Skid Row Housing Trust Failures Outlined in New Report

The 2023 collapse of the Skid Row Housing Trust — which provided permanent single-room occupancy housing services to low-income people in the Skid Row area in Los Angeles — is under the magnifying glass in a damning new consultant report.

Low and inconsistent rental subsidies and other structural issues in Los Angeles’ homeless housing systems helped deliver the final blow to the nonprofit landlord, the Los Angeles Times reported. At its peak, the Skid Row Housing Trust managed 2,000 units across 29 properties in the infamous downtown neighborhood, making them the largest such landlord at the time.

Claire Knowlton Consulting, in partnership with the housing trust’s final CEO Joanne Cordero, outlined some of what went wrong in a new report published Wednesday.

The biggest issue was that the housing trust didn’t have enough funds to manage its buildings with tenants’ public rental subsidies. The trust’s services included assisting their tenants with mental illness and drug addiction. All of the trust’s properties were running annual deficits, including the newer structures with studio and one-bedroom units.

On top of that, the trust received funding through multiple programs that paid disparate rates for rooms with no path to increasing payouts. In some cases, similar buildings received subsidies that differed by as much as $600 per unit per month, making rent payment — and thus, building management — challenging.

The report called the calculations “cryptic” and “indefensible,” especially given that most subsidies were up to $1,058 below market value per unit per month.

“The subsidies are not covering the cost,” Claire Knowlton, a nonprofit consultant and lead author of the report, told the Times. “The increases are inconsistent. The subsidy types are inconsistent, and there’s no reason.”

In 2015, Los Angeles County began using a coordinated entry system to prioritize placing the neediest homeless residents into trust buildings and other supportive housing. That move was the beginning of the end, the report claims.

The system also often took too long to match potential residents with rooms and grouped together too many people with mental illness, physical disabilities and addiction.

After the new system went into effect, vacancies in trust buildings increased exponentially, straining the trust’s finances even further. Security costs also ballooned from $50,000 annually before 2016 to $500,000 in the years after that and up to $1.4 million by 2022.

Years of rough financial waters were coupled with the buildings falling into disrepair with broken elevators; clogged and broken toilets; and squatters making themselves at home.

Finally, in April 2023, the city of Los Angeles helped place all of the trust’s 29 properties into receivership and set aside $40 million to finance the deal. Over the next year and a half, the properties were transferred to new owners, mostly to developer Leo Pustilnikov and the AIDS Healthcare Foundation.

Knowlton said she believes the failure of the Skid Row Housing Trust is “a canary in the coal mine situation.”

“This is a wake-up call,” Knowlton added. “It’s time to dig in and figure out a vision for this sector moving forward.”

While the trust is no more, other supportive housing providers are facing some similar issues today. Nonprofit landlord SRO Housing Corporation, which operates 30 supportive housing facilities including many in Skid Row, is also facing financial difficulties and dismal building conditions, per the L.A. Times.

— Chris Malone Méndez