LA City Council OKs $10M for receivership to oversee Skid Row Housing Trust

After previously approving $2 million in early October to maintain and repair 22 dilapidated buildings in the Skid Row area under a receivership, the Los Angeles City Council on Tuesday, Oct. 31, approved an additional $10 million to continue rehabilitation efforts on those properties.

The council voted unanimously to approve a $10 million loan for the receivership with additional recommendations to ensure transparency and accountability in how the funds are spent. The council approved the matter without prior discussion.

On Oct. 25, the Budget, Finance and Innovation Committee unanimously approved the funding request. The five-member committee had an hour-long discussion with Ann Sewill, general manager of the city’s Housing Department; Kevin Singer, CEO of Receivership Specialists; and Rick Marquis, senior project manager for Singer.

Councilmember Monica Rodriguez, who sits on the budget committee, asked several questions with the intent of understanding how the money would be used and forthcoming results that council members would see in the next few months of the receivership.

“I already have a bad taste in my mouth with the way this began. And so, when you then follow that experience with a ‘hurry up and give me $2 million, or give us $12 million. Trust us,”‘ Rodriguez said. “Sorry, that part was already done with the first receiver. That’s unacceptable to me.”

She added, “But it does leave me with a number of these lingering concerns about the oversight — about making sure there isn’t any misappropriate or misuse of these funds.”

Earlier this year when the Skid Row Housing Trust — a non-profit that formerly managed the 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, 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, a receiver, 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.

In June, Judge Mitchell Beckloff, who is overseeing the receivership, concurred with city leaders’ call to remove Mark Adams, president of the California Receivership Group, as receiver. As part of those events, the Council also authorized a $10 million loan to support “critical building repairs and operations” for those properties in the housing trust.

Sewill assured the committee that Singer works for the court and costs-related to the receivership are verified by the city attorney’s office, and the court has deemed them reasonable.

Kevin Singer, who replaced Adams, emphasized “this is a health and safety case where the buildings were not being maintained.”

He added, “The city has hundreds of outstanding violation on these buildings, and our goal as court-appointed receivers is to come in, look out for the health and well being of the residents, take care of the code compliance issues, then work with parties to the case and find new, responsible non-profits to take on these buildings after we get them into that stage.”

Singer noted there are 1,000 people living at some of these 22 properties. These people would be on the streets, if it were not for the city’s decision to intercede when the non-profit failed.

While Singer highlighted some of his team’s efforts in supporting tenants — such as establishing a hotline where tenants can call if they have questions or concerns, increasing security and cleanliness — reports show that some properties under the receivership still remain in “severe disrepair” and tenants face challenges, such as an influx of crime, rampant drug abuse and overall health issues.

Singer said that law enforcement agencies receive less calls for service at proprieties under the receivership, and his team is taking steps to address ongoing issues.

According to a report from Sewill to the City Council, the initial $10 million was budgeted to “cover the gap between revenue and expenses, as well as abatement and repair costs” for up to six months. But total expenses were much higher than expected — approximately $3.6 million were spent on security, insurance, utilities and janitorial costs while operating costs averaged about $2.17 million per month.

The receivership is expected to run out of money early October, which prompted the request for additional funding.

“We will return to Council in November with a request to authorize additional funding to cover the final amount owed to the former receiver pursuant to a court ordered final accounting, and to identify necessary funds to cover the SRHT Receivership’s operations for the first quarter of 2024,” Sewill wrote in her report.

The Housing Department also expects that the monthly costs of the receivership will go down significantly as work progresses.

“With the new Section 8 rent payment standards and the assistance of our partners at Housing Authority City of Los Angeles and the county, the gap between monthly income and expenses should be much smaller. When the buildings are fully redeveloped income will be projected to adequately cover expenses,” according to the report.

The Housing Department expects that only 12 of the “oldest and most challenging” properties will remain in the receivership by the end of the year.