How problems at two of Skid Row’s biggest landlords threaten to worsen LA’s homelessness crisis

(Francine Orr/Los Angeles Times)

How problems at two of Skid Row’s biggest landlords threaten to worsen LA’s homelessness crisis

California Politics

Liam Dillon
Doug Smith

Dec. 28, 2023

One of the most vexing factors contributing to Los Angeles’ homelessness problem is the lack of affordable places for people coming off the streets.

Part of the solution would include homes that have been on Skid Row for more than a century. One-room hotels, or SROs, consist of small rooms with shared bathrooms. Because monthly rental prices are often measured in hundreds of dollars rather than thousands, SROs are considered the best


First place of housing over homelessness,


tailored to help the 4,400 people now estimated to be living on the streets or in shelters in Skid Row.

But that’s it rickety. Two of LA’s largest landlords of SROs and other low-cost units in Skid Row, the Skid Row Housing Trust and the AIDS Healthcare Foundation, have struggled to make the 2,700 units they manage there safe and livable. The trust collapsed financially earlier this year, in such dire circumstances that its 29 buildings fell into receivership. The AIDS group’s tenants, meanwhile, have had to deal with faulty elevator, plumbing and electrical systems, pests and high crime rates, an earlier Times investigation found.

AIDS Healthcare Foundation spokesperson Jacki Schechner did not respond to a list of questions from The Times but noted in an email that the foundation has spent nearly $30 million rehabilitating and repairing its L.A. buildings after had bought this one.

In previous statements, the foundation said its problems are the same as those of other Skid Row landlords: little public support, old buildings and a tenant population plagued by mental health issues and drug addiction. Operations across the portfolio have shown a deficit of more than $15 million, the report said.

The dismal state of Skid Rows’ SROs leaves many of LA’s poorest residents without a reliable source of permanent housing and


frustrated politicians and advocates trying to respond to the homelessness crisis.

The problem is we don’t have enough of anything, says John Maceri, chief executive of People Concern, a nonprofit organization for the homeless. The sooner we can renovate any distressed properties, whether in these two portfolios or in other portfolios, and make them habitable, it opens up the pipeline.

Blaine Heffron, 36, has lived in SROs owned by the two nonprofits. In early 2020, Heffron moved into the Skid Row Housing Trust’s Senator Hotel Apartments and quickly felt overwhelmed by the small room, grim shared bathrooms and piles of trash littering the hallways. He lasted fifteen months before giving up the apartment and the housing allowance, leaving his share of the rent at just $62 a month.

Heffron ventured less than half a mile


at the AIDS Healthcare Foundations King Edward Hotel. Even though his rent rose to $575 a month, it was still cheap enough to manage. As with the Senator, Heffron had to share toilets and showers with other tenants. But his room was three times the size and the building was cleaner.

Then, as he described in a Times story that published the case, his 2-year-old pit bull died when the radiator in his room exploded.

In one of them they killed my dog, Heffron said. In the other, no one died, but living conditions were appalling.

SROs emerged in the late 1800s and early 1900s as spaces for temporary workers who came to Los Angeles via the railroads and evolved into permanent housing for some of the region’s most vulnerable. Typically a few stories high with dozens of private rooms and communal bathrooms, SROs can be so spartan that they have no kitchen facilities.

They fell apart in the 1980s. The Skid Row Housing Trust was created to rehabilitate and preserve as many SROs as possible, and the nonprofit was once considered a model for leveraging government subsidies to operate the buildings and provide support services to its tenants.

Despite the trust’s intervention, other SROs continued to deteriorate, leaving buildings with vacant and uninhabitable units. In 2017, the AIDS Healthcare Foundation began purchasing and rehabilitating buildings using a different strategy: avoiding public funding and not offering service programs in an effort to prove that SROs could be run more cheaply.

Tenant advocates, homeless services and other nonprofit landlords say poor decisions by the leaders of the AIDS Healthcare Foundation and the Skid Row Housing Trust have contributed to many of the problems they face.

In recent years, a revolving door of CEOs at the trust has pursued a series of questionable money-making schemes, including a failed proposal to develop a 10-acre cannabis farm in South LA where the tenants would work. As nonprofits’ balance sheets crumbled, executives continued to sign six-figure consulting contracts and hire family members of top executives.

The entry of the AIDS Healthcare Foundation into the field came at the urging of Michael Weinstein, its leader since he co-founded the organization, now the world’s largest AIDS charity, mid-crisis.

1980s. Fueled by $2.2 billion in annual revenues, much of it from its pharmacy division, it has spent $190 million purchasing 16 properties in Los Angeles and manages 1,500 units.

But the group had no experience with housing for the homeless and has failed to address some structural deficiencies in the buildings. And citing costs, it has chosen not to offer social services to its residents, even though expert research shows this is essential to keeping tenants with mental health and addiction issues housed.

Stephanie Klasky-Gamer, president and CEO of LA Family Housing, which manages 36 affordable and homeless housing projects in the region, said both organizations have not done the improvements and tenant care needed to stabilize their buildings.

I think in both cases it was about the lack of attention to the needs of the properties and tenants living there, Klasky-Gamer said.

Anita Nelson, the CEO of SRO Housing Corp., a nonprofit landlord founded around the same time as the trust, said she is concerned that her portfolio could suffer the same fate as the trust’s. Her organization owns 33 properties, half of which are SROs.

Nelson said low voucher revenues, rising insurance premiums and slow rent collection, building repair backlogs and gaps in social services due to the COVID-19 pandemic have left her group in dire straits.

The floodgates are hitting us, Nelson said. It looks a bit like an avalanche that has built up.

Managing the Skid Row Housing Trusts buildings in receivership has been expensive, and it is expected to take almost a decade to rehabilitate all assets.

City leaders have lamented that each unit is operating at an average $300 deficit because federal housing vouchers don’t provide enough to keep up with costs. The City Council has approved nearly $40 million in taxpayer money since March to subsidize operations and repairs, with more money planned for next year.

Eight of the trust’s 29 properties have been transferred to other non-profit landlords, with another nine expected to follow in the coming months. But a dozen of the trusted SROs are in such poor shape that city officials believe their operations as currently structured will never break even.

This month


the City Council signed off on a plan to have the city try to take them over, petition the federal Department of Housing and Urban Development to increase rental subsidies for tenants and eventually offer the buildings to homeless housing providers who would redevelop. According to initial estimates, the process will last until 2031.

The AIDS Healthcare Foundation continues to acquire properties. This month


it announced an $11.9 million purchase of the Morrison Hotel, a 111-unit SRO on the edge of downtown.

Times writer Benjamin Oreskes contributed to this report.


Please enter your comment!
Please enter your name here


Hot Topics

Related Articles