Skid Row Housing Trust

In June 2022, a lawsuit was filed against the Trust on behalf of 67 tenants due to a litany of health and safety concerns. In November 2022, California housing officials found over 250 habitability violations after inspecting several of the Trust’s properties. ²

In March 2023, the Los Angeles Times published a report that argued mismanagement of funds, including excessive salaries for executives, are to blame for the Trust going defunct. Former employees told the newspaper that the Trust was never receiving enough revenue to keep up with the cost of maintaining the properties. The report argued that the use of government subsidies and charitable donations are an unsustainable way to manage properties. ²

Background

Skid Row Housing Trust was founded in 1989 as a 501(c)(3) nonprofit organization and used low-income tax credits, public financing, and private financing to renovate dilapidated hotels in downtown Los Angeles’ “Skid Row” district to create subsidized low-income housing and long-term housing for homeless people. Between 1989 and 1999, it renovated a total of 12 hotels, turning them into single-room apartments. ³

In 1993, the Trust started its supportive housing program, and in 1995 the Skid Row Housing Trust Property Management Company was created. ³ Through the housing program, the Trust offers social services to its tenants, including mental health, substance abuse, and other social services. It also has its own for-profit property management company subsidiary to manage its properties. ⁴

In 1996, the Trust was awarded a grant from the U.S. Department of Housing and Urban Development (HUD) to create the Innovative Housing Program. In 2004, it was awarded the federal Chronic Homelessness Initiative grant to create the Skid Row Collaborative and to provide other housing services. ³

According to its 2020 annual report, the Trust stated that it had fully developed over 30 properties since its inception and had 10 in development at the end of 2020. It also reported that it had 1,842 units in service, with over 2,300 inhabitants. ⁵

Services

Skid Row Housing Trust provided housing options for homeless people and has low-income housing as well. It markets its housing for those with mental health or substance abuse issues as it does not prohibit the use of illegal substances on its property. ⁴

The Trust also provided social services to its tenants and the community. In 2020, it reported that it provided case management to over 45,000 people, connecting them to public and private providers of mental health services, medical providers, workforce development programs, welfare services, and “wellness programming.” ⁵

Lawsuits

In June 2022, Danielle Schlichter, a former employee of Skid Row Housing Trust, filed a lawsuit against the Trust on behalf of 67 tenants. The lawsuit alleged that multiple properties owned by the Trust are riddled with health and safety violations, including pest infestations, mishandling of sewage, and other waste management issues. In the lawsuit, tenants also cited a lack of security that has led to individuals terrorizing the tenants through thefts and threats of violence. ²

The Los Angeles Times’ report on the Trust also reveal that it is facing numerous lawsuits from creditors due to unpaid bills, claiming that such issues had been going on for years. ²

Criticisms

Through interviews with the Los Angeles Times, former employees of Skid Row Housing Trust alleged mismanagement of funds by executives as the primary reason for the failure of the Trust. The LA Times also reported that in 2022, despite going defunct due to unpaid debts, CEO Lee Raagas was paid $229,969 as his salary before being fired and earned an additional $451,599 through a contract with the Trust for so-called “executive coaching.” The LA Times argued that such “high-end” salaries for executives are in part to blame for the Trust’s deficit. ²

In November 2022, after the Trust officially disbanded, California housing officials visited several of the Trust’s properties and reported over 250 violations. Regarding the Trust’s financial management and ability to keep up with the property, a former employee stated, “What we were currently doing was really bad for the people living in the buildings, and really bad for the people working in the buildings,” and “There was just no way to solve the number of problems that we were facing with the amount of time and money we had to solve them.” ²

Funding

According to its 2020 annual report, Skid Row Housing Trust received $7.7 million in government contracts and grants, $1.9 million in private donations, and $16.0 million in rental income toward $28.2 million in total revenue. Also in 2020, it reported spending $36.5 million in “program services” and $5.3 million in “supporting services.” ⁵

At the end of 2019, the Trust reported having $140 million in assets and $156 million in liabilities, totaling -$15.3 million in net assets. ⁶

According to its tax returns, in 2019, the Trust spent $1.8 million on lobbying, $8.5 million on salaries and compensation of employees, and $1.0 million to a property management company. ^{7 8 9}