Living in a purple, vine-covered building in Fruitvale, you’ll find a hodge-podge community of musicians, cooks, piercers, and performers. The 33-unit complex at 4001 San Leandro St. is a “live-work” artist warehouse.
“It’s this crazy space where you get to have a business” inside your residence, said Jean Cadwell, who lives there with her partner in an apartment where the walls are plastered, floor to ceiling, with concert posters. She’s a fiber artist who used to run a food business, and her partner’s a musician. One of their rooms is a sound-proofed music studio—no need to pay additional rent at a separate space.
“Being an artist has never been cheap or easy, and live-work was made to support artists,” Cadwell said.
There are numerous live-work buildings in Oakland, although the number has been dwindling. Cadwell calls 4001 San Leandro the “cranky, goth big sister of Vulcan,” the better-known complex a few blocks away. Both properties are owned by Madison Park Financial, a company run by developer John Protopappas, who was treasurer for both Libby Schaaf and Jerry Brown’s mayoral campaigns. And both properties are at the center of ongoing cases that will decide whether they are subject to Oakland’s rent-control policy.
The cases require parsing the often murky history of when warehouse spaces like these became housing in Oakland. The outcomes will determine how much the landlord can raise the rent from now on.
Like many local artists, the 4001 San Leandro residents feel that their future in their building, and in Oakland, is precarious. While local housing costs have grown exponentially in recent years, the pandemic put many DJs, dancers, set designers, and tattoo artists out of work, making it hard to pay rent.
Some tenants fear an eventual rent increase will push them out of their homes for good. If they lose this housing, their options in Oakland will be limited, and not only because of costs.
The Ghost Ship fire, which killed 36 people at a nearby artist warehouse in 2016, put a spotlight on live-work complexes and prompted cities across the U.S. to shut down similar spaces out of safety and liability concerns. Once cities and landlords started moving people out of these former industrial properties, cannabis grow houses began moving in.
“These warehouses are going away, and if they go away they’re never going to come back,” said Cadwell.
Madison Park, which specializes in live-work spaces, has not hit the tenants at 4001 with major rent increases, they acknowledge. But the company is asking the city to certify that the property is exempt from local rent control. There was a Rent Adjustment Program hearing for the case last week, and now owner and tenants alike await a verdict from hearing officer Linda Moroz, who has 60 days to decide.
From furniture factory to live-work—but when?
The saga at 4001 San Leandro began in 2017 when Madison Park increased Cadwell’s rent above the amount that would be allowed under the city’s rent-control law. Cadwell and her partner petitioned RAP to protest the increases. A hearing officer at the time ruled in favor of the landlord, finding their unit exempt from rent control. The tenants geared up to appeal the verdict, but put that on pause when Madison Park filed a petition trying to certify all of the building’s 33 units as exempt.
Simon Chen, Madison Park’s chief operating officer, said the petition is “something we do across the board” as a “practical matter” to avoid hashing out the rent rules for each unit like Cadwell’s on a case-by-case basis.
Otherise, “you could potentially have 30 of these processes going on,” Chen said.
Why are there disagreements about whether 4001 San Leandro is protected by rent control?
In Oakland, most multi-unit residential properties built before 1983 are rent-controlled, meaning the rent can only be raised by an amount pegged to inflation—this year it’s 1.9%. At newer properties, landlords can instate larger annual increases, though a recent state law has capped those at 5% plus inflation as well. Whenever a tenant moves out of a rent-controlled unit, the landlord can increase the rent by that higher rate, too.
The rules for live-work properties are slightly different. Even if a building was constructed long before 1983, say as a factory in the 1920s, it’s still exempt from rent control, unless people started living there before 1983. The case at 4001 San Leandro hinges, in large part, on what year the building actually began housing tenants.
City records indicate that the building permit to convert the former furniture factory into a living space was issued in 1984. Other approvals for the residence, like the electrical permit, were finalized over the next few years. From Madison Park’s perspective, this documented history is clear: 4001 San Leandro became live-work after 1983, so it’s exempt from rent control.
David Hall, an attorney with Centro Legal de la Raza, who’s representing the tenants at 4001 San Leandro, disagrees. “We believe we have evidence there were people living there prior to ‘83,” he said. He believes a former landlord had rented out unpermitted units there before 1983. “Even if they were living there illegally, the place cannot be exempt from rent control,” he explained.
The trouble is Hall and his clients were not able to track down the people they believe were living there 40 years ago to testify in the case. But Hall said the burden should be on Madison Park to prove nobody was living there then.
Cadwell, like many artists, has lived in not-so-official, underground housing in the past, which was even more common in previous decades when “regulations were more lax,” she said. “Most certainly the property was lived in, but how am I going to find someone who lived there under the radar, casually? We’re trying to have our own lives and jobs, and here’s the extra detective work, getting all the documents and deeds.”
The tenants are also making an argument that revolves around what happened when the property was converted to live-work in the 1980s. Hall said a former tenant, who spoke at the hearing, testified that he lived at the property before the owner at the time—a different company than Madison Park—received all the necessary permits to lease the space as a residence. Hall believes the potential illegal nature of the conversion should disqualify the property from a rent-control exemption, to discourage landlords from breaking the rules.
“We made a public policy argument,” he said. “You don’t want to incentivize people [renting out] dangerous, unpermitted units.”
Chen said Madison Park believes historical records indicate that the conversion happened by the letter of the law.
The Oaklandside requested a recording of last week’s RAP hearing from the city, but staff could not provide a copy in time for publication, citing a technological issue.
Rent control can affect sale of buildings
Chen said Madison Park—which managed 4001 San Leandro for many years before buying it—has not raised rents significantly. Many tenants, especially the long-term renters, have generally received increases similar to, or below, rent-control limits, he noted.
In 2018, rents ranged from roughly $1,450 to $4,400, for units between 850 and 4,000 square feet, according to the owner.
But for property owners, the ability to raise rents is not the only appeal of securing a rent-control exemption. In 2018, Madison Park put 4001 San Leandro, Vulcan Lofts, and another live-work building on the market, advertising to potential buyers that the properties were exempt from rent control. The exemption is referred to as an “amenity” and “a rare opportunity in Oakland” in listing materials. A rent control exemption means buyers have the chance to recoup some of their investment by charging tenants more.
At the time, a Vulcan offer letter told potential buyers they could raise the rent 15% and charge tenants more for utilities, increasing profits, KQED reported. (The offer predated statewide rent control.)
“The real estate market, as bonkers as it was in the dot-com era, is crazier now,” said Hall. “People have dollar signs in their eyes.”
While one of the properties sold, 4001 San Leandro and Vulcan were taken off the market, since no deal was reached with a buyer, Chen said. He said the rent-control petitions did not affect that decision, but that Madison Park decided to wait to pursue the sale again until the city issues a decision.
Tenants at live-work spaces often fear the implications of those properties changing hands. Oakland’s artist warehouse stock used to be larger, but the Ghost Ship fire called attention to safety hazards at similar properties and alerted landlords and local governments to possible legal risks. Renters worry that cities will deem their spaces uninhabitable, or that property owners will use the crisis to evict artists and convert warehouses into higher-end complexes.
Even before that tragedy, the issue was in the spotlight. At 1919 Market St., another warehouse once managed by Madison Park, a tenant repeatedly posted Youtube videos of habitability issues there, prompting media coverage. City inspectors declared the site unsafe, forcing tenants to move out.
Cadwell said a “refugee” from 1919 Market lives at 4001 San Leandro. “There’s a lifelong, debilitating effect of being shuffled around,” she said.
But the tight-knit community of Oakland warehouse residents has also spurred tenant organizing, including by a group called the Madison Park Tenants Council. Many warehouse residents and activists showed up to the hearing for 4001 San Leandro last week.
Hall said he logged into the hearing expecting only the lawyers for the other side, but was startled by the large showing of solidarity from tenants.
“Fundamentally, I want these people to be protected,” he said. “They’re artists making the city an interesting place. Once you lose a rent-controlled property, it’s gone forever.”
But Chen noted that the hearing officer in Cadwell’s original case ruled in favor of the owner, so he expects this one to as well: “It’s a matter of laws and ordinances.”