me recently. When she heard the thud, she went to the bathroom and saw debris all over the floor. Her mom told her to take a picture. That’s when she saw the construction worker’s leg coming through the ceiling.
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K3 Holdings is a company owned by the 20-somethings Nathan and Michael Kadisha, heirs of the Texollini textile fortune in Long Beach. K3 Holdings emerged as a homebuying force in 2019, and tenants say they enacted a playbook across their portfolio of 40 properties, using myriad tactics to entice their rent-controlled tenants to exit their apartments, and when that didn’t work, ask tenants to leave. Then they could re-rent the apartments at higher rates.
This model can work thanks to both loose enforcement of housing laws and dangerous financial incentives for landlords to exploit their tenants, coupled with a hot market. “The usual economic incentive for speculators to buy rent-controlled property and ‘cleanse’ it of rent control through harassment or eviction has grown dramatically as rents have increased by huge amounts,” says Gary Blasi, a professor of law at UCLA. Such a strategy eliminates some of Los Angeles’s most affordable housing with some of its most vulnerable populations. Rapidly rising values for housing creates plenty of homelessness, but it also can create dangerous living conditions for people with housing too.
In the case of K3, the harassment was acute. According to multiple tenants I interviewed, tenants in their buildings across the city were visited daily by freelance “relocation specialists,” who offered them cash-for-keys agreements. Some non-English-speaking tenants were asked to sign paperwork in English that doubled their rent. Live-in managers were let go, replaced with off-site substitutes, and the conditions worsened. As families and renters took buyouts, the firm began construction, often without permits, on multiple units at once. Company spreadsheets confirmed by depositions of K3 staff tracked which apartments were paying below-market rent and by how much. Tenants who complained or took action against the company would often receive a slew of three-day eviction notices. K3 Holdings did not respond to a request for comment.
PRIOR TO K3’S ACQUISITION, THE HERNANDEZES’ BUILDING was occupied by mostly Latino families, with a pool in the courtyard that kids splashed in all day, their parents relaxing in chairs looking on. Joselin Hernandez’s family moved to Los Angeles in 1998 from Guadalajara, Mexico; as a kid, she and her parents settled into the quiet rent-stabilized apartment building in Highland Park, which is between downtown L.A. and Pasadena. The boxy two-story building looks a lot like a mid-century motel, with palm trees flanking the entrance and a breezy baby-blue-and-white color scheme adorning the stucco and outdoor walkways.
In the more than 20 years that they lived there, the family had no problem with management. “The building was well taken care of,” Hernandez says. Families generally kept to themselves. Then, in March of 2020, things changed. A representative from K3 showed up and offered her family between $22,000 and $23,000 to move. The family turned it down. The offers kept coming though, eventually reaching $100,000. But her mother Alma, the primary name on the lease, didn’t want to move.
One major impediment to taking the offer was that the money would be entirely taxable, and with her brother in college, it would have radically changed his financial aid eligibility. Besides, with rents rising so fast in Los Angeles, it’s not clear how far the $100,000 (or whatever was left after taxes) would have taken them. The benefits of rent stabilization over the 20 years they lived in the apartment meant that they could make a life in the metro area. I asked Hernandez where she thought they might move if they had taken the buyout and she was completely stumped. “It’d be out of L.A. County for sure,” she says.
Across L.A., the researcher Joel Montano finds a consistent corporate model tied to purchasing buildings, evicting tenants, and flipping units.
The new owners had emptied the building of families that were living in other below-market and rent-stabilized units. Without warning, the owners began construction on over 20 apartments at once. Rats crisscrossed the lobby, cockroaches ran wild, a dumpster full of construction debris spilled across the parking lot, and water flooded from uncapped pipes, causing black mold to carpet the ceilings of the remaining occupied apartments.
Similar conditions proliferated at many other K3 properties, according to tenants at other buildings. But sadly, this level of effort on the part of the landlord to encourage displacement is not contained to just one company. Across L.A., the researcher Joel Montano finds a consistent corporate model tied to purchasing buildings, each registered to a separate LLC, and then evicting tenants and flipping units “as a measure of first resort, not of last resort.” The strategy of mismanaging communication, scheduling disruptive and harmful construction, and harassing tenants to leave is a business model all unto itself, only made worse by the scarcity of housing. About 3 in 4 households in L.A. are rent-burdened (meaning they pay over 30 percent of their income on rent) and about half are severely rent-burdened (meaning they pay over 50 percent).
This buy-and-displace tactic is not limited to Los Angeles or even California, and even local tenants’ rights ordinances have been relatively ineffective. One of the biggest factors is that landlords can always accrue fines for mismanagement, and then walk away with no liability if necessary.
AS RENTS RISE AND AFFORDABLE HOUSING GROWS SCARCE, entirely new sectors of housing emerge to exploit renters. In Los Angeles, RVs have become an ad hoc solution to housing scarcity, sitting uneasily between living in a tent and a regulated apartment dwelling. Many of these homes are rented out by so-called “van lords” who often buy RVs at discount auctions, park them on public streets, and rent them out. Los Angeles County Supervisor Kathryn Barger noted that her district is home to multiple RV settlements, including 90 parked on a stretch of Forest Lawn Drive, in the shadow of the famed Hollywood sign. Across the county, nearly 6,500 people are living in 4,000 rigs as of 2023, a 40 percent increase since 2018. In general, 14,000 vehicles are used as homes in Los Angeles County. Researchers at UCLA find that people living in vehicles tend to be women who have or are looking for work, and their children.
RVs are cheaper than the alternative, but not that cheap. ABC7 found one tenant, a full-time home health aide, paying $400 a month to stay in one RV, noting that “a lot of people pay a lot more than that.” One van lord told ABC he now owns 15 RVs around town, and charges $600 to $800 a month to stay in them.
Robin Kaiser-Schatzlein
A city code inspector that visited the K3 apartment building in Highland Park found 190 code violations.
RVs provide protection from the elements, but because they are completely unregulated, they enable dangerous conditions and neglect. Many have no running water or effective waste disposal, and they have a nasty habit of being set on fire. RV encampments are a new class of slum housing, something that L.A. has plenty of. In a census survey from 2019, 64,400 units in the city were considered severely inadequate, with 102,000 having no working flush toilets (much like the RVs) and 143,000 with mold.
The city and county are attempting to bring these black-market dwellings into the light, largely by tweaking numerous legal codes. The city council in September passed a motion that directed the city attorney to draft an ordinance making it illegal to lease or rent the vehicles while in public spaces. The county has drafted a similar measure. But the RV rental economy is spilling into private realms as well. Landowners are renting out their driveways and vacant lots to RV owners, and as the Los Angeles Times reported this summer, the city filed misdemeanor charges to an ad hoc RV park in Sylmar.
HERNANDEZ’S MOTHER ALMA GREW CONCERNED about the possibility of being evicted, and found herself looking for help online. She eventually came upon the Los Angeles Tenants Union’s Facebook page, and contacted the organizers. With support of the LATU, Hernandez’s building formed a tenant association that worked to stop construction on the building by submitting complaints to the city about apartments that were flooded with water or had bathrooms that were made inoperable for months at a time. When a city code enforcement inspector came through in 2021, they found around 190 code violations, revealing that almost none of the recent work done had been permitted. K3 would have to tear everything out and start over. After a long fight, the tenant association also got the housing department to put the building into the Rent Escrow Account Program (REAP), which allows tenants to place half of their rent into an account until the owners remediate their violations.
But tenants at other K3 buildings haven’t been so lucky as to get into REAP. Many are living with unfulfilled work orders and declining conditions. The herculean effort to get the city to hold K3 to account in their building shows how difficult it is to enforce tenants’ rights laws in Los Angeles, and how easy it is for harassment to slip through the cracks.
To some extent, the city knows about the pervasiveness of harassment. The Tenant Anti-Harassment Ordinance, which prohibits landlords from withholding repairs, refusing to accept payments, or other actions intended to remove tenants from buildings, was passed by the city council in August 2021. But it was largely an unfunded mandate; no investigators or lawyers were assigned to enforce it until 2022.
Even now, the city housing department claims in comments to Capital & Main that of the thousands of complaints they’ve received, most don’t qualify as harassment. “The truth is,” an official remarked, “that harassment is really broad and subjective, and we haven’t got any strong cases.” This assessment comes as a surprise to K3 tenants like Hernandez, who have issued numerous complaints themselves. To date, only 12 complaints against all landlords in L.A. under the ordinance have been referred to the city attorney’s office, and none have resulted in a landlord being prosecuted. The law also doesn’t guarantee that legal counsel will be paid court fees, so few lawyers are willing to take on these cases.
Today, Hernandez’s building is organized with a group of K3 tenants across the city, sharing support and resources, calling themselves the K3 Tenant Council. Some buildings have launched monthslong rent strikes, and others have won small improvements. Hernandez fought the landlord on a mandatory replacement of their carpet, and when the landlord brought in an environmental inspector to prove there wasn’t mold under the carpet (he actually found that there was), other tenants immediately demanded the same inspection, revealing a widespread mold problem across their buildings.
On a sunny day in September, I visited Hernandez at her building and we talked by the pool while her little sister and boyfriend ate lunch on chaise lounges nearby. Hernandez told me about how the whole process had brought her closer with her neighbors, and while she didn’t know what would happen next, she didn’t feel like she would have to move anytime soon, which really was a major win. The city was now overseeing construction, and the contractors were less intrusive and more respectful of the tenants. The stability of an affordable apartment had allowed her to start her career as a speech pathologist, working one-on-one with families in the surrounding area. The apartment had been their landing base and their rock, she said, “and that’s why we’ll keep fighting.”
