Mark Adams, the trustee overseeing 1,500 Skid Row tenants, tendered his resignation Thursday, ending a tumultuous three-month tenure that failed to stabilize the neighborhood’s largest portfolio of homeless housing, while the properties were saddled with millions of dollars in additional debt.

Adams resigned at the request of Los Angeles Supreme Court Justice Mitchell L. Beckloff near the end of a two-hour hearing, during which Beckloff ruled that litigation between Adams and city officials was beyond the formidable task of managing the nonprofit’s 29 properties. Landlord Skid were overwhelming. Terraced Houses Trust.

Mayor Karen Bass and City Atty. Hydee Feldstein Soto had recommended Adams to manage the trust portfolio.

Feldstein Soto announced that Adams, one of the most experienced trustees in the state, was uniquely qualified to stabilize the properties and finance repairs so other affordable housing providers could take them over.

But she admitted that amid the urgency of the trust issues, her office hasn’t fully vetted his resume. Feldstein Soto and other city leaders said they had lost faith in Adams as problems with oversight of the properties escalated over the past month.

It seems to me that a fresh start might be the way to go, Beckloff said.

Beckloff’s hands were partially tied by a city council decision

,

this week to provide $10 million in new funding, only on the condition that Adams is impeached. With Adam’s trusteeship virtually out of money due to weeks of wrangling over raising funds, the judge ruled that the city’s plan was the most responsible way to continue paying for needed upgrades and repairs.

City officials hope the funding will cover unpaid security and other bills Adams incurred while giving Kevin Singer, the replacement receiver Beckloff approved Thursday, enough dollars to manage the trusts’ properties for at least another four months.

Adam’s tenure has extended the turmoil faced by the trusts’ previously homeless tenants, who have endured years of mismanagement and financial disarray as conditions in the buildings steadily deteriorated. In April, with the trust unable to pay its bills and residents reporting lack of security and property management, broken doors, windows and plumbing, and widespread trespassing and drug abuse, Beckloff appointed Adams at the request of Bass and Feldstein Soto.

Shortly thereafter, a Times report details past cases under Adams’ receivership in which property owners lost their homes, tenants were at risk of eviction and he overcharged by six-figure sums.

The city’s issues with Adams first surfaced in a court hearing last month. He had borrowed $1.3 million for trust operations and upgrades at 15% interest, which the city said violated a pledge to only make loans with interest rates less than 10%.

The following week, the property management company that hired Adams issued 451 eviction notices to tenants who had not paid rent in May. A tenant was told he owed $56,

other

many others were exempt from payment due to the appalling conditions of their unit. Feldstein Soto considered all announcements illegal under city law.

Adams has said the notices were sent without his knowledge, and he replied to them in letters to tenants.

Since then, city officials have complained that Adams is not providing them with detailed financial information and that repairs are slow or non-existent. The number of properties with faulty fire and safety equipment has more than doubled since Adams took over the portfolio, requiring costly 24/7 security guards, Feldstein Soto told a council committee this week.

Adams argued against the city’s claim that fire safety had deteriorated during his tenure, saying nearly all buildings had problems before he was appointed.

In court documents filed this week, he said city officials scapegoated him for their failure to let the trusts’ portfolio deteriorate and deliberately starve him of money. The city’s financial support contingent on his replacement, he said, was akin to holding trust residents hostage while critical security services and emergency repairs were left unfunded.

Frankly, the city’s actions could end up costing lives, Adams wrote.

Initially, Adams called on Beckloff to order the city to provide him with the $10 million funding. But on the eve of Thursday’s hearing, Adams filed a statement saying he had agreed with Avatar Financial Group, a private lender in Seattle, on a $12 million loan at 15% interest with an additional down payment. of $800,000.

In court on Thursday, Adams continued to point to lack of funding as the main issue facing the receivership and said he was confident he could get the job done if he had access to the money.

To say the lack of money is a problem is an understatement, Adams said. Because it’s the problem.

Beckloff seemed to agree with Adams, reiterating the praise he had expressed in previous hearings that Adams was well qualified for the part. The judge also stated that he had no problem with Adam’s work and found no wrongdoing.

Managing the trusts’ properties was such a tall order that Beckloff said he wasn’t sure anyone could do it better.

But the judge determined that the city’s financing arrangement, with an interest rate of up to 3%, was the best way forward.

It’s become a situation where I have the city in one corner and the receiver in another and I have a lot of people around the ring, Beckloff said. But at the heart of it are 1,500 people at risk of leaving their homes.

How much it will cost to restore the trust portfolio and who will pay the bills remain open questions.

Trustees typically pay for repairs and the trustee’s fees by tapping equity capital or using proceeds from property sales or higher rents. But the trust is on the brink of insolvency, federal and local restrictions prevent renters’ rents from rising, and amid a homelessness crisis, city leaders are desperate for low-cost housing.

The $10 million loan comes from an affordable housing program run by the city. City leaders told councilors this week they expected they would eventually be paid back as property was spun off to other entities, but that city and other government grants would likely need to cover at least some of the debt.

Appearing in court virtually on Thursday, city officials and Singer engineered the new $10 million budget by predicting that more than half of the trusts would build affordable housing complexes.

the newer and more valuable properties

would be transferred to other not-for-profit housing providers in the coming months. Beckloff has already authorized the sale of six such buildings to PATH Ventures and another to LA Family Housing.

That would put a dozen of the trust’s residential hotels, many centuries old, and the other most dilapidated buildings into receivership.

We will most likely have to go back to city council and ask for some additional funding after we show that we’ve done a great job, Singer said.

One key variable, city leaders said, remains unknown: what will cost Adam’s tenure. Adams had 18 employees assigned with hourly rates ranging from $151 to $465 for himself.

In lawsuits, Adams said fees for his company, California Receivership Group, totaled $329,000 for April and May, not counting what is owed to the outside law firm, property management, security and other contractors he hired. City attorneys said in court Thursday they believed the total of outstanding bills was more than $3 million.

Feldstein Soto, who was not in court on Thursday, tried to assure councilors that Singer will do better than Adams. At a council committee hearing this week, she cited a more thorough examination of the new trustee’s nearly 500 files, his work on complex cases in San Francisco and his willingness to provide the city with detailed information about his progress.

It’s very hard to come and admit a mistake, Feldstein Soto said at the hearing. But I do think part of our job is that if there’s a mistake, we have to correct it.”