A judge on Wednesday approved the sale of one of Los Angeles’ largest homeless housing complexes, marking the final step in averting a catastrophic loss of permanent shelter on Skid Row.
Los Angeles County Superior Court Judge Stephen Gurwitch said 17 buildings purchased for $10 million The fee, paid by Beverly Hills developer Leo Pustilnikov, is in the best interest of formerly homeless tenants and Los Angeles taxpayers, who have been funding the portfolio’s maintenance and repairs for 16 months.
“This is a solution that is the product of collaboration, hard work and checks and balances,” Gurwitch said. “Only time will tell if this will be successful, but I’m optimistic.”
On Wednesday, Gurwich approved the sale of another building, New Genesis, to KE Ventures, a company with Washington, D.C.-based multifamily developer, priced at $2.1 million. Both deals are scheduled to close next month. All 29 buildings previously controlled by the Skid Row Housing Trust have found new owners, in addition to 11 other properties previously transferred to nonprofit landlords.
The trust had been considered a national model for converting old one-room hotels and small apartment blocks in slums into supportive housing for homeless residents. But in February 2023, the nonprofit announced it can no longer pay its bills After years of leadership issues and financial challenges. decided to leave Its 2,000-unit portfolio is in disarray As tenants, many of whom are elderly, disabled or addicted to drugs, face damaged pipes and heating systems, pest infestations and Other horrific conditions.
Mayor Karen Bass, city attorney. Hydee Feldstein Soto and other city leaders push court ordered receivership Responsible for last year overseeing the portfolio and finding a new owner. They said at the time that without urgent action more than a thousand people could be forced onto the streets and a vital source of homeless housing would be abandoned.
This process is costly and Facing mistakes. The first receiver drafted was Mark Adams, Resigned under pressure Just three months after struggling with financing and management. The city did not conduct a full review of Adams — who had hosted Political fundraiser for city attorney and has a history of problems Other receiverships involving low-income tenants — before recommending him for the role.
city’s Bankruptcy administration costs are at least US$37 millionalthough part of the amount is expected to be repaid after sales approval closes on Wednesday.
Finding new owners has been a challenge for some of the same reasons trusts fail. Many buildings are aging and in need of extensive repairs; federal housing subsidies fail to cover rising monthly operating costs; and renting has become more difficult as leasing practices prioritize those with mental health and addiction needs. Current receiver Kevin Singer said in recent court documents Some properties are so valuable that they cannot be given up.
Because of these problems, City leaders initially proposed addressing the most problematic buildings and divest them to nonprofits, which will demolish them and build new homeless housing on their sites.
But that plan faltered in the spring as city and state budgets dried up. An agreement was reached with the AIDS Medical Foundation for some of the remaining buildings Failure occurred in April in worry The charity’s record in slumsa controversy over the provision of social services to tenants and claims by the foundation that conditions inside the building were worse than they imagined.
Pustylnikov has long been interested in these properties; Become a buyer afterwards. The developer is known for its plans Take advantage of state laws Build 3,500 new apartments in Beverly Hills, Redondo Beach and other affluent Southern California communities. Ten years ago he tried to amass a large portfolio in the city center with two wealthy investors Falling apart in litigation.
Pustylnikov said he is stepping in to prevent conditions in the favela from deteriorating and that he has learned the complexities of financing and managing affordable housing in the neighborhood. He is committed to maintaining social services for tenants, which is a critical need for Bath and the city.
“I want to thank the city, county and state for their efforts to protect these vulnerable populations, and I look forward to continuing to work with the mayor, city council and county board of supervisors to turn around these challenging and neglected properties,” said Pustielny Koff said in a statement.
Gurwitch did not formally object to the sale, which he said was an important factor in his approval of the sale after questioning city attorneys and the receiver during the 90-minute hearing. Gurwitch said he believes the decision will avoid outcomes that threaten the housing of vulnerable tenants and that the city has adequate oversight to ensure new owners improve the properties.
“In layman’s terms, anything is better than nothing,” the judge said. “But I think it’s a good thing.”
Ann Sewill, general manager of the Los Angeles Department of Housing, said after the hearing that she was impressed by the attention paid to the properties since Pustilnikov became involved in the deal. She said he tried to visit tenant units across the portfolio, ask detailed questions about building operations and work with the city.
“We have a clear vision of how to return these buildings to financial and practical viability,” Sewell said.
