OAKLAND, CA – The U.S. Bankruptcy Court has issued a landmark order authorizing sale of the notorious Empyrean Towers in downtown Oakland to an affordable housing developer to rehabilitate the building as long-term low-income housing.
The Court’s order is a landmark decision because it is not based simply on compensating creditors; the ruling recognizes the principle of “social responsibility” in bankruptcy law, guaranteeing that the building will be maintained as affordable housing for at least 55 years.
The order also is a major victory for the tenants and the City because it will allow the developer, Resources for Community Development (RCD), to make millions of dollars in urgently needed repairs and improvements to the property, which has a long and tortured history of substandard and inhumane living conditions.
“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,” City Attorney Barbara Parker said. “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.”
The Court’s decision is a major step in the City’s long battle to improve deplorable and inhumane conditions at the Empyrean Towers, a more than 90-unit building located at 13th and Webster streets. The property requires major renovations including structural, electrical, mechanical and plumbing systems. RCD has estimated the cost of the project will exceed $10 million.
The City has cited the owners for numerous and serious housing code violations, including significant electrical, heating and plumbing problems. In May 2015 the City red-tagged and temporarily evacuated the building due to contaminated water supply. A prior owner of the Empyrean (formerly the Menlo Hotel) was convicted in 2011 for attempting to hire an arsonist to burn down the building.
In April 2015, the City Attorney, on behalf of the people of the City of Oakland and the State of California, sued the owners of the Empyrean in the Alameda County Superior Court for maintaining the property in an uninhabitable condition, for violating Oakland’s Tenant Protection Ordinance and for operating the property as a public nuisance. The lawsuit prosecuted by City Attorney’s Neighborhood Law Corps unit asked that the Superior Court order the owners to bring the building into compliance with applicable building codes and appoint a receiver to manage the property and oversee the repairs.
The owner declared bankruptcy after the Superior Court appointed a receiver to oversee the property. The U.S. Bankruptcy Court appointed a trustee for the property. The trustee and the City Attorney asked the Court to authorize sale of the property to RCD.
The City is familiar with RCD’s work on other properties, including the Fox Courts development in the Uptown neighborhood. The City’s motion supporting the sale of the property to RCD stated that the City “values (RCD’s) contributions to improving and increasing the stock of affordable housing for low-income residents of the City.”
City Attorney Parker thanked the Eviction Defense Center and its Executive Director Anne Omura for working on behalf of tenants at the Empyrean and helping to secure RDC’s offer to purchase the property.