Panama Hotel is a beautiful, serene tea house in the historic International District. Like many buildings in the area, it was Japanese-owned before World War II, but after the internment, it was bought again by a Japanese owner. She turned it into a tea-house and museum, that today serves as sort of a community center / historical marker / coffee shop. If you're just looking for a great latte or some fresh tea, it's a perfect spot: quiet, beautiful, and tasteful, it's a great alternative to Starbucks. If you want a little more though, take a second look. You'll find a window in the floor reflecting down onto some old dusty trunks, left there by Japanese inhabitants when they left for camps and never returned. You'll see pictures on the walls of the businesses and architecture of the area throughout the past century; and you'll discover downstairs one of two remaining Japanese bathhouses in the country. And they have the coolest bathrooms arond.
Once or twice I've found their tea to be over-steeped. Other than that, there's really not much to complain about.