The world’s largest AIDS charity has emerged as the leading bidder to take over a portfolio of housing projects for the homeless in Skid Row, a move that has drawn opposition from state housing officials who have drawn attention to the troubled period of the charity as landlord.

The Hollywood-based AIDS Healthcare Foundation wants to acquire properties, mostly old one-room hotels, owned by the Skid Row Housing Trust. The trust became financially bankrupt a year ago and is in receivership.

Seventeen trust buildings, totaling 1,200 units, are for sale or expected to be for sale soon. The foundation has proposed paying $53 million for the first dozen of the buildings made available, which is the highest bid received, according to a person with knowledge of the bidding process who was not authorized to discuss it.

A spokesperson for Mayor Karen Bass said the foundation is the only organization to have made “a financially viable offer” for the trust portfolio, but other factors must also be considered in the deal. The foundation declined to comment

to De Tijd

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State officials are raising concerns about the foundation’s record on housing the homeless, citing problems detailed in a recent Times investigation.

The foundation “would not be an appropriate owner and operator given the well-known and well-documented deficiencies in the foundation’s ability to provide safe and well-maintained buildings,” wrote Jennifer Seeger, deputy director at the Department of Housing and Community Development, in a March 20 letter to the recipient.

The foundation, which earns more than $2 billion in annual revenue largely from its network of pharmacies, became a landlord in 2017, claiming it could provide housing for the homeless faster and cheaper than government agencies and other nonprofits. It now owns 16 buildings with approximately 1,500 units in and around Skid Row.

The Times found that foundation buildings suffered heating, plumbing and electrical failures, pests and, in some cases, an increase in tenant complaints and crime after the foundation took them over.

Seeger’s letter references stories from The Times and other news reports from the nonprofit website Knock LA

In previous comments, the foundation has said it has spent tens of millions of dollars renovating and repairing its buildings, increasing occupancy so that nearly 1,000 people are off the streets, which otherwise would not have been the case. It has attributed the problems at its sites to the age of the buildings, a lack of support from the city and a challenging tenant population.

Another sticking point in the foundation’s attempt to buy the trust portfolio could be the availability of social services. The city’s bidding qualifications require each buyer to have a history of successfully operating supportive housing or working with a property management company that did so. The foundation does not provide services to tenants in most of its properties due to the costs this entails.

Ensuring the health and safety of tenants and providing required support services is essential to the Department’s regulatory compliance. Failure to adhere to these standards puts tenants at risk, Seeger wrote in the letter.

The state and city are creditors on the trust buildings but have no control over the sale. Last spring, with the trust unable to pay its bills or care for its tenants, the city asked Los Angeles County Superior Court Judge Mitchell Beckloff for a receivership to manage the buildings and oversee repairs. The final decision on what happens to the property rests with the judge.

Beckloff has already agreed to transfer 11 of the 29 properties in the trust, newer buildings with tax credit investors, to other nonprofits with experience in homeless housing and social services, and one more is expected. The curator, Receivership Specialists, is putting the remaining 17 up for sale.

A decision on who will buy at least part of it is expected within weeks. The city council discussed the curator in a hearing behind closed doors on Friday.

Clara Karger, Bass’ press secretary, said whatever providers are selected to purchase the properties must meet the qualifications to offer services and demonstrate their ability to continue rehabilitation efforts for the properties.

“The city will closely monitor prospective buyers based on strict criteria that have been established and provided,” Karger said. “As of now, the recipient has informed us that AIDS Healthcare Foundation is the only organization that has come to the table with a financially viable offer.”

In a written response to questions from The Times, Jackson Wyche, a senior project manager at Receivership Specialists, said the company is reviewing offers and negotiations with multiple potential buyers for a dozen trust properties and that the final five will list soon. .

Wyche declined to name the bidders but said he expected there would be more than one buyer to divide the properties. The recipient will negotiate letters of intent, purchase agreements and then file motions with the court to obtain confirmation of the sale, Wyche said. The terms will likely include

specifically

measures to ensure the long-term operation of the buildings, he said.

“We don’t want a situation where we sell these properties, and then they end up back in receivership because their new owners can’t operate them safely,” Wyche said.

In this case, the city council approved a preliminary plan for the city housing authority to take over any remaining properties from the recipient, stabilize them financially and then transfer the buildings to

other

nonprofits that would tear them down or strip them down to convert them into efficient apartments. The motivation for the proposal was in part the growing belief among government officials and social service agencies that one-room hotels, many of which are a century old and do not have private bathrooms, are an outdated housing model for chronically homeless residents with significant challenges regarding mental health or drug addiction.

But since then, the city and state’s financial prospects have deteriorated. The city has already approved nearly $40 million to fund the receivership and was expected to ask for more dollars

later

this year. Gov. Gavin Newsom’s proposed budget for next year cuts spending on affordable housing, dollars that could have been used to redevelop the trust buildings.

A receivership sale would reimburse at least some of the city’s expenses.

The AIDS Healthcare Foundation has been interested in the Skid Row Housing Trusts’ entire portfolio since its impending dissolution became public last February. Foundation officials visited half a dozen properties as part of sales explorations within weeks of the news, a spokesman for the charity told The Times last year.

Currently, the foundation is facing at least 10 lawsuits in state and federal courts over conditions in its country

existing

buildings, including class action cases detailing habitability problems in Baltimore and Madison

SROs

one room hotels in Skid Row. A negligence suit against the foundation filed by a Madison tenant who was shot in his doorway led to a tentative settlement this month, according to court documents from the case. The terms were not disclosed.

Last February, the foundation settled a lawsuit brought by elderly and disabled tenants in Madison over the building’s perpetually out-of-service elevator, paying $832,000 to 13 residents and undisclosed amounts to four others. The foundation agreed to additional elevator repairs at the time. But outages remain frequent, including five straight weeks without service this year before the elevator was repaired on March 15, the city’s housing department said.

Receivership Specialists’ Wyche said the company would like to recommend buyers for the first 12 trust buildings up for sale in early April. The next hearing in the curator case will take place on Thursday

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Times writer Doug Smith contributed to this report.