A judge on Wednesday approved the sale of one of the largest collections of homeless housing in Los Angeles, marking a final step toward avoiding a catastrophic loss of permanent shelter on Skid Row.
Los Angeles County Superior Court Judge Stephen Goorvitch said The purchase price of 10 million dollars for 17 buildings The payment to be made by Beverly Hills developer Leo Pustilnikov was in the best interest of the formerly homeless tenants and Los Angeles taxpayers who had been funding the portfolio's maintenance and repairs for 16 months.
“This is a solution that is the result of collaboration, hard work and checks and balances,” Goorvitch said. “Only time will tell if it will be a success, but I am optimistic.”
Goorvitch on Wednesday approved the sale of an additional building, New Genesis, to KE Ventures, an entity affiliated with a multi-family developer based in Washington DCfor $2.1 million. Both deals are set to close next month. Along with earlier transfers of 11 other properties to nonprofit owners, all 29 buildings formerly under the control of the Skid Row Housing Trust have found new owners.
The foundation was once considered a national model for taking old one-room hotels and small apartment complexes on Skid Row and rehabilitating them into supportive housing for homeless residents. But in February 2023, the nonprofit announced He could no longer pay his bills. After years of leadership problems and financial difficulties, the decision left Your portfolio of 2,000 units is in disarray As tenants, many of whom were elderly, disabled or drug addicts, they faced plumbing and heating problems, vermin infestations and Other terrible conditions.
Mayor Karen Bass, City Attorney Hydee Feldstein Soto and other city leaders pushed for a court-ordered judicial administration Last year, a process of overseeing the portfolio and finding new owners had begun. If urgent action was not taken, they said at the time, more than a thousand people could be forced to live on the streets and a critical source of housing for homeless people would be abandoned.
The process has been costly and faced mistakes. The first receiver chosen, Mark Adams, resigned under pressure after just three months of struggling with funding and management. The Times reported that the city failed to fully vet Adams, who had been hosting A political fundraiser for the city attorney. and had a history of problems in Other receiverships involving low-income tenants —before recommending him for the position.
The city of The bill for the judicial administration is at least 37 million dollarsalthough part of that amount is expected to be refunded once sales are approved on Wednesday.
Identifying new owners has been a challenge, for some of the same reasons the trust failed. Many buildings are aging and in need of major repairs; federal housing subsidies have not covered rising monthly operating costs; the tenant population has become more difficult as leasing practices prioritize those with mental health and addiction needs. Kevin Singer, the current trustee, said in recent court filings that some of the properties had such negative value that they could not be given away.
Due to these problems, City leaders had originally proposed taking over the most problematic buildings. and hand them over to nonprofit organizations that would demolish them and build new housing for homeless people in their place.
But that plan fell through in the spring, when city and state budgets ran out. A deal for some of the remaining buildings with the AIDS Healthcare Foundation broke down in April Amid concerns about The charity's history on Skid Rowdisputes over the provision of social services to tenants and the foundation's claim that conditions in the buildings were worse than they believed.
Pustilnikov, who had long been interested in property, emerged as a buyer later. The developer is best known for his plans. To take advantage of a state law build 3,500 new apartments in Beverly Hills, Redondo Beach and other wealthy Southern California communities. His attempt to amass a large downtown portfolio with two wealthy investors a decade ago collapsed amid litigation.
Pustilnikov has said he is intervening to prevent living conditions in Skid Row from worsening 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, a key demand of Bass and the city.
“I want to thank the city, county and state for their efforts to protect this vulnerable population and look forward to continuing to work with the mayor, City Council and County Board of Supervisors to improve the situation of these challenging and abandoned properties,” Pustilnikov said in a statement.
No formal opposition to the sale arose, which Goorvich said was a significant factor in its approval after a 90-minute hearing in which he questioned city attorneys and the receiver. Goorvich said he was convinced this decision would avoid an outcome that would threaten the homes of vulnerable tenants and that the city had sufficient regulatory authority to ensure the new owners would improve the properties.
“To put it colloquially, something is better than nothing,” the judge said. “But I think this is a good thing.”
Ann Sewill, the managing director of the Los Angeles Department of Housing, said after the hearing that she had been impressed by the attention Pustilnikov had paid to the properties since he became involved in the deal. She said he had attempted to visit tenant units across the portfolio, asked detailed questions about building operations and worked collaboratively with the city.
“We have a clear vision of how to return these buildings to financial and physical viability,” Sewill said.
