Investment fund to preserve Little Tokyo revealed

LOS ANGELES — In an effort to help preserve Little Tokyo, local activists announced the creation of the Little Tokyo Community Impact Fund, which seeks individual, corporate and foundation support to invest funds in real estate purchases that provide much-needed rent control for legacy and community-related businesses in Little Tokyo while offering reasonable but below-market returns to investors.

Bill Watanabe, retired head of the Little Tokyo Service Center, asserted via e-mail that preserving L.A.’s Japantown “is a big deal. Little Tokyo … is over 130 years old and represents much of the history, heritage and culture of the Japanese American experience in America.”

Watanabe, one of the individuals spearheading the funding effort, noted that there was once a Little Italy in L.A. in the late 1800s-early 1900s, but hardly anyone remembers it now. “All of the history and contributions of Italian Americans to our society are gone.”

The fund doesn’t want that to happen to Little Tokyo, Watanabe declared. “It is easy for many non-Asian Americans to assume all Asians just got off the boat and have not contributed to the building of this society. But historic places like Little Tokyo and Chinatown are living examples of the long-term contributions of Asians to this society. This must not be forgotten, especially given the racist history of American society.”

To preserve Little Tokyo, one of three historic remaining Japantowns in the United States, Watanabe exclaimed, “We have to mobilize now. We should have started five years ago when land prices were lower. The goal of raising $10 million is attainable if enough people participate.”

According to the Little Tokyo Service Center, the last decade has seen the addition of more than 1,000 units of luxury residential housing units in Little Tokyo, part of a larger trend in downtown Los Angeles where more than 6,000 market-rate housing units are planned. Meanwhile, many affordable housing units in Little Tokyo are at risk as their affordability covenants approach expiration dates.

“This surge in development … threatens the cultural and historic character of Little Tokyo,” reported the center, noting that there are currently 400-plus businesses in the neighborhood, but in 2015, at least a dozen businesses were displaced from Little Tokyo or went out of business due to rising rents, construction disruptions, and changing demographics. Since then, more than 20 local businesses have gone under. Also, currently, seven properties are up for sale.

Speculators Seeking Deals
There are property owners “of different stripes” in Little Tokyo, Watanabe commented. “Some are old-timers whose families have owned property for 100 years or more but are not Nikkei. Other owners are Nikkei families now in their third or fourth generation. Some new property owners are not from the Nikkei community but are real estate speculators and investors looking for a good deal.”

Chris Komai, vice chair of the Little Tokyo Community Council, stated via e-mail, “One thing that concerns those of us who care about Little Tokyo is the fact our community doesn’t really own a lot of property. This is in contrast to Chinatown, where … several families have hung onto the land, which gives their community much more leverage.”

The community council is very concerned about gentrification in the Nikkei community, Komai continued. “Since LTCC was founded in 1999, we’ve tried to influence the city of Los Angeles to put a check on development that we feel is detrimental to our historic neighborhood. But it hasn’t worked very well … The rents are too high for community businesses.”

The idea of controlling as much land in Little Tokyo as possible is “a laudable goal,” Komai stated, “But with the price of real estate already high … I am not sure how much property a fund like this could buy. That’s why LTCC has been lobbying the city to not sell or lease the major tracts of land it owns near the Go for Broke Monument and the Gold Line Station to outside developers, but to let a community group like the Little Tokyo Service Center develop those spaces. The city could maintain ownership, but lease it to community groups and businesses, which would protect the integrity of our neighborhood.”

Investment Not A Donation
The fund has collected pledges from about 35 potential investors, reported Watanabe. Most are at the $10,000 minimum level and some go as high as $100,000. “When we reach 50 investors, we will formally elect the board of directors.”

Watanabe, who emphasized that investment in the Little Tokyo fund is not a donation, initially felt he couldn’t invest $10,000, but later realized that his savings account was earning about 0.2 percent interest, and a CD was earning only about one percent interest. The LTCIF could provide a “less-than-market rate of return of perhaps two-to-three percent per year, which is many times more than my savings account or CD.”

The fund could use the savings — from paying less than market returns — to help subsidize small businesses in Little Tokyo, Watanabe explained. “It’s a win-win situation where investors get a return on investment and at the same time know that their money is helping to preserve the Nikkei community.”

Irene Tsukada Simonian, head of Little Tokyo’s Bunkado gift shop, said in a telephone conversation, “Landlords could rent their properties to the highest bidders, which does not necessarily benefit a mom-and-pop business. We see that when areas get gentrified … the only ones that can afford them are the large chain stores … We know first-hand the businesses that had to leave Little Tokyo because they could no longer afford the higher rent.”

The fund’s concept is for investors to pool their funds, buy properties, and charge local people affordable rent, she stated. “The goal is to help businesses stay in Little Tokyo. It’s a noble cause.”