Pointing to a series of problems and a breakdown in trust, L.A.’s city attorney is now recommending yanking control of the troubled Skid Row Housing Trust from the person she had a judge put in charge just a few months ago.
In a memo dated Friday, City Attorney Hydee Feldstein Soto and the city’s housing director outlined their support for asking the judge to replace Mark Adams as the properties’ receiver — and have the city lend up to $10 million toward fixing problems with the apartments.
To incentivize the judge to replace him, the city would be offering the low interest loan on the condition that Adams is replaced. City councilmembers are expected to take up the recommendation at a budget committee meeting Monday. The committee's chair, Bob Blumenfield, told LAist Friday afternoon that he supports the move to replace Adams.
“All of these red flags move from being red flags to being flashing red lights that say, 'watch out'," Blumenfield said.
"We really need to do everything we can to prevent a human tragedy from getting worse, and to look after the public dollar as well. Because that is very much at stake," he added.
WHAT IS A RECEIVER?
A receiver is someone appointed by a court to take control of a property and fix problems. They essentially become the landlord, with oversight by a judge and the city. The Skid Row Housing Trust case is by far the city’s largest court-appointed receivership in the history of L.A., according to the city attorney.
Back in late March, Feldstein Soto had asked a court to put Adams in control of the trust’s 29 properties, which are home to about 1,500 formerly unhoused people — after the nonprofit Housing Trust fell apart financially and many of its apartments were deemed health and safety risks.
But in a reversal of confidence, Feldstein Soto joined with L.A. Housing Department chief Ann Sewill to recommend Adams be replaced by Kevin Singer of Receivership Specialists, for “some or all” of the properties.
'Disappointing' progress
“[Adams’] progress toward resolving serious code enforcement violations such as repairing the fire/life safety systems, fixing plumbing problems in common area restrooms and restoring units that have been cited for abatement by HACLA for minor code violations has been disappointing,” states the memo to the city council.
“In addition, just a couple of weeks ago, the property management company hired by [Adams] sent out 3-day eviction notices to hundreds of tenants which were then rescinded but which should never have been sent.”
Feldstein Soto previously told the Los Angeles Times the 451 eviction notices were illegal under the city’s tenant protection law and violated his promise to not evict anyone solely for being behind on rent.
The memo also says Adams hasn’t hired enough staff to repair and secure the properties and says he hasn’t provided the court-ordered reporting and accounting that the city and other agencies require.
“It became apparent that the receivership would be better served with a different receiver,” it states.
Adams didn’t respond to LAist’s requests for comment Friday morning, and a spokesperson for the city attorney said they had no comment.
In recommending Singer to replace Adams, officials wrote that Singer has handled nearly 500 receiverships statewide — more than Adams’ roughly 300 — and that San Francisco officials spoke highly of his work in the city, which included “a very challenging receivership” in the Tenderloin District.
Asked if Singer received more vetting by the city attorney than Adams did, Blumenfield said he and others have asked and "we have been assured there’s been considerably more vetting."
What happens next
The request to extend city loans up to $10 million — as long as the court replaces Adams — now heads to the city council’s budget committee for a decision. That meeting is set for Monday at 2 p.m.
“One way or the other, the public ends up on the hook for this," Blumenfield told LAist, saying that he believes if the Housing Trust implodes, many of the residents will end up back on the streets with no other options.
"An ounce of prevention is worth a pound of cure. We need to be smart about this and engage as early as we can to prevent a bigger catastrophe that will also end up costing us a tremendous amount of money – which is why we're even entertaining the idea of engaging with our own tax dollars in this process.”
As part of the loan, Blumenfield said, the city would put in place more stringent requirements for the new receiver to update the city – and consequences if that doesn't happen.
Blumenfield said that's something the city can't currently require, because the receivership is a court-controlled process and the city isn't a lender.
It will ultimately be up to L.A. Superior Court Judge Mitchell Beckloff whether to replace Adams. His support of Adams could be waning — last week, during a tense court hearing in downtown L.A., Beckloff removed seven properties from the receivership and questioned Adams’ efforts to improve the properties. Still, the judge expressed support for Adams, saying he thought he was the right person for the job.
It’s unclear what the status is of the city attorney’s investigation of Adams’ performance, which she revealed last week. Her spokesperson declined to comment about it Friday.
The key going forward, Blumenfield said, is for the housing units to be fixed up quickly so they can become financially stable. Currently, hundreds of the units are ineligible for federal housing voucher dollars because the city has declared they violate livability standards, including for issues like fire safety.
Past issues
The move comes after the improper eviction notices, and reports by the L.A. Times and LAist about multiple judges finding problems with his past receiverships, including major overbilling for his company’s services.
LAist also reported earlier this month that a company Adams created for his receivership work has been banned by the state from doing business since 2015 over unpaid taxes. Adams told us he’d look into it and said his current company is in good standing.
SKID ROW HOUSING TRUST TIMELINE
The Skid Row Housing Trust is a nonprofit formed in the late 1980s and is the largest provider of subsidized housing in Skid Row, L.A.’s main neighborhood of unhoused people. The organization develops, manages and operates 29 buildings in downtown L.A. that house people who formerly experienced homelessness. In recent years, the nonprofit completed construction on about 250 units with Measure HHH funding, the $1.2 billion housing bond approved by voters in 2016.
- Feb. 7: Warning of an impending financial collapse, the nonprofit’s interim CEO briefs employees on efforts to have other housing providers take over its 29 buildings, according to the L.A. Times. The trust had been financially underwater for years, running annual deficits as big as $14 million.
- March 30: Citing unsafe conditions, L.A. City Attorney Hydee Feldstein Soto files court papers asking a judge to put Mark Adams in charge of the nonprofit’s properties as a court-appointed receiver.
- April 5: Three people are found dead in a Skid Row Housing Trust building due to suspected overdoses, according to the Times.
- April 7: L.A. Superior Court Judge Mitchell Beckloff approves the city attorney’s request and appoints Adams as receiver. "We are seeing the train go off the cliff here," an attorney in Feldstein Soto’s office told the judge, explaining the urgency of the situation.
- June 2: Illegal eviction notices are sent to 451 tenants of the trust by a property management company Adams hired, according to the city attorney. The following Monday, Adams rescinded the notices, saying they were sent in error.
- June 6: City attorney staff send a letter to Adams saying they were “shocked and deeply disappointed” by the eviction notices. In an interview with the Times, Feldstein Soto cited other issues like a lack of 24/7 security and said she was losing confidence in Adams.
- June 15: Beckloff removes seven of the properties from Adams' control, after growing frustrated at times with Adams' responses. Adams said the move could harm his ability to raise much-needed operational funds.
- June 23: The city attorney, who originally recommended Adams for the job, joins a top city housing official to recommend that Adams be replaced and that the city loan up to $10 million to fix the housing trust properties. The decision on replacing Adams is up to the judge, and the loan decision now heads to the city council.
City officials have said the stakes are high with the housing trust. For decades, it’s been one of L.A.’s largest providers of affordable housing to unhoused people. But its buildings have fallen into disrepair in recent years as its nonprofit owner descended into disfunction and financial ruin, according to the memo and reporting by the Times.
On April 5, just before Adams was put in charge, three people were found dead in a Skid Row Housing Trust building due to suspected overdoses.
When Feldstein Soto announced in late March she would be seeking the receivership that put Adams in control of the properties, she said the 1,500 people living in its buildings are extremely at-risk.
“[These] are among our most marginalized and vulnerable populations,” Feldstein Soto told reporters. “If they lose their housing, there is very little question that they will spill out onto our streets.”
LAist reporter David Wagner contributed to this story.
