You need to call the Community Development Department to see what needs to be done in a redevelopment area. They will tell you who has jurisdiction over the permitting of this unit, and if you can make it legal, cost, etc.
This response is not to be construed as establishing an attorney-client relationship, and provides general information on the subject at hand only.
Possible agencies that could be involved include building and safety, zoning, planning, rent control, health department and others. Since it appears you have an illegal unit, one or all of them might be involved in some manner.