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Yen Hom, Sau King Wong and dozens of other tenants who live in a complex in Oakland’s Chinatown were told to pack their bags in April so the building’s owner could turn their units into market-rate condos. Their fight to stay is now a legal tangle ensnaring renter advocates, an influential developer and city leaders. At issue is who promised what as the ambitious Chinatown project was being planned more than a decade ago. “The community fought hard to have the project developed the way that they wanted it developed,” said Siegel & Yee partner Alan Yee. Yee was one of the community members who voiced concerns about the $67 million project when it was proposed in the 1980s. Yee now represents the renter plaintiffs. In July, the East Bay Community Law Center, the California Affordable Housing Law Project, and pro bono private firms filed suit in Alameda County Superior Court alleging that International Hotelier Management Corp. broke a 1990 city agreement requiring it to maintain affordable housing in the Pacific Renaissance Plaza. The suit also accuses the company of failing to repay a $7 million city loan and charging poor tenants too much for rent. Since the tenants groups filed suit, the city attorney’s office has also sued the management company for overcharging residents for rent. The landlord’s attorney disputes the accusations. In a demurrer that will be heard before Judge James Richman on Oct. 31, Stephen Kaus of Cooper, White & Cooper argues that the tenant coalition has no legal standing to claim his client breached city agreements. This month, the landlord slapped Oakland with a countersuit claiming that city officials gave it wrong information about what to charge for rent. The litigation centers on the Pacific Renaissance Plaza project, which includes a shopping center, 250 condos — including 50 low-income rental units �� �� a parking garage, community center and library. The project was completed in 1993. The plaza was developed and is owned by companies managed by businessman Larry Chan. Other businesses affiliated with Chan operate two Marriott hotels in downtown Oakland. When the project was proposed in the 1980s, the development company promised that community amenities would be part of the shopping mall-condo project but later backed down from those assurances. They were re-added under pressure from community groups, Yee recalled. “They did not want to do affordable housing. They did not want to do a community center and a library,” Yee said. In the final agreement the developer designated 50 units as low-income housing. After that, the city could buy them so the units would remain low-cost. The developer also pledged to repay the city loan. Many of those promises were broken, Yee said. In 2000, Pacific Renaissance Associates transferred ownership to another entity managed by Chan, International Hotelier. The lawsuit contends that the company misled the city about its finances so that it would forgive the loan. Over 10 years, the landlord also overcharged tenants by more than $2 million, according to the plaintiffs’ legal team, which includes lawyers from Heller Ehrman White & McAuliffe and Paul, Hastings, Janofsky & Walker. The landlord has dropped the unlawful detainer suits, but many of roughly 100 people living in the 50 rental units moved out after eviction notices went out, the plaintiffs lawyers say. Name plaintiffs Hom and Wong still live in the plaza. The plaintiffs want the low-income housing restored, the city loan repaid and the overcharged rent refunded. The tenants’ attorneys have got it wrong, says the landlord’s attorney, Kaus. “We provided affordable housing for 10 years.” When the 10-year affordability agreement lapsed, the building’s owner asked the city to take over the units, Kaus said. The city declined. After that, International Hotelier decided to transform the rental units into market-rate condos, he said. While the tenants may have a right to pursue some claims, they have no legal standing to dispute the developer’s agreements with the city, Kaus argues in court papers. That means that Richman should toss out their breach of contract, fraud, quiet title and breach of fiduciary duty claims, he wrote. Kaus also argues that two community groups that are name plaintiffs in the suit, Just Cause Oakland and the Asian Pacific Environmental Network, also don’t have standing to pursue many of the accusations in the suit. “They are not contract beneficiaries,” said Kaus, who is a business litigator. Kaus also disputes accusations that the loan deal was improper. When the plaza was transferred in 2000, its value had plummeted because of the sluggish local economy and because it was saddled with nearly $60 million in debt that had to be paid to creditors before the city could be repaid, Kaus said. The city loan agreement allowed the debt to be forgiven under such circumstances, he added. “The city knew all of the facts,” Kaus said. “They knew that the loan was not collectable.” The lawyer also disputed the alleged rent overcharge. The rent was spelled out in development agreements that contained a “clerical error” that the city was probably aware of, Kaus argues in the countersuit. The city should correct the mistake and pay damages for misleading the owner, the lawsuit says. In addition to battling the management company in court, the renters’ lawyers are lobbying the city to take a more aggressive stance, said Margaretta Lin, an East Bay Community Law Center attorney. “It seems to us that the city has grounds to pursue the loan issue,” said Lin, who is the economic and community development director at the 15-year-old law center. The plaintiffs’ lawyers have asked City Attorney John Russo to sue the developer for breaching the city’s affordable housing agreements and allegedly misleading city officials to get its $7 million loan forgiven. If it had been repaid, the loan, with interest, would have been worth more than $16 million today �� which would have been more than enough money for the city to buy back the units from the developer, the plaintiffs say. However, Deputy City Attorney Maria Bee says the rent suit is the only legal action that Oakland is pursuing now. She declined to elaborate on why the city chose not to take further action. A city official that spoke on condition of anonymity said the city attorney considered and rejected plans to pursue the breach of contract claims. However, as a precautionary measure, the city will hire an outside firm to make a second review of the case, the official said. Meanwhile, Lin says that she and community leaders have been lobbying Oakland City Council members to take a more active role in the issue. The council will weigh whether to pursue more legal action in closed session in the next few weeks, she said. The issue could be politically sensitive because Chan’s family and Yee have extensive city ties. Yee and his firm, Siegel & Yee, have been political players and have made contributions to local candidates for years. The firm roster includes Councilwoman Jane Brunner and school board member Dan Siegel. Chan, who is connected to key Oakland businesses such as the Marriott hotels and the Pacific Renaissance Plaza, is also influential. Before John Russo was elected he was the councilman for the district that includes the plaza. City records show that at least one Chan-connected business, the Oakland Marriott City Center, donated money to Russo’s City Council campaign. It’s unlikely that the Chan family’s business ties have influenced the city’s legal decisions, Kaus said, noting that the city slapped his clients with the rent suit. “We obviously have no clout,” he said.

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