A deal to sell a half-dozen Skid Row housing developments unraveled Thursday, putting the city of Los Angeles back on the hook for costly repairs.
The AIDS Healthcare Foundation had agreed to buy six buildings owned by the Skid Row Housing Trust for $27 million earlier this month. The trust collapsed in February, leaving the fates of more than 1,000 low-income tenants at risk.
But during due diligence, AHF found that repairing the troubled single-room hotels would cost too much. It would take $14 million to bring the six properties up to a “fully habitable state.”
“While AHF is gratified that the Los Angeles City Council and Mayor Karen Bass have indicated their support for the sale, the current circumstances do not allow for a sustainable model,” according to a statement from the foundation. “Any buyer of these properties will find themselves in the same situation that led to the failure of Skid Row Housing Trust in short order unless a new model can be developed.”
The city of L.A. has already authorized nearly $40 million for operations and repairs at the buildings. The departure of AHF could force the city to front more money to rescue the properties.
According to the L.A. Times, Receivership Specialists, the firm that manages the Skid Row Housing Trust’s portfolio, said that unless the sale was approved by May 10, their bank accounts will be empty by the end of the month.
"We are engaging with prospective purchasers and hope to have a new deal in place in the next two weeks (possibly sooner)," Jackson Wyche, a senior project manager with Receivership Specialists, told the Times.
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Three other bidders previously made offers on the properties, but they were either lower than AHF’s offer or involved complicated financing that Receivership Specialists said was not viable.
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