A City Council committee Wednesday approved a slew of recommendations for the continued maintenance and repair of 22 dilapidated buildings in the Skid Row area under a receivership — and the city may look to acquire these buildings as part of a bidding process early next year.
The Housing and Homeless Committee unanimously approved a request from the Housing Department for a third allocation of funding, totaling about $15 million, for the Skid Row Housing Trust receivership.
About $14.5 million would cover upgrading deficits, repair costs and receiver costs for the over 1,500 units and 22 buildings through the end of the fiscal year, June 30, city officials said.
An additional $500,000 from a special city fund would be used to retain consultants to develop a recapitalization strategy for the buildings.
Ann Sewill, the Housing Department’s general manager, said of the $14.5 million that $4.2 million would cover expenses claimed by the former receiver, which are yet to be confirmed by the court; $5.8 million would cover expenses and operations not covered by rents between January and March; $3.1 million to pay the current receiver for capital expenditures; and lastly, $1.1 million for expenses and operations not covered by rents between April and June — which at that point, the receivership is expected to have ended.
“What brought us to this point is that the buildings cost about $1,000 per unit per month to operate, and the income has been about $700 per unit per month,” Sewill said.
According to Sewill, the city would bid $22 million that has already been invested as a credit bid during a pending receiver sale happening in January or February. If nobody else comes in, the city would end up owning the Skid Row Housing Trust portfolio.
She noted, if the city were to acquire the portfolio, it would engage with the Housing Authority of the City of Los Angeles to manage the buildings.
Earlier this year when the Skid Row Housing Trust — a nonprofit organization that formerly managed 29 buildings, announced it was financially incapable of maintaining the properties — the city of Los Angeles stepped up and entered into a court-ordered receivership.
Seven of those 29 buildings were removed from the receivership and placed with the National Equity Fund, a housing nonprofit organization, by a court order in June.
According to the City Attorney’s Office, a receivership is a legal process that allows a court-appointed person to take control of a property, address the issues, bring it into compliance and improve the quality of life for residents and the surrounding community.
Sewill said the housing trust was one the city’s “largest” and “oldest” supportive housing providers with a portfolio of over 2,000 units and 29 buildings that were mostly built in the 1920s.
These buildings were redeveloped between 1987 and 2020 in an effort to make them into modernized, accessible housing.
In March, the City Attorney’s Office asked a Superior Court judge to appoint a health and safety receiver to take control of the properties and address various code and health violations.
The first receiver Mark Adams, president of the California Receivership Group, was replaced by the second and current receiver Kevin Singer, CEO of Receivership Specialists, after a series of events prompted city officials to request Adams’ removal.
City Council and Mayor Karen Bass previously approved a total of $22 million in loans that the Housing Department says will cover through Dec. 31.
Sewill said between Jan. 1 and June 30 the receivership will need the funding to stabilize the properties and minimize ongoing operation deficits while supportive housing partners can be identified and ultimately take ownership of some of these buildings, if not all.
Under Singer’s leadership, Sewill expressed significant progress has been made, specifically that 307 violations have been cleared and more than 150 units have been returned to a rentable state.
Two of the 22 buildings are expected to exit the receivership in December, she added, and another eight should exit by March.
“That will leave us with 12 buildings with 809 units in the receivership, which is really the focus of our work to stabilize the portfolio,” Sewill said.
Council members who sit on the Housing and Homeless Committee were hesitant about the request, but ultimately approved it with the understanding that the city is preserving housing units.
Councilwoman Nithya Raman, who chairs the committee, asked whether the city would see a return of the money they invested in the housing trust.
Sewill explained there are two ways — one being housing partners will pay a share of expenses or that developers enter the picture.
Councilman Bob Blumenfield said he was supportive of the request. But as the chair of the Budget Committee, the councilman noted he was “squeamish” as the city will be facing deficit spending in the coming fiscal year.
Councilwoman Monica Rodriguez expressed frustration in the manner the issue of the housing trust has been handled.
“We ended up going down this path, and then we ended up having it blow up in our face,” Rodriguez said. “We are further burdening taxpayers with these obligations and now saddling ourselves with far more obligations that are going to affect our bottom line.”
She noted, at this point, the city is committed, and wants to ensure that repairs and maintenance of these buildings are up to standard, as well as wages and conditions for workers.
The request is expected to come to full council early December.