The Votes Are In!
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View Winners → Politics Oct 14, 2023
| Photo courtesy of Stephen zeigler/Wikimedia Commons (CC BY 4.0)
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By Jose Herrera
In a rushed move, the Los Angeles City Council on Friday approved an additional $2 million loan to maintain and repair 22 dilapidated buildings in the Skid Row area under a receivership, which two council members said is necessary to ensure the city meets the needs of the buildings’ tenants.
The council voted 11-0 to approve the matter with council members Heather Hutt, John Lee, Curren Price and Monica Rodriguez absent during Friday’s council meeting.
There was a call to hold the matter until it was discussed in more detail in the Budget, Finance and Innovation Committee, as well as the Housing and Homelessness Committee. However, Councilman Bob Blumenfield, who chairs the budget committee, urged the council to approve the minimum required amount of $2 million the LA Housing Department and receiver requested to “settle some of their debts.”
“I was uncomfortable waiving that, but I also don’t want there to be any interruption in services,” Blumenfield said prior to the vote. “We’re then going to send the remainder of the requested loan to the committees, where we can vet it and have a better understanding of all the debts that are happening here.”
Blumenfield added, “What the receiver is doing — by all accounts, this is not a criticism of the current receiver — is taking the necessary actions to move forward on this.
“This is just about our council doing its due diligence, and I wish we could have heard the whole thing before, but the timing is what is needed. The time is critical, and we don’t want there to be an interruption,” Blumenfield said.
Earlier this year when the Skid Row Housing Trust — a nonprofit 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, 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.
Initially, Judge Mitchell Beckloff appointed Mark Adams, president of the California Receivership Group, as the receiver. Adams was tasked to work with the city to ensure these buildings were rehabilitated and maintained, so that units are not left vacant.
However, a few months into the job, Adams came under fire. He received criticism for allegedly failing to make progress on rehabilitating the buildings and finding credit at good rates.
In the spring, a firm he hired sent eviction notices to hundreds of tenants who were behind on rent. Adams has denied authorizing the notices and retracted them.
On June 27, the City Attorney Hydee Feldstein Soto and Housing Department General Manager Ann Sewill came to the council seeking the removal of Adams — which members approved in a 12-0 vote. Soon after, the court agreed to it as well. As part of that move, the council also authorized a $10 million loan to support “critical building repairs and operations” of the receivership.
Kevin Singer, CEO of Receivership Specialists, replaced Adams.
Sewill wrote in a report to the council that under the current receiver, Singer, all properties have 24-hour security and janitorial services that are available on weekdays.
The buildings also receive daily inspections to verify security, cleanliness and check fire watch logs.
Sewill noted that Singer’s “highest priority” was addressing fire/life safety issues and removing as many properties off a fire watch list, with only 10 currently on that list.
Yet, reports show that some properties under the receivership still remain in “severe disrepair” and tenants face many challenges, such as an influx of crime, rampant drug abuse and overall health issues.
According to Sewill’s report, 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 city’s housing department expects that only 12 of the “oldest and most challenging” properties will remain in the receivership by the end of the year.
Council committees will consider fulfilling the request of $10 million for the receivership in the future.
