The City Council is expected Tuesday to vote on a $15 million request to cover costs for the continuing maintenance and repair of 22 dilapidated buildings in the Skid Row area under a receivership.
About $14.5 million would cover repairs, debts owed to the receivership and deficits due to low rent for more than 1,500 units and the buildings through the end of the fiscal year, June 30, according to city officials.
An additional $500,000 would be used to retain consultants to develop a recapitalization strategy for the portfolio.
If approved, the funding will be the city's third allocation to support the Skid Row Housing Trust.
Earlier this year, the trust -- a nonprofit organization that formerly managed 29 buildings -- announced it was financially incapable of maintaining the properties. The city of Los Angeles entered into a court- ordered receivership. According to the City Attorney's Office, a receivership is a legal process that allows a court-appointed person 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.
Seven of the 29 buildings were removed from the receivership and placed with the National Equity Fund, a nonprofit housing organization, by a court order in June.
In March, the City Attorney's Office asked a Superior Court judge to appoint a health and safety receiver to take control of the properties and address various code and health violations.
The first receiver, Mark Adams, president of the California Receivership Group, was replaced by the second and current receiver Kevin Singer, CEO of Receivership Specialists, after a series of events prompted city officials to request Adams' removal.
City Council and Mayor Karen Bass previously approved a total of $22 million in loans that the Housing Department said will cover costs through Dec. 31.
Part of the $22 million expended also covered a $1.9 million payment to Adams for bills associated with security and repairs to the buildings, however, the L.A. Times reported those costs may grow. The City Attorney's Office hired a forensic accounting team to review other receipts -- debts Adams contends he is owed back.
The Times reported some of those costs are for emails he wrote and interviews he declined, among others. The judge will have final say regarding that issue, according to the Housing Department.
Ann Sewill, the Housing Department's general manager, previously said that of the proposed $14.5 million, $4.2 million would cover expenses claimed by Singer; $5.8 million would cover expenses and operations not covered by rents between January and March; $3.1 million would pay the current receiver for capital expenditures; and lastly, $1.1 million would pay expenses and operations not covered by rents between April and June.
"What brought us to this point is that the buildings cost about $1,000 per unit per month to operate, and the income has been about $700 per unit per month," Sewill said.
Sewill said between Jan. 1 and June 30, the receivership will need the funding to stabilize the properties and minimize ongoing operational deficits while supportive housing partners can be identified and ultimately take ownership of some of these buildings, if not all.
Two of the 22 buildings are expected to exit the receivership in December, she added, and another eight should exit by March.
"That will leave us with 12 buildings with 809 units in the receivership, which is really the focus of our work to stabilize the portfolio," Sewill said.
According to a report from the Housing Department, Singer intends to conduct a receivership sale early 2024 and proposes that any of the 12 buildings remaining that are not purchased be acquired by the city -- using the $22 million already expended as credit.
The council's Housing and Homelessness, and Budget, Finance and Innovation committees approved the request in late November.
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