A half-dozen properties owned by a failed Skid Row landlord should be sold to the AIDS Healthcare Foundation, the court-ordered receiver overseeing the buildings said, despite Hollywood-based nonprofit’s problematic history of operating low-income housing,
The foundation has agreed to pay $27 million for six properties owned by the Skid Row Housing Trust, which collapsed financially last year. Under the deal, the foundation will continue to operate the buildings, half of which are single-room occupancy hotels and the other half efficiency apartments, as permanent housing for formerly homeless residents.
The foundation had the highest bid for the properties, and the sale is in the best interests of all parties, including tenants and creditors, wrote Kevin Singer, founder and president of Receivership Specialists. In a document filed Monday in Los Angeles Superior Court,
The purchase, which could be finalized as soon as next month, will accelerate the foundation’s rapid growth as a landlord for the formerly homeless. The foundation receives $2 billion in revenue per year from its network of pharmacies. Since 2017, it has purchased 16 properties with approximately 1,500 units in and around Skid Row.
The Skid Row Housing Trust buildings – the Boyd, Hart and St. George single-room occupancy hotels and the Lincoln, New Carver and Rainbow apartments – will add 415 units to the foundation’s portfolio.
The foundation says it has taken steps to address chronic homelessness where public agencies, the private market and other nonprofits have failed, increasing occupancy in its buildings by nearly 200% and removing nearly 1,000 people from the streets. Has been removed and taken to permanent residence.
But the foundation’s buildings are beset by heating, plumbing, elevator and electricity failures and insect infestations. In some cases, an increase in tenant complaints and crime has been observed after the Foundation takes over the buildings, An investigation published last fall by the Times found,
These problems prompted the state Housing and Community Development Department to Send a letter to the recipient last month Stating that the Foundation Trust “would not be a suitable owner and operator” for the buildings. A spokesperson for the department told The Times on Monday that its concerns remain about the foundation’s potential ownership.
The Los Angeles City Council is scheduled to discuss the receivership in a closed hearing on Tuesday.
The proposed sale comes as Singer and city officials are trying to close a years-old receivership that began when the trust, once considered a nationwide model for housing formerly homeless residents, announced in February 2023. that he can no longer pay his bills and Mass abandoned its 29 buildings and 1,500 tenants,
The receiver has sold 11 of the trust’s newer and better-maintained properties to more established nonprofit affordable housing providers LA Family Housing and People Assisting the Homeless, or PATH, and hopes to transfer another one. Singer has put up for sale the remaining 17 trust buildings, many of which are old single-room hotels without private bathroom facilities.
Apart from the trust, several other owners of single-room occupancy hotels, which are seen as the last option for the city’s most vulnerable, have struggled in recent years Low public subsidies and a tenant population beset with mental health and addiction problems have led to priority for permanent housing.
Last fall, city officials introduced a plan for the local housing authority to take control of the remaining trust properties and operate them until they were turned over to developers who could tear them down and build efficiency apartments for homeless residents. Will rebuild as.
But the proposal has failed amid increasing budget pressures for the city and state. instead the focus became saving buildings and potentially recovery Some of the approximately $40 million in financing The city has authorized receivership.
In Monday’s court filing, Singer said three other bidders, whom he declined to name, made significant offers for the trust portfolio. But those proposals fell short of those of the AIDS Healthcare Foundation or involved complex financing, which he believed was not feasible.
Of the foundation’s $27 million offer, $5 million will finance ongoing renovations to six buildings, and $10 million will repay part of the city’s debt; The remaining funds will go toward continuing receivership operations until the remaining assets are sold. Singer said he is continuing negotiations with two other bidders to purchase the six other buildings.
Los Angeles Superior Court Judge Michelle Beckloff, who was in charge of the receivership case, retired this month. Singer is asking Stephen Gorewitch, Beckloff’s replacement, to hold a hearing before May 10 to approve the sale of the buildings to the foundation.
Without an influx of cash, Singer wrote in its filing, the receivership will run out of money in May.
A major issue in negotiations with the Foundation has been the availability of social services for tenants. Residents of Trust buildings are entitled to receive case management, mental health and other services as part of their voucher programs. But the foundation does not provide services in many of its buildings citing cost.
purchase and sale agreement The Foundation has been called upon to retain an external property management firm for six months and has agreed that it has an ongoing responsibility to provide unspecified social services to tenants. Ultimately, the agreement states, the foundation intends to operate and manage the properties with its own staff. The agreement also calls for a two-year moratorium on enforcing code violations that existed on the properties at the time of sale so the foundation can continue rehabilitation efforts without penalty.
A spokesperson for the foundation declined to provide details of the nonprofit’s social service plans for the buildings or answer other written questions from The Times.
Clara Karger, a spokeswoman for Mayor Karen Bass, said the city has stressed to the receiver that any future owner and operator of the Trust buildings must ensure that tenants receive comprehensive social services.
“It is paramount that the selected buyer commits to long-term affordability contracts and provides property management services that address both the needs of vulnerable residents and the maintenance and investment required to manage these buildings,” Karger said. “The City has expressed clear expectations that wraparound services will be delivered on-site to all buildings.”
Monday’s settlement comes as city regulators and courts investigate the AIDS Healthcare Foundation’s housing activities.
Los Angeles City Ethics Commission this week Plan to discuss $22,250 in fines against the foundation and one of its lead housing organizers, Susie Shannon, for failure to register and report their lobbying in 2023, according to proposed settlement agreements between the parties.
The agreement states that Shannon lobbied city officials on behalf of the foundation on various affordable housing issues without publicly disclosing his actions, as required by city law. A spokesperson for the foundation said that Shannon did not lobby on trust receivership.
The foundation faces at least 10 lawsuits in state and federal courts over the conditions of its buildings, including a class-action case detailing concerns over occupancy in the Baltimore and Madison single-room occupancy hotels in Skid Row. Are.
This month, it won $1.5 million in damages through a default judgment against former Madison owner Kameron Segal after the foundation alleged he failed to disclose the condition of the five-story building. long broken elevator Before going on sale in September 2017. It is unclear whether the foundation will be able to recover from Segal, who did not defend himself in the lawsuit and whose companies have gone bankrupt. A foundation lawyer said in a statement that the decision shows the nonprofit is not at fault for the building’s elevator problems and noted that it has spent $600,000 on repairs.
Despite the spending, Madison’s elevators have repeatedly been closed for long periods of time, including as recently as last month. Last year, the Foundation Agreed to pay $832,000 to 13 residents and an undisclosed amount to four others Who had sued regarding the lift.
In a separate ruling this month, a Los Angeles Superior Court judge threw out parts of the madison class action Against the foundation. But he said tenants are “likely to receive some reduction in the agreed rent” as compensation for the alleged plumbing and electrical problems, unsanitary conditions and other failings in shared parts of the building.
Judge William Highburger wrote in the decision, “Just because tenants lived in subsidized housing at below-market rent does not mean that they were obligated to pay their full agreed rent if there were material deficiencies or other deficiencies in the condition of the common area. ” ,
Times staff writer Doug Smith contributed to this story.
