Low-cost housing in plan for notorious Oakland hotel

An undated photo of the Empyrean Towers in Oakland. An undated photo of the Empyrean Towers in Oakland. Image 1 of / 1 Caption Close Low-cost housing in plan for notorious Oakland hotel 1 / 1 Back to Gallery

A federal Bankruptcy Court has authorized an affordable-housing developer to buy one of Oakland’s most infamous blighted properties, a dilapidated hotel in Chinatown that was red-tagged last year for code violations and a contaminated water supply.

Now that building could supply scarce low-income housing for a city that desperately needs it.

“It’s been a public nuisance for a long time, and we could really turn it into an asset for the neighborhood,” said Carolyn Bookhart, who heads the housing team at Resources for Community Development, the Berkeley nonprofit that has signed an option agreement to purchase the former Empyrean Towers Hotel at 13th and Webster streets for $4.5 million.

It will need an additional $10 million in structural, electrical and plumbing repairs, Bookhart said. She hopes to convert the hotel’s 96 single-room-occupancy units into tidy one-bedroom and studio apartments, which could open as early as 2018.

Long a wart in Oakland’s gentrifying downtown corridor, the Empyrean — formerly the Menlo Hotel — has a troubled history. In 2011, a former owner of the building was convicted for trying to hire an arsonist to burn it down. Last April, City Attorney Barbara Parker sued the hotel’s current owner, Alice Tse, for code violations. The lawsuit accused Tse of neglecting badly needed plumbing and electrical maintenance, and called for a court receiver to take over the property.

A month after Parker filed the suit, city officials temporarily evacuated the Empyrean after finding that its water supply was contaminated. Tse filed for bankruptcy protection in July. She and her lawyer, Steve Whitworth, did not return calls seeking comment.

The court’s decision, issued March 4, was monumental in that it hinged on a principle of “social responsibility” in bankruptcy law, according to Parker. That meant the court took into account the positive impact of converting a blighted property into affordable housing, rather than selling it to the highest bidder.

Granted, the transformation won’t be easy. After years of neglect, the building’s elevator doesn’t work, it needs a new boiler, and its electrical, plumbing and heating systems have all decayed. What’s more, none of the apartments has a kitchen, and most lack private bathrooms.

Still, Bookhart said her firm is hoping to raise enough funding to finish the project.

Carl Chan, a board member of the Oakland Chinatown Chamber of Commerce, said the prospect of dozens of new affordable units could be a boon to the neighborhood, which is wedged between Oakland’s downtown core and Lake Merritt.

“Affordable housing is really needed,” he said Wednesday. “And many people would love the possibility of moving here.”

Rachel Swan is a San Francisco Chronicle staff writer. Email: rswan@sfchronicle.com Twitter: @rachelswan