Renters Seek to Buy Piece of History : Housing: Fearing that the low-income Castle Argyle Arms apartments could be jeopardized if sold on the open market, residents are organizing to gain control of the landmark.

Residents of Castle Argyle Arms are organizing to take over ownership of their building, an Old Hollywood relic that deteriorated into a drug den before it was broken up into small apartments for low-income tenants.

It won’t be easy. Although the landlord has expressed interest in selling the federally subsidized building, the leaders of a newly formed tenants union will have to cut through a thicket of government regulations that govern the sale of buildings like Castle Argyle.

If the residents don’t want the headache, other nonprofit groups will have a chance. In a nonprofit buyer does not emerge, the building could then go on the open market, which could mean the loss of 98 low-cost units that will not be easily replaced.

The burden seems to weigh heavily on Maria Kahlsa, a former airline stewardess, social worker and housewife who was elected president of the tenants association.

Although 51 of the 60 residents who attended a raucous first meeting in February voted to go ahead, most of the decisions fall on her and a handful of activist members of the 10-member board, she said.

Still, she said at a recent board meeting, “It’s going to be very challenging and we’re all going to learn a lot and not have a dull moment in the next few years.”

Guided by Steve Cancian, an organizer from the Coalition for Economic Survival, a renters rights group, the board voted last week to seek a technical assistance grant from the city of Los Angeles.

“We want to see if we can grasp this material,” Kahlsa said. “Let’s keep an eye open for leaders. They’re hiding in the woodwork.”

The grant, for as much as $20,000, would pay for leadership training and other skills needed to go through the process, which could last two years or more.

“Technical assistance is really just a first step,” said Maya Dunne, director of the policy unit of the Los Angeles Department of Housing. “We have over 10,000 units that potentially are in this type of situation. If these units are lost there’s a tremendous resource lost . . . and this could have a tremendous impact on those residents’ ability to be housed.”

Construction or renovation of such buildings was financed by the Department of Housing and Urban Development, but after 20 years, owners are free to pay off their mortgages.

After the sale of some buildings and the eviction of tenants in the late 1980s, Congress responded by passing laws intended to preserve low-income housing, which is in chronic shortage in Los Angeles and other major cities.

If landlords want to sell, the law gives tenants groups like the one at Castle Argyle the first shot at buying their buildings, either as independent cooperatives or with the help of nonprofit corporations.

“We’ve owned it for 23 years now, and we never had any intention to sell,” said owner William Bloodgood, a developer whose business entities own 21 Los Angeles buildings where the low-income tenants are subsidized by the federal government.

But, Bloodgood said, he may well unload all his properties if the price is right.

“You’ve got to figure what the value is now versus what revenue you’d get from it,” he said. “Most owners would just as soon turn it over. You never know what new regulations will crop up.”

The building is assessed at just over $1 million, but Cancian said he expects the appraisal of its market value to come in at about $5 million.

Bloodgood declined to speculate on the value pending two separate appraisals--one for him, another for HUD--that are due next month. If the two are significantly different, an independent expert will set the price.

If the building is sold to the tenants or another nonprofit group, HUD would guarantee a large part of the new purchase loan, and residents would still enjoy subsidized rents.

Once the site of a real castle--built in 1912 by Dr. Alfred Guido Randolph Castles, an eccentric personality of Hollywood’s early years--the apartment building dates to 1928.

It was then that Castles, a Chicago doctor who struck it rich in the Nevada silver mines, tore down the mock-Gothic pile that he called Castle Sans Souci and put up the luxury apartments called Castle Argyle Arms.

Castles, whose stationery identified him as a “glandular specialist” who trained at the imperial hospital in Vienna, was 77 at the time. A world traveler, art collector and sponsor of musical fetes, he changed his name from Schloesser (German for “castles”) during the anti-Teutonic days of World War I.

The actress Evelyn F. Scott, who grew up nearby, remembered him as an imposing figure in a frock coat, heavy makeup and top hat, taking his daily constitutionals along Hollywood Boulevard. He died five years after construction of the building that bears his name, but 1919 Argyle Avenue remained a tony address, home to the likes of Clark Gable, Howard Hughes, Ronald Reagan and Cecil B. De Mille, according to Hollywood lore.

The sylvan quiet boasted by an advertisement when the building was built had been lost by the 1940s, when the Hollywood Freeway was built close to the seven-story structure near the northwest corner of Franklin Avenue.

It was remodeled in 1946 and again at the end of the 1960s. But by then, “there was a lot of heroin,” said Laura Dotson, a longtime resident of the area.

In fact, county records show that the building sold for $500,005 in 1971, virtually the same as it cost for construction alone 43 years before.

“If we lose it back to . . . any of those slumlords, we’re in big trouble,” said Dotson, who is active in the local Neighborhood Watch.

The original castle was a landmark of its day. Distinguished by leaded glass windows, corner turrets, crenelated roof lines and a tower poking up from the middle, it featured a Gothic hall with a 25-foot-high beamed ceiling, stained glass windows, suits of armor and an organ loft.

Two marble lions that once guarded a palace of the Doges of Venice stood at the entryway.

“No one seemed to mind that beyond the stained glass windows were Southern California lemon groves,” remarked architectural historian Charles Lockwood in his book, “Dream Palaces.”

Outfitted with balconies and large, rambling apartments--two to a floor--it enjoyed a panorama of the nearby hills, downtown Hollywood and, on a clear day, the plains to the west.

“I think I’m living in Cecil B. DeMille’s old apartment,” said Sandra C. Kenner, who has lived in the building for 10 years.