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Infamous Hotel Cecil Reopens As Affordable Housing Project, Hospitality Plans Scrapped As Coronavirus Casualty

The Cecil Hotel (once called the Stay on Main and now the Hotel Cecil) on Main Street in Downtown LA.

After being shuttered for four years, Downtown LA’s Hotel Cecil, the infamous site of at least a dozen deaths and cited as the inspiration for a season of American Horror Story, has quietly reopened as an affordable housing project. 

The long-planned project was slated to revamp the hotel into a mixed-use project featuring 300 hotel rooms and low-income housing units, but the pandemic derailed hospitality plans and prompted developers to pivot.

This week, the property held its grand opening as a fully affordable housing project. 

Developer Matthew Baron, CEO of Simon Baron Development, said the choice to eliminate the hotel component came in the spring of 2020, a direct result of how the coronavirus pandemic affected the Downtown Los Angeles hotel market. 

"Once Covid hit, obviously the feasibility of new hotel projects went away,” Baron said. “I think, frankly, it's probably still challenging in this market for a new hotel project." 

Though leisure travelers were expected to bring relief to LA’s hospitality market, especially the harder-hit Downtown region, that return hasn't been enough to slingshot the market back to pre-pandemic levels. 

Downtown LA’s year-to-date hotel occupancy rate in Q3 was 48.7%, according to a report from the Downtown Center Business Improvement District, citing data from the LA Tourism and Convention Board. That’s up from Q3 2020, when occupancy was at 39.5%, but still isn't near the pre-pandemic level of 80%. A few Downtown hotels, including the Sydell Group’s NoMad Los Angeles hotel, closed during the pandemic and have yet to reopen

Citywide, the hospitality sector appears to be struggling, but not quite at the level of downtown. In September, citywide hotel occupancy was 65%, according to CoStar. That represents a drop from 76% occupancy in July, which was the highest occupancy in LA since the onset of the pandemic, according to the firm. CoStar attributed the decrease to the decline of leisure travelers visiting the city as students went back to school. 

Nevertheless, hotels in LA and Downtown are continuing to come online. The CitizenM hotel opened in August at Spring Street and Fourth and the Downtown LA Proper hotel both opened this year. A high-end Hilton is coming to a $1B Frank Gehry-designed project on Grand Avenue and dual-branded Moxy and AC hotels are planned across the street from the Los Angeles Convention Center.

LA’s September occupancy numbers were still higher than other top hotel markets, according to CoStar, but the outlook isn’t too rosy. Group travel, like that associated with conventions, is expected to remain soft as both the LA and Long Beach convention centers struggle to book events in the near term. 

Once it became clear that the coronavirus was going to change the developer’s plans to bring 300 hotel rooms to Downtown, Baron said the company reached out to Skid Row Housing Trust, which was already set to partner with SMD for the now-defunct mixed-use version of the project. Together, they found a way for the project to move forward.

The new Hotel Cecil, dubbed Cecil Hotel, will offer 600 units, a mix of single-resident occupancy rooms — a form of housing that is geared toward low-income residents — and so-called efficiency studio units. Rooms will range from 160 to 176 SF and will be rented to residents making 30% to 60% of area median income, with the majority of the units available to tenants making the lower end of that range. Community amenities will include a shared kitchen, secured entry and laundry facilities. 

Baron says the switch to fully affordable took place in April or May of 2020. 

"Our business plan was taken away by the pandemic,” Baron said. “But once that was taken away, we looked at what the best thing we could do with the building was." 

Baron says the unique features of the property — namely, that it was adaptive reuse and not a new-construction project, and that the property had been used as an SRO before — helped them secure funding without public funds. Roughly $45M in bonds for rehabbing the building had been approved in 2019, Urbanize reported, but the process was not completed and SBD did not receive those funds, Baron said.

He estimates the project’s overall cost has been roughly $75M. 

Publicly funded affordable housing projects are regularly required to sign agreements to keep the rents low for a set period of time — usually between 30 and 55 years — in order to get access to public money to build their projects. This project is privately funded and therefore is not required to do that. 

When asked about these agreements, called covenants, and how long the units would remain affordable, Baron said he was unsure if any covenants were already filed with the appropriate agency. However, he said he plans to keep the units affordable for decades and that, if filing had not yet been done, it was in the process.

"Our intent is to keep it affordable for 55 years," Baron said.

"The project is designed financially to remain affordable for 55 years, through self-imposed restrictions, restrictions that incentivize the owner to keep it affordable, without the requirement of traditional affordable covenants on buildings that come with receipt of public funding," Skid Row Housing Trust Chief Real Estate and Investment Officer Sierra Atilano said in an email to Bisnow.

Though the project held its grand opening this week, Baron says there are still a few more units to deliver before the project is officially complete. 

Skid Row Housing Trust will manage the project and on-site case management will be provided by SRHT Health and Social Services. SBD has previously done affordable projects in New York, where the company is based, but this is the firm's first in California.

CORRECTION, DEC. 17, 11:40 A.M. PT : An earlier version of this story included The Hoxton in a list of hotels that opened in 2021. The Hoxton opened in 2019. The story has been updated. 

CORRECTION, JAN. 7, 2:10 P.M. PT: A previous version of this story incorrectly stated that 55-year affordability covenants would be applied to the property. But the process is not automatic; covenants must be recorded with the county and until they are, they are not binding. The story has been updated.