Special for any tenants living in Skid Row Housing Trust properties or concerned neighbors: For anyone that is aware of a down elevator, fire alarm problem, broken window or door lock or other major repair issue at any SRHT property in the receivership, feel free to email John (John.Heath@lacity.org) and they will expedite a response and repair. The maintenance emergency number is: 866-538-6112.
Original post February 10, 2023 (scroll down for updates): On Tuesday, while we were trying to get away from L.A.’s problems by spending my birthday exploring inland empire landmarks, the Los Angeles Times broke the story of the collapse of Skid Row Housing Trust, among the largest providers of permanent supportive housing in Downtown Los Angeles, and their desperate search for someone to take over their 29 buildings. The Real Deal and CBS News picked the story up.
And there went any chance for a peaceful day not focused on the troubles of Los Angeles. Because the reporting raised far more questions that it answered, and ever since reading it, we’ve been digging trying to discover the real reason(s) for the crisis. As with the situation at the Hotel Cecil, managed by SRHT for leaseholder Matt Baron, the closer you look the weirder and more infuriating it becomes.
Here are a few significant matters that were overlooked by the Times in its so-called reporting.
On July 11, 2022, an odd SEC filing sought to sell $75 Million in stock tied to distressed mortgages. The offering was called Skid Row AHP, and deceptively used the Skid Row Housing Trust name, signature orange logo and what appear to be images of its buildings and tenants in the marketing of unrelated investments. The entity is a Delaware LLC that was established on 12/17/2021.
According to the filing, the three board members of Skid Row AHP are Chicago based real estate investment promoter Jorge Newbery (a distant relative of the Argentinian aviator and owner of the parent AHP fund, American Homeowner Preservation), Seattle based hedge fund manager Adam Henderson, and Joanne Cordero, who several months ago became interim CEO of Skid Row Housing Trust. At the time of the SEC filing, Cordero was identified as SRHT’s Chief of Staff, since 2021.
Jorge Newbery has had an “interesting” career, starting forty years ago when he appears to have defrauded much of the DIY punk music community through his fly-by-night distribution company, Upstart. He moved on to investing in low income apartments and residency hotels, resulting in a criminal investigation by the Indianapolis Housing Agency, evictions and displacement. More recently, he’s self published books and managed a series of distressed mortgage investment vehicles that get mixed reviews from investors, especially those seeking to cash out.
Soon after Jorge Newbery’s associate Joanne Cordero joined Skid Row Housing Trust, CEO Lee Raagas was forced out. Real Estate Development and Asset Manager Sierra Atilano served as the CEO for six months (approximately April – October 2022), before resigning to take an Executive Vice President position with BRIDGE Housing.
At this time, Chief of Staff Joanne Cordero was given the additional title of Interim CEO, and it is in this role that she is quoted in the Los Angeles Times blaming the non-profit’s collapse in part on property damage by tenants who are presumably suffering from mental illness.
But caring for and sheltering such people is the actual job of Skid Row Housing Trust, not the supercharged, architecturally distinctive ground up property development in which they have long engaged, nor the distressed mortgage fund in which Cordero has a vested interest.
The story of Skid Row Housing Trust’s collapse doesn’t make sense, at least not how it was reported. If they’re so overextended, why not sell a few buildings? They’ve got 29 of them.
But there’s a very simple reason why the non-profit is on the verge of collapse, and you’ll read it here, and not in the Los Angeles Times. The answer is found in a very revealing labor lawsuit. Around the time that Sierra Atilano departed, her predecessor Lee Raagas filed suit against Skid Row Housing Trust and board member Patrick Spillane. We recommend anyone interested in the matter read her complaint.
Raagas’ disturbing filing describes a culture of hostile sex based discrimination by former board chair Spillane and blames him for the 2018 improprieties in managing relocation of the RSO tenants of the Edward Hotel at 713 East 5th Street that resulted in the California Department of Housing and Community Development declaring Skid Row Housing Trust an “ineligible sponsor” that is barred from engaging in real estate development or perhaps even operating the buildings it owns!
In light of these claims of board member incompetence and malfeasance, we find it disgusting that Joanne Cordero seeks to blame the collapse of Skid Row Housing Trust on its vulnerable tenants, and that the Los Angeles Times gives her a platform to do so.
The 2018 date of the ultimately fatal decisions around the Edward Hotel may be significant, since this was the year when Los Angeles City Councilmember Jose Huizar‘s home and office were raided by the FBI in a racketeering investigation to which he has recently pleaded guilty.
In the aftermath of the raids, it would have been extremely difficult for Huizar to intercede on behalf of a struggling non-profit in his Downtown district, even a friendly one like SRHT, whose board chair Patrick Spillane serves as Treasurer of L.A. Streetcar Inc., an unpopular project closely associated with Huizar’s failed Bringing Back Broadway initiative and which the councilman heavily promoted.
Something stinks in Downtown Los Angeles, and it’s not the garbage piled up against the illegally vacated Edward Hotel.
It stinks that the reporters at the Los Angeles Times apparently can’t find, or don’t want to find, significant information like the Skid Row AHP mortgage investment scheme or Lee Raagas’ bombshell lawsuit. It stinks that AIDS Healthcare Foundation has to buy full page ads to refute the paper’s biased reporting and refusal to cover the good work they do to fill illegally emptied Skid Row SROs. It stinks that hundreds of vulnerable tenants and Skid Row Housing Trust employees don’t know if they’ll be able to keep their homes or jobs.
Anyway, happy birthday to me. Loving Los Angeles isn’t for sissies or lazybones, and scooping the L.A. Times is a pretty cool birthday present. I’ll put it on the shelf next to the Historic-Cultural Monument designation I helped obtain for the Los Angeles Times buildings themselves, which confessed racketeer Jose Huizar gutted and rewrote for the benefit of developer Onni Group.
Here are two of the more startling things we spied on Tuesday’s ramble, jaunty Mr. Milk Bottle and the modernist ruins on San Bernardino’s courthouse row. Decay can be beautiful, but we’d love to see the world get cleaned up.
Updates to our 2/10/2023 post: As we find additional information that may help untangle the truth about Skid Row Housing Trust, we’ll add it below.
The bio of Interim CEO Joanne Cordero appears deliberately vague: “Before joining SRHT, Joanne served as COO of a non-profit, an industry-leading financial education and services provider, and a HUD-approved housing counseling agency.”
The non-profit mortgage lending organization where she worked from 2019-2020 is called Springboard CDFI. Established 1982 as San Diego Neighborhood Housing Services, it is still in existence. You can find its 990s here, with Cordero’s initial uncompensated appearance as President in 2018, suggesting she was hired on or around 12/31/2018, after longtime President Gabe Del Rio left to become CEO of the Home Ownership Council of America. Cordero’s compensation in 2019 was $144,669 and $196,592 in 2020.
Starting in January and into March of 2019, the Commissioner of Business Oversight for the State of California gave Springboard CDFI several chances to file its required annual report, with no response. As a result, on April 3, 2019, the organization’s lending license was revoked. You can find documentation of the subsequent settlement agreement here.
Additionally, the Department of Housing and Urban Development Mortgagee Review Board took the following actions: “On May 12, 2020, the Board voted to impose a civil money penalty of $14,819 against Springboard CDFI dba Springboard Mortgage Collaborative… based on the following alleged violations of HUD requirements: Springboard (a) failed to maintain the minimum required liquid assets in fiscal year 2018; (b) failed to timely report the failure to maintain the minimum required liquid assets in fiscal year 2018; and (c) failed to timely notify HUD of a sanction in fiscal year 2019.”
Just over a week before news of Skid Row Housing Trust’s implosion broke, local real estate blog Urbanize reported on the status of The Ambrosia, a 90-unit supportive housing complex at 800-816 W. 85th Street in South Los Angeles. The Real Deal picked it up. The trigger for the story was a January 2023 notice issued by the Los Angeles Housing Department that “approximately $1.7 million in Section 8 project-based vouchers are sought annually to cover operations for the property.”
Urbanize was apparently not aware that some time before May 2022, “due to capacity concerns,” SRHT contracted to sell the property on 85th Street, and transfer the associated HHH redevelopment funds, to Texas based Domus Development, LLC. The property is to be managed by Century Affordable Development Inc.
Perhaps it was this unwanted press attention for a project no longer owned by SRHT that led to the all-staff meeting and subsequent story in the Los Angeles Times.
In this May 2022 inter-departmental memorandum from the L.A. Housing Department, you can find details about the property sale and transfer of both The Ambrosia and HHH-funded Confianza project in Van Nuys.
How many people in the City Family knew about the grave problems with Skid Row Housing Trust, and kept it secret from the public?
This is the Edward Apartment Hotel, a Skid Row Housing Trust property at 713 East Fifth Street. It was built in 1924, and extensively remodeled by the Community Redevelopment Agency circa 1993-95, creating 47 SRO apartments and 9 bathrooms. The units are rent controlled, and it is meant to provide stable housing for Skid Row community members.
It is this handsome structure that SRHT proposed in 2018 to demolish, destroying 47 units in order to create 50 units (+1 manager’s unit) and space for supportive services. The improper eviction of The Edward’s protected tenants is what fired CEO Lee Raagas claims in her lawsuit was the cause of SRHT being declared an “ineligible sponsor” by the CDHDC.
In July 2022, SRHT posted two photos to Facebook showing a person taking possession of a unit at the Edward Hotel on “move in day” for “new residents.” If the claims in Lee Raagas’ lawsuit are true, this suggests that after SRHT evicted the tenants in 2018, and rendered the building uninhabitable with unpermitted interior work that removed the elevator and air conditioning system, it then engaged in additional unpermitted work to return the building to habitable status. There is an application to install a new HVAC system, but the permit is not approved.
Has the building been inspected to ensure that it is safe place for people to live in, and that any work done between 2018 and 2022 is up to code?
You can see the building’s LADBS history here, including two attempts to gain a demo permit (1, 2) and an attempt to get a new building approved. See also the new building’s Draft EIR, Initial Study and CEQA documents.
The historic name of this establishment is Edwards Hotel, but for unknown reasons, SRHT changed it to Edward. We hope that a new owner will restore the proper name, respect the building’s value as a contributor to the Fifth Street Single-Room Occupancy Hotel Historic District, a potentially eligible historic district, and not seek to evict dozens of tenants to build a slightly bigger building. Any Skid Row housing non-profit board that thought this was a good use of its limited resources has serious problems, even without its primary State granting agency ending their relationship.
Above, a press clipping and photograph that illustrate the history worth preserving on East Fifth Street.
On August 11, 2022, Abode Communities sued Skid Row Housing Trust for $186,769, representing twelve unpaid invoices for architectural services for SRHT’s 649 Lofts housing and medical clinic project (2021). In its complaint, Abode states that SRHT agreed it owes this money and promised to pay by March 30, 2022, but did not pay.
The most interesting thing about the lawsuit is that Abode identifies itself as a California Non-Profit Corporation, but it identifies Skid Row Housing Trust as “a business entity, form unknown,” Does Abode have reason to believe that SRHT is no longer a non-profit?
To learn more about this project as told by SRHT, see the video posted by the Southern California Association of Non-Profit Housing, How We Got It Built: Project Case Study Featuring Skid Row Housing’s 649 Lofts.
Buried in the fine print of the SEC filing for the stock sale of Skid Row AHP LLC is the statement that “Skid Row Housing Trust… has entered into a Consulting Services Agreement with Restora, LLC (“Restora”), a majority-owned subsidiary of the Skid Row Housing Trust, whereby Restora will enhance the Company’s access to bidding opportunities for distressed mortgage assets with governmental agencies such a HUD, Fannie Mae, and Freddie Mac… In consideration of these services and the use of the “Skid Row” name, the Company will pay the Skid Row Housing Trust a consulting fee equal to 1% of the investment capital raised by the Company. Under the Consulting Servicing Agreement, Restora is entitled to appoint one Director to the Company’s Board.”
Three months later, in October 2022, it was announced that Restora was the winning bidder for Fannie Mae’s Twentieth Community Impact Pool of Non-Performing Loans. The transaction was expected to close on December 9, 2022 and includes approximately 61 loans totaling $13 million in unpaid principal balance (UPB). The loans are geographically located in the Miami-Dade area.
Freddie Mac reports that “given the delinquency status of the loans, the borrowers have likely been evaluated previously for loss mitigation, including modification or other alternatives to foreclosure, or are in foreclosure. Mortgages that were previously modified and subsequently became delinquent comprise approximately 94.0 percent of the pool balance. Also, purchasers are required to honor the terms of existing loss mitigation agreements and solicit distressed borrowers for additional assistance except in limited cases and ensure all pending loss mitigation actions are completed.”
Funny thing about Restora LLC. The organization shows up on OpenCorporates as being founded in 2017 as a California LLC (entity information: 201704610325). Then between August 9, 2020 and January 26, 2021, SRHT’s longtime CEO Michael Alvidrez was removed as agent, and replaced with the generic The Skid Row Housing Trust, manager. A search on the California state business portal shows that on April 13, 2021, Restora LLC was registered as a Delaware LLC (entity information: 202111310509), with its agent listed as PARACORP INCORPORATED in Sacramento.
If deeply distressed Florida mortgage loans seems like a strange thing for the Skid Row Housing Trust to be focusing on to the apparent detriment of managing its Los Angeles properties and paying its local bills and debts, that’s because it is.
However, it is a category of financial instrument with which SRHT Interim CEO Joanne Cordero has experience: her name shows up on pages 65-67 of James Xanthos’ 2009 testimony to the Financial Industry Regulatory Authority (FINRA)’s Department of Enforcement in the matter of Citigroup Subprime. Here, Cordero is described as an independent contractor and outside consultant surveilling the health of mortgage loans. Xanthos is uncertain, but thinks his boss Susan Mills might have brought her in. Mills is a named defendant in the Federal Housing Finance Agency’s lawsuit against Citigroup. In 2014, Citigroup settled with the DOJ for $7 Billion for misleading the public about toxic mortgage loans.
James Xanthos’ testimony is hosted as a Word file on the Financial Crisis Inquiry Commission (FCIC) website’s searchable version hosted by Stanford University’s Rock Center for Corporate Governance and Stanford Law School. We have uploaded it here for ease of access.
On 2/14/2023, The Real Deal picked up our reporting on the peculiar distressed Florida mortgage fund activity in which the collapsing Skid Row Housing Trust is involved: When asked for a comment, SRHT did not respond.
On 3/17/2023, the Los Angeles Times published a report on the shocking conditions inside the Skid Row Housing Trust properties, including red tagged uninhabitable buildings, unsecured doors, roaming intruders, non functional toilets, lack of on-site managers or security, arson fires, leaks, mold and broken elevators. This organization should have announced their financial collapse and sought outside aid long before it came this this state, and the board and senior staff need to be held accountable for putting their vulnerable tenants in harm’s way.
Also on 3/17/2023, Los Angeles City Councilmembers Nithya Raman and Hugo Soto-Martinez filed a motion for Los Angeles to provide $700,000 to pay for security for Skid Row Housing Trust’s neglected residency hotels. Interested people can click the envelope icon to subscribe and follow the motion as hearings and votes are held, or provide written comment by clicking NEW.
On 3/30/2023 (the day Los Angeles political titan Mark Ridley-Thomas was convicted on numerous felony counts),the Daily Breeze reported on a press conference held by City Attorney Hydee Feldstein Soto and Mayor Karen Bass announcing the city’s legal action seeking to place Skid Row Housing Trust’s real estate assets and tenants under the control of California Receivership Group. Full video is here and here is the longer transcript, including questions from the press. And the Los Angeles Times reported that lender Pacific Premier Bank is asserting its rights to seize the hotels as collateral on a defaulted $4 Million loan, with no tenant aid plan. The matter will go before Judge Mitchell L. Beckloff on Tuesday.
Question: What happens to Skid Row Housing Trust’s distressed mortgage scheme (a story we broke) now that the nonprofit’s hotels are being forced into receivership? And did they spend SRHT funds to acquire those loans?
On April 6, 2023, Rev. Andy Bales from the Union Rescue Mission gave a powerful 12 minute interview to John & Ken on KFI-AM. Tune in to hear how he spent years telling reporters, Los Angeles Times editors and elected officials about the crisis at Skid Row Housing Trust, and they either didn’t believe him or refused to report on the failure of the widely acclaimed “model” for supportive housing on Skid Row.
On April 7, 2023, Los Angeles County Superior Court Judge Mitchell Beckloff approved the appointment of Mark Adams of the California Receivership Group, as Skid Row Housing Trust’s receiver, and approved a half million dollar loan for CRG to begin to address the derelict conditions at SRHT’s buildings. Adams stated in court that after looking at the properties this was not nearly enough money, and he wished he’d asked for a million. It appears taxpayers will be footing the bill for the city having allowed SRHT to run its properties into the ground.
Update April 16, 2023: Drawing on information uncovered in our February 2023 investigation into the collapse of Skid Row Housing Trust (SRHT), on 2/23/2023 we submitted a public records request to the California Department of Housing and Community Development (HCD).
This is the state granting agency that appears to have questioned improprieties in SRHT’s operations and begun to restrict its access to grants and loans several years ago—even as the supposed watchdogs in Los Angeles ignored the warning signs, repeatedly passed the buck and allowed the nonprofit to go on neglecting its buildings and putting vulnerable tenants in harm’s way.
On April 6, 2023, we received the first responsive emails from HCD, with the promise that additional documents would be supplied on a rolling basis. So watch this space. And read on to see evidence of the abject failure of the entire Los Angeles City and County permanent supportive housing machine to oversee the abuse of millions of dollars in taxpayer funded real estate and Section 8 vouchers.
This is so much worse than just one nonprofit running off the rails.
What these emails show is that everybody knew, and they all closed ranks to cover it up, even as 29 buildings fell into a squalid state, endangering vulnerable tenants, contributing to our city’s horrible housing use crisis, squandering millions in public funds and providing fodder for disingenuous and destructive editorials arguing that the SRO housing model doesn’t work (it does) and old buildings are too expensive to preserve as affordable housing (they’re not).
We had already learned from fired CEO Lee Raagas’ employment lawsuit that HCD had declared SRHT an “ineligible sponsor” due to its illegal displacement of the Edward Hotel tenants and misuse of associated grant funds. HCD’s action served to shut down the nonprofit’s redevelopment pyramid scheme, where they would seek funding to demolish and rebuild an existing SRO hotel, even if it meant evicting dozens of vulnerable tenants and taking housing offline for years.
And it wasn’t just HCD turning off the grants tap. As you’ll see below, on 12/30/2020 the Los Angeles County Development Authority (LACDA) rescinded approximately $28 Million in No Place Like Home Program funding commitments for SRHT’s Ambrosia, Confianza, and “Towne” projects, and declared SRHT ineligible to receive additional funding, after the nonprofit defaulted on a Wells Fargo construction loan.
The so-called “Towne” project, which we believe was called The Alvidrez, appears to have been a model similar to the Edward Hotel debacle that raised HCD’s ire: the proposed demolition of the existing 617 Crescent Hotel Apartments (55 units)—a building which is, like the Edward Hotel, is a potential historic resource called out on Survey LA as a contributor to the Fifth Street Single-Room Occupancy Hotel Historic District—and the St. Marks Hotel Apartments (91 units), also a potential historic resource, for a brand new 14 story tower containing essentially the same number of units.
The flashy project, by starchitect Michael Maltzan (controversial Sixth Street Bridge remodel), was to be built with trendy but not necessarily greener mass timber construction, and named after longtime SRHT CEO Mike Alvidrez. (Which is kind of ironic since the organization went to hell once he retired.) On 9/7/2022 the city approved SRHT’s request to withdraw The Alvidrez from planning consideration.
If the St. Marks Hotel Apartments sound familiar, you might have seen the news stories in 2019 and early 2022 (text, video) about unsafe and unsanitary conditions in the building. In the latter story, HACLA was quoted saying SRHT needed to immediately correct deficiencies noted in the inspection. But instead, the building continued to deteriorate.
As for the Ambrosia and Confianza projects, SRHT’s failure to move forward was quietly shared at a meeting of the Proposition HHH Citizens Oversight Committee in May 2022, when the transfer of $21 Million in development funds was noticed, but the deeper meaning was completely missed by journalists and activists covering the homelessness beat. It would be another 9 months until Angelenos learned that SRHT was on the ropes.
It is plain from the evidence uncovered in our investigation that from at least late 2020, SRHT was a dead nonprofit walking, with no choice but to wind down its operations, fire its overpaid executives and hand off its tax-funded properties to other service providers. But this crucial information was kept a secret within the circle of interconnected government agencies, and withheld from the taxpayers who funded SRHT and the tenants who lived in its deteriorating buildings, as the buildings became more and more unsafe.
Where is the accountability, not just for SRHT, but for the City, County and State oversight agencies and the elected and appointed officials who knew what was going on and did nothing to stop it?
And right in the center of it all, the reason we started to ask questions about SRHT in July 2022, is the notorious Hotel Cecil—a mostly empty building that SRHT did not own, yet where its limited resources were being squandered just before the scandal broke.
Read on for tranche #1 in the HCD emails. We think you’re going to hate it.
Email #1) File REL0000000047.MSG
On 1/11/2022, Rebecca Weber, a Section Compliance Resolution Program Chief for HCD forwarded the file titled “Response to SRHT 1-10-2022.pdf” (“The Response”) to then SRHT CEO Lee Raagas and board member Simon Ha, and cc’d 49 interested parties. This list includes board members and senior staff, directors of Section 8 for the city’s Housing Authority (HACLA), senior staff at the Los Angeles County’s Departments of Mental Health, Health Services and Housing, Ann Sewill the GM of the Los Angeles’ Housing Department and 9 members of HCD’s team.
The outside entities represented the public funders who had participated in a call on 12/16/2021 “in which SRHT committed to detailing specific action steps to be taken within the next 30 days to address ongoing compliance issues.”
“The Response” from Lindy Suggs, Branch Chief, Asset Management & Compliance, Division of State Financial Assistance, references five documents sent by SRHT between 12/27/2021 and 1/10/2022, then states “The Department has reviewed the Plan and found it to be insufficient. The Plan lacks specific details, concrete action steps and dates as agreed upon.”
Over several pages, Suggs explicitly calls out unexplained loan defaults, lack of property management, delayed building openings, stalled lease ups, lack of mandated reporting and SRHT’s failure to fill the vacant Edward Hotel, nearly four years after 47 affordable units were illegally shuttered.
There is also a reference to the mysterious partnership between SRHT and the mostly vacant Hotel Cecil, subject of a separate Esotouric investigation: “Cecil Hotel – Please explain in detail SHRT’s involvement in the hotel. Is SRHT now managing this 600-unit project? If so, how will this demand on your capacity affect your ability to meet your obligations for the other projects in your portfolio? Please also explain what services, if any, you are providing to the tenants.”
“The Response” concludes “The Department will not proceed with the preparation of the loan documents or disbursement of funds for any SRHT projects until the Plan is revised to show specific action steps and deliverables and all outstanding items listed above are fully addressed to the satisfaction of the Department.”
Two months later, KCAL News broadcast a six minute investigation into squalid, unsanitary, unsafe conditions at SRHT’s St Mark’s Apartments, where vulnerable tenants were housed through the Section 8 voucher program.
Email #2) File REL0000000048.MSG
An email exchange dated 1/10-1/14/2022 between SRHT board member Simon Ha and HCD’s Rebecca Weber regarding “The Response” about the illegally displaced Edward Hotel tenants.
In this thread, Simon Ha confesses that SRHT has “spent millions of dollars in predevelopment to get the project shovel ready” before being forced to halt their illegal redevelopment plans. Ha attempts to blame unnamed former employees or board members for the bad decisions, agrees that it is an outrage to have 47 vacant units on Skid Row, but balks at HCD’s demand that the hotel be fully occupied by the end of March 2022. Why, the hotel has no elevator, no air conditioning! It never had an elevator or air conditioning, Rebecca Weber replies. And what they’ve done is a serious violation of the law, their mission, and the conditions of the public funds.
Email #3) File REL0000000053.MSG
An email thread spanning 1/17-1/27/2022 between SRHT and HCD. In it, HCD continues to try to elicit responses to outstanding questions, and payment of missing funds in order to allow the nonprofit to continue operating. CEO Lee Raagas blames COVID infection sick days and signs off with a pathetic “In Partnership.”
Attached is a 7 page document from SRHT marked CONFIDENTIAL. It argues that HCD is wrong to criticize them so severely, and lists what they have done and will do to comply with HCD’s demands. SRHT admits that the illegally emptied Edward Hotel is not their only building with vacant units: the Senator Hotel is only 82% full, Flor 401 is at 66%, SP7 is at 61% and 649 Lofts is at 74%. 649 Lofts has no on-site manager because that person resigned due to resident threats and a domestic violence dispute, but refused to vacate the manager’s unit and had to be evicted.
Of special note—and we’ll return to this in Email #4—SRHT explains its role in the Hotel Cecil project: “Cecil Hotel is owned and funded by SIMON BARRON [sic for Baron] and their private capital partnerships. Therefore, SKID ROW HOUSING TRUST can offer appropriate information but not what is considered confidential by the Investor or prohibited to disclose. SRHT’s involvement was to offer analysis and intellectual support to the private capital group pursuits to use the hotels units for affordable housing during this crisis and moving forward. SKID ROW HOUSING TRUST did not invest or outlay any capital for the project or property. All costs from capital requirements, property oversight, staffing and other required needs are privately funded by SIMON BARRON and therefore there is no impact on the Organization’s capacity to manage its’ own portfolio. There were no, are no nor will there be future Health and Social Services provided to the Cecil residents/tenants by SKID ROW HOUSING TRUST. That was confirmed by DHS in our December 16th meeting.”
Email #4) File REL0000000055.MSG
An email dated 2/19/2022 from Rebecca Weber at HCD to SRHT about the 2/3/2022 meeting with Los Angeles public funders to discuss plans to reoccupy the Edward Hotel by 3/31/2022. Attached is a 5 page letter from Lindy Suggs, Branch Chief, Asset Management and Compliance summarizing the meeting and HCD’s concerns.
Included in this document is evidence that SRHT has made unauthorized withdrawals from the [Edward Hotel] Operating Reserve (“OR”) Account, misused more than $219,000 in project funds for the Simone Apartments, has $109,564 in delinquent residual fees spread over four buildings and that there are 250 health and safety issues with buildings must be cured by 2/28/2022.
The relationship with the Cecil gets an entire section, and it’s pretty hot stuff. Like us, HCD wants to know why Skid Row Housing Trust is dedicating scarce staff and administrative resources to a building they do not own, while their own portfolio sits largely empty and squalid.
Subsequent to the 2/3/2022 meeting, HCD’s team caught SRHT senior staff lying about the relationship with the Cecil, and they want answers!
6. Cecil Hotel
a. Provide any and all contractual agreements between SRHT and Simon Baron, including but not limited to the property management contract and the organization documents for SRHTandCecil GP LLC and the SB Cecil LP.
i. SRHT’s lack of transparency and honest communication with the public funders who are trying to assist SRHT is astonishing. In the meeting on December 16, 2021, Lee Raagas said, “we’re just facilitating and assisting in the launch” and Sierra Atilano added, “our involvement was helping them with the financial structure, that it goes to affordable housing and not market rate.” On February 3, 2022, SRHT admitted being the Managing General Partner and the Property Management Company.
According to Lee Raagas’ own employment lawsuit, board member Simon Ha and an unnamed colleague asked her to resign on 3/17/2022 “in order to ensure the well-being and safety of residents,” but she refused. She was then fired on 3/21/2022. Sierra Atilano, who also apparently lied to HCD about the relationship with the Cecil, served as CEO through October 2022, then resigned to take an Executive Vice President position at BRIDGE Housing.
It is interesting that five months after HCD became aware that SRHT had been lying about the Cecil, councilman Kevin de Leon introduced a motion for the city to take a Master Lease and use the hotel for temporary homeless housing. It is unclear if SRHT would be managing the facility under this plan.
Southeast 1, a 2016 renovation of two existing RSO hotels in their portfolio, also gets a lengthy and disturbing write up in the 2/18/2022 letter.
HCD did a site visit on 11/30/2021 and made 19 Findings of issues to be corrected. When they returned on 2/11/2022: “the group discovered cockroaches, water damage on the ceiling tiles, broken smoke detectors, AC systems not working, piles of garbage, and no soap, toilet papers, or paper towels in the bathrooms which residents reported had been out for weeks. The project smelled heavily of bleach, however the areas all appeared dirty. It was also noted the only nice and clean area in the project was the garden area, which is cared for by the residents.”
Of even greater concern to HCD was SRHT’s deliberate lies: “Again, the lack of accurate information from SRHT is alarming and of grave concern to the Department. Please note the Department’s opinion is that SRHT has not made significant progress in addressing the concerns of the Department. This determination is based on the absence or incomplete nature of the documentation submitted by SRHT, and the lack of details and transparency in SRHT’s communication. It is apparent that SRHT has not grasped the seriousness of this situation, as the suggestions made by the Department and the other public funders continue to be ignored. The Department has given several items deadlines of March 31, 2022, and sincerely hopes that SRHT will be able to meet those deadlines. However, if SRHT continues on the same path and does not meet its commitments, the Department is prepared to take additional steps necessary to protect the tenants and future tenants housed in SRHT’s portfolio.”
Cc’d on this letter are all the major players in the Los Angeles supportive, affordable and Section 8 housing community: LA County Department of Health Services, LA County Department of Mental Health, Los Angeles Housing Department, Housing Authority of the City of Los Angeles, Los Angeles County Development Authority and Los Angeles Homeless Services Authority.
And yet a year would pass before the profound crisis at Skid Row Housing Trust would become public knowledge, and another two months before their dangerous SROs would be put into receivership, with taxpayers on the hook to clean them up—too late for the three people in the 649 Lofts who overdosed and died in early April or for the Dewey Hotel tenants displaced in February when the building caught on fire.
Everybody knew, and they all covered it up
Email #5) File REL0000000056.MSG
You can see a brief exchange from the program that was posted to Facebook here. Lee Raagas appears both jumpy and disheveled as she interrupts the Assemblyman. The event was not announced to the public, and only one uncomfortable minute was shared on social media. Who—if anyone—attended, and who was the intended audience? Was SRHT using their relationship with Santiago to send a message to their unhappy funders that they still had friends in Sacramento?
Email #6) File REL0000000058.MSG
An email dated 4/19/2021, subject “Skid Row Housing Trust Portfolio Findings Letter” from Mai Le at HCD to Lee Raagas. CC’d are others at SRHT, the nonprofit’s attorneys at Gubb and Barshay, and HCD.
It is a deadly serious document, explaining that “a ‘Finding’ is a deficiency in performance based on a statute, regulation, guideline, and/or regulatory agreement.” There are eight Findings detailed, as well as information about the pending Declaration of Default for the Edward Hotel, which has been held illegally vacant for 3 years and 2 months. But 10 more months will pass before the public becomes aware of the crisis unfolding in the nonprofit’s unmanaged residency hotels. There are 7 separate attachments (#6.1 is erroneously attached twice):
#6.1) HCD+Findings+Letter+to+Skid+Row+Housing+Trust.pdf – Ten pages from Jennifer Seeger, Deputy Director, dated 4/14/2021 spelling out the serious financial and compliance issues that have caused HCD to place the Edward Hotel in default and to express concern that SRHT will be unable to complete the five projects currently in the works.
Under the Summary of Findings, Mai Le writes:
“SRHT’s history of compliance violations, including late payments, unapproved withdrawals of funds from restricted accounts, vacating units without the Department’s prior written approval, purposefully keeping units vacant, continual late report submittals, coupled with a noticeably high staff turnover and lack of knowledge of the Department’s requirements at SRHT, causes the Department grave concern. The Department is worried about the productivity and capacity of SRHT to own, operate, and self-manage affordable housing developments.”
On page 9, HCD threatens legal action if the Findings are not corrected, and objects to SRHT’s proposal to demolish the Edward Hotel, a potential historic landmark that could still offer 47 units of desperately needed affordable housing on Skid Row.
But there were no legal actions taken, at least not ones that the public knew about, for nearly a year.
#6.2) Skid+Row+Housing+Trust+Project+List.pdf – A single page listing the SRHT properties in Los Angeles over which HCD has oversight, with the seven different programs under which their loans and agreements fall, with tracking numbers for each property and program. A very useful list for investigative reporters—if only Los Angeles had some.
#6.3) Pre_Nod+dated+September+29,2020.pdf – A Preliminary Notice of Declaration of Default letter dated 9/29/2020 from Rebecca Weber, then Manager, Compliance Resolution Program, HCD to SRHT, advising that the Borrower is in violation of its loan obligations to HCD for the Edward Hotel, and in breach of the $1,175,000 California Housing Rehabilitation Program – Rental Component Loan, an agreement made in December 1993.
The nonprofit was given 30 days in which to correct the breach, until Hallowe’en 2020. That deadline came and went, but nothing was done to take the property away from SRHT and return it to full occupancy, or to alert the citizens of Los Angeles that one of the largest providers of permanent supportive housing on Skid Row was no longer providing that service to its clients.
#6.4-7) Single page invoices from 2020-2021 demanding unpaid residuals for the Simone and Charles Cobb Apartments, totalling $89,956.
Email #7) File REL0000000059.MSG
An email dated 7/20/2021, subject “RE: Skid Row Housing Trust Portfolio Findings Letter” from Mai Le at HCD to Lee Raagas. CC’d are others at SRHT, the nonprofit’s attorneys at Gubb and Barshay, and HCD. This is correspondence regarding outstanding non-payment issues surrounding the Simone Apartments. HCD continues to monitor their bank accounts for the outstanding $363,430.
Email #8) File REL0000000061.MSG
An email dated 12/11/2021 with the subject line “SHRT – All public funders request” from Rebecca Weber at HCD to Lee Raagas and the Members of the board, requesting a meeting on 12/16/2021 to discuss concerns. Attached is an extraordinary four page letter, “RE: SKID ROW HOUSING TRUST NEXT STEPS” which has at the top six full color logos for the agencies behind the message. Look at them: in December 2021, they all knew. Why would more than a year pass before the public was let in on the scandal of Skid Row Housing Trust’s collapse?
A few lowlights from this very tough letter, which we recommend you read in full (page 75 at the link): “We continue to be gravely concerned about the health and well-being of the residents served by SRHT… When the lenders have inquired, SRHT has not been forthcoming or truthful about the reasons for the delays… On numerous occasions, SRHT promised to wire funds to cure the default, but then, without explanation, failed to wire the funds… Clients who are matched through the CES have spent an unusually long time waiting for units in the SRHT portfolio to be move-in ready. Data shows that dozens of people matched to units at SRHT have waited up to 350 days with no status updates… There have also been recent reports from FLOR 401 residents about insect infestation, fire debris from the sixth floor not being cleaned up, and non-operational security cameras…. California Law requires that a property manager or a responsible person be in charge of every project in which there are more than 16 units. At this time, there are at least 150 units between [the new projects FLOR 401 and 649 Lofts], and neither site has a property manager…. As the State continues to face a shortage of affordable housing units and homelessness continues to rise, SHRT has allowed 47 units at the Edward Hotel to remain vacant for more than 3 years, contrary to the requirements of the HCD Regulatory Agreement… SRHT’s public agency funders and stakeholders have collectively attempted to help SRHT correct these deficiencies. Unfortunately, SRHT has been largely unresponsive to these efforts. Due to this lack of progress, on December 30, 2020, the Los Angeles County Development Authority (LACDA) rescinded approximately $28 Million in No Place Like Home Program funding commitments for SRHT’s Ambrosia, Confianza, and Towne projects as a result of the Wells Fargo construction loan default. Similar to the actions taken by HCD, SRHT is not currently eligible to receive funding from the LACDA… HCD has also taken the serious step of revoking SHRT’s Eligible Sponsor designation, making the Trust ineligible for future state funding in a time of historic levels of new resources targeted to ending homelessness.”
This letter is signed by Jennifer Seeger (Deputy Director, Division of State Financial Assistance California Department of Housing and Community Development / HCD), Sarah Mahin (Director of Housing for Health, LA County Department of Health Services / DHS), Carlos Van Natter (Director of Section 8 Housing Authority of the City of Los Angeles / HACLA), Lynn Katano (Director, Housing Investment & Finance Division, Los Angeles County Development Authority / LACDA) and Ann Sewill (General Manager Los Angeles Housing Department / LAHD).
Along with SRHT board members from 2017 through 2023 and senior staff, the above seems like a good start for a list of witnesses to give testimony at a public hearing explaining what the hell happened here.
Email #9) File REL0000000062.MSG [Note that this is out of chronological order.]
An email dated 6/24/2021 with the subject line “RE: Skid Row Housing Trust Portfolio Findings Letter” from Mai Le at HCD to Lee Raagas. CC’d are others at SRHT, the nonprofit’s attorneys at Gubb and Barshay, and HCD. The email gives SRHT an extension to 7/15/2021 to make good on the misused $291,430 for the Simone Apartments. This is the final email in the first tranche from HCD.
By 12/11/2021, SRHT’s goose was cooked—there was simply no way the nonprofit could continue to operate, since it had allowed its portfolio of SROs to fall into disrepair it was unwilling or unable to correct, and it was barred from operating the redevelopment pyramid scheme.
So why did the California Charities Registry—once SRHT was declared ineligible to receive funding from LACDA and HCD, and after it had failed to cure the many health and safety violations at its buildings—not require the properties be handed off to another nonprofit that shares its mission? Why didn’t the LA Housing Department, LADBS, LAFD, LAPD or the City Attorney shut the unsafe buildings down? Why was this crisis kept secret from the community?
Who was being protected here? And are they still being protected as the city closes ranks to quietly force Skid Row Housing Trust into receivership, with no answers and no consequences after such a shocking violation of the public trust?
Oh, and about that deceptive management deal with the Hotel Cecil? We hear from a resident that Skid Row Housing Trust was a terrible manager, but now that The Eberly Company is running things, it’s better.
All of this is to say, the people who are managing the billions of dollars and thousands of living spaces that are supposed to be helping to alleviate the homeless crisis in Los Angeles are incompetant at best, but more probably corrupt. None of this is good enough. We are all being lied to, while people who desperately need and deserve help are being allowed to suffer and die. It has to change.
Hitting publish on this update will be a relief. We have been sleeping poorly and yelling a lot since receiving the emails. But there is so much more work to do, and we’re going to continue to ask questions, and to support the good people in this city who are actually making a difference, like the oft-demonized AIDS Healthcare Foundation.
It really makes us wonder why there is so much apparently coordinated hostility directed towards a nonprofit that is buying illegally empty SRO hotels on Skid Row, cleaning them up and renting the rooms to people in need, while the crimes of Skid Row Housing Trust are covered up. We hope to find out.
Update April 19, 2023: At a meeting of the Los Angeles City Council Housing and Homelessness Committee, councilmembers discussed Nithya Raman’s and Hugo Soto-Martinez’ 3/17/2023 motion for the city to provide emergency funds to manage and secure Skid Row Housing Trust properties, amended to reflect the receiver’s appointment. Audio of the discussion is here, with serious concerns about the cost and lack of accountability expressed by Councilmember Bob Blumenfield.
Update April 23, 2023: Here’s something that we haven’t seen reported elsewhere: thanks to a tip in a one-star Yelp review, we learn why former board chair Patrick Spillane might not have been focused 100% on his fiduciary duties to protect SRHT’s bottom line and its vulnerable clients on Skid Row.
Good questions, Chris D.
Although he has been identified on SRHT’s website from September 2009 to April 2023 as being employed by IDS Real Estate Group in Downtown Los Angeles, for the past five years Spillane has been a partner with his step-brother Sean Cassar in operating Legendary Organics, East Ventura County’s first legal medical marijuana dispensary. The weed business is a subsidiary of their family tobacco importing company, Kretek International.
And while Patrick Spillane’s involvement with legalized drug distribution in Ventura County was hidden from anyone seeking information about Skid Row Housing Trust’s board, he proudly listed his charitable work for SRHT—and for West Hollywood Community Housing Corporation—in Legendary Organics’ Commercial Cannabis Application to the City of Oxnard.
Another distraction for board chair Patrick Spillane in 2018, when the ultimately fatal decision was made to empty out the Edward Hotel without HCD approval, was his interest in an interstate marijuana growing enterprise that quickly dissolved into accusations of fraud towards his Colorado partners and a multi-million dollar lawsuit. How much attention was Skid Row getting while all this was going on?
Update April 24, 2023: The Los Angeles Housing Department submits a report to Los Angeles City Council, seeking authority to issue a tax-exempt multifamily conduit revenue note for up to $29,000,000. This is to finance construction of Ambrosia , the South Los Angeles HHH project that Skid Row Housing Trust was forced to transfer to DOMUS, after the California Department of Housing and Community Development declared the non-profit an “ineligible sponsor,” and the Los Angeles County Development Authority rescinded $28,000,000 in funding commitments, as described above. Over a 291 page report, initial project developer Skid Row Housing Trust is never mentioned, an instance of almost Stalin-esque civic erasure. The cost for Ambrosia’s 90 apartments: $623,400 per unit.
Update May 11, 2023: We noticed that there is no glass in a bedroom window in the New Pershing Apartments at Fifth & Main Streets, and reported this to the Housing Department. Google streetview shows it’s been like this for at least three months, maybe as long as a year.
Update May 17, 2023: The Los Angeles Times reports on the “checkered history” of receiver Mark Adams, who was handed the lucrative SRHT account with no public review by Mayor Karen Bass and City Attorney Hydee Feldstein Soto. Reporters Liam Dillon and Doug Smith address allegations of excessive billing that got reversed in court, a deceptive resume and mistreatment and displacement of vulnerable tenants. We meet Mary Jacobs, whose East Los Angeles property was demolished and who was homeless until she landed in the Madison Hotel. Mark Adams makes the absurd claim that “There is nobody other than me, in California or anywhere in the United States, that would even have a chance of solving the problem at Skid Row Housing Trust.” In fact, the mission of Healthy Housing Foundation is to buy historic Skid Row SROs (like the Madison) and restore them to habitable status.
Also on May 17, 2023, a City Council motion calls for the Housing Department to: a) Report monthly of the status of the Skid Row Housing Trust receiver’s progress in maintaining the health and safety measures and fiscal controls necessary at the Skid Row Housing Trust properties (Properties); and b) Report on the various types of receivership structures and options, short term and long term management plans, requirements to ensure that long term affordability of the Properties, and any financial and other risk exposure to the City.
Update May 23, 2023: A side effect of the Skid Row Housing Trust collapse appears to be the closure of The Nickel Diner (est. 2008). Co-owner Monica May told Steve Chiotakis (Greater L.A., KCRW) that during the height of the pandemic, “We were feeding people in the SROs through the Skid Row Housing Trust. And we survived basically through subsidies, grants, and donations. But right now that money isn’t as accessible as it once was.”
Update June 7, 2023: The Los Angeles Times reports on the city’s growing concern about quickly appointed receiver Mark Adams amid complaints by Skid Row Housing Trust tenants about illegal eviction notices, lack of security and squalid conditions in the buildings. Adams has also taken out a $1.3 Million loan at 15% interest, in violation of the agreement that loans be capped at 10%. The receiver is now under investigation by the City Attorney’s office. Meanwhile, Adams and his staff are being paid $151 to $465 per hour. We think a better use of this money would be to move the tenants to secure, clean buildings.
Update June 12, 2023: LAist reports on concerns about receiver Mark Adams, including unpaid LLC taxes, a recent court determination that he overbilled by 39% and his having maxed out contributions to the campaign of City Attorney Hydee Feldstein Soto, whose office recommended Adams for this task without vetting him.
Update June 15, 2023: Courthouse News reports on the amateurish mess of Mark Adams’ receivership of the Skid Row Housing Trust buildings, removal of the seven most valuable buildings in the portfolio.
Update June 22, 2023: Incompetent receiver Mark Adams nearly out at Skid Row Housing Trust, as LAHD and City Attorney recommend $10 Million emergency loan—on the condition he be replaced with Kevin Singer, principal and CEO of Receivership Specialists or another receiver acceptable to the City and the Court. Some SRHT properties to be managed by PATH Ventures and LA Family Housing. As for the money squandered by the unvetted Adams? Yeah, taxpayers will be on the hook for that.
Update June 26, 2023: City Attorney Heidi Feldstein Soto admits to “making a mistake” with her choice for Skid Row Housing Trust receiver, as receiver Mark Adams counters he’s not responsive for years of “bureaucratic neglect.”
Update June 27, 2023: A boring wrongful termination contract lawsuit has hit the docket of the U.S. District Court for the Northern District of Illinois Eastern Division. Why should Angelenos care about Matricciani v. American Homeowner Preservation Inc. et al.?
Because the firm being sued, and its founder and co-defendant Jorge Newbery, allegedly stopped paying Janet L. Matricciani, Chief Operating Officer of AHP, Inc. and of its affiliates, just one month after this blog published questions about Newbery’s and SRHT’s interim CEO Joanne Cordero’s sketchy side business: selling distressed Florida mortgages marketed with photos of Skid Row Housing Trust tenants.
And if you thought Cordero’s close association with Citigroup Subprime’s fraud was worrying, you’re going to love reading about why Janet Lewis Matricciani was allegedly terminated from her previous position with World Acceptance Corp. Did anyone have multi-million dollar bribes of Mexican government and union officials and allegations of violating the Foreign Corrupt Practices Act on their Bingo card?
And as the city debates a $10 Million loan to begin bailing out the mismanaged non-profit, we still don’t know how much of Skid Row Housing Trust’s funds are tied up in toxic mortgage debt and if any effort is being made to claw it back.
Update June 27, 2023 (continued): And The Real Deal reports on the troubles with Skid Row Housing Trust receivership, and quotes AIDS Healthcare Foundation consultant Miki Jackson, “The city takes forever to inspect units. Many units are in horrible conditions. Others are fixed, but are vacant because city inspectors don’t come in a timely fashion.” The story concludes, “AHF has expressed interest in working with the city to fix up or take over Skid Row Housing Trust’s former buildings.” We wonder why this non-profit, the only one actively purchasing and renovating long vacant and sometimes derelict Skid Row SRO hotels, has not been a part of the city’s solution.
Update June 27, 2023: Under pressure from city officials offering a $10 Million loan to anyone but Mark Adams, the beleaguered Skid Row Housing Trust receiver resigned today, with Kevin Singer expected to be appointed tomorrow.
Update July 3, 2023: Our May report to the LA Housing Department about the missing window at the New Pershing Hotel has had no effect. There are now pigeons inside the building, exposing tenants to potential avian influenza infection in their homes.
Update July 12, 2023: In a boggling ethical breach, the Los Angeles Times reports that City Attorney Hydee Feldstein Soto benefited from individual donations from failed receiver Mark Adams and his associates, and he hosted a fundraiser for her campaign, months before she asked a judge to put Adams in charge of the Skid Row Housing Trust properties.
Update August 26, 2023: We added The Edward Hotel to the route of Hotel Horrors & Main Street Vice, a true crime and cultural history tour of Skid Row and Downtown Los Angeles… and learned that the facade of this National Register eligible building that was nearly lost to SRHT’s redevelopment pyramid scheme is best photographed from the window of a coach class tour bus. What a beauty, despite the unfortunate tile added when the hotel was first remodeled. Let’s bring it back to how it’s supposed to look!