A City Council committee on Monday approved a recommendation to remove Mark Adams, the bankruptcy trustee in charge of overseeing 29 derelict buildings in the Skid Row area, home to about 1,500 low-income renters.
The Council’s Budget, Finance and Innovation Committee also gave the green light to a related recommendation to approve a $10 million loan for the maintenance and repair of buildings under receivership.
Both recommendations were accepted with 3-0 votes, City Councilor Monica Rodriguez was absent from Monday’s meeting.
Ann Sewill, director-general of the Housing Department, and prosecutor Hydee Feldstein Soto explained the need for the loan, which is conditional on the appointment of a new bankruptcy trustee, Kevin Singer, who would replace Adams.
“From the perspective of my office, and myself in particular, this is a difficult question,” said Feldstein Soto. “We wouldn’t be here if we weren’t convinced of the absolute necessity of preserving the housing and services for 1,500 of our most vulnerable residents.”
The council does not have the authority to fire Adams, who was appointed by a Los Angeles Superior Court judge at the request of the city. The council would have to ask Judge Mitchell Beckloff to fire Adams and appoint a new receiver.
The buildings are wholly or partly owned by the Skid Row Housing Trust, which collapsed financially earlier this year.
Sewill released a report on Friday saying some of the buildings could suffer irreparable damage and should be demolished. Additionally, the Los Angeles Times reported that many of the tenants suffer from “dirt, clogged plumbing, pest infestations, and constant intrusion from street dwellers who use drugs, set off fire alarms, and sleep in hallways.
Adams has been criticized for allegedly failing to make progress on rehabilitating the buildings and finding loans on good terms. Last spring, a company he hired sent eviction notices to hundreds of tenants who were behind on their rent.
Adams, whose appointment did not include the power to evict tenants, said he did not approve the orders and withdrew them.
Adams told the Times he would respond to the city’s report in court, citing Beckloff’s previously stated support for him.
Feldstein Soto told the committee that she wasn’t here to rehash “whatever may have happened in other receiverships in the past,” but rather to orient herself solely on the basis of “what happened in that receivership.”
She reiterated that there was a lack of transparency at Adams, including accounting for “approximately $3.5 million worth of rent,” which her office estimates Adams has collected since he was appointed bankruptcy trustee in April.
“So the proof was only obvious last Friday. And even despite a court order requiring reporting, we still haven’t received the kind of report that one would expect from a financial trustee like a bankruptcy trustee,” Feldstein Soto said.
“…We have lost confidence in the capability of this particular receiver,” she added.
Councilor Bob Blumenfield, chair of the budget committee, acknowledged that the city’s homelessness situation is a “humanitarian crisis” and asked how a new bankruptcy administration would address the above issues differently.
Feldstein Soto responded that Singer, the managing director and CEO of Receivership Specialists, was originally identified by Sewell. He was checked by the housing office and the public prosecutor’s office.
“I’ve personally spoken to the San Francisco Attorney who has given it rave reviews, and we must do our best to do the job as diligently as we can,” Feldstein Soto said.
Sewill indicated in her report that the loan will be repaid when the properties exit receivership, either by the limited partners or by other housing from the Department of Housing and possibly other government partners.
The $10 million loan is intended to pay the Adams’ bankruptcy costs and pay off expenses for up to six months. However, there may be additional costs for repairs and other expenses not yet known to the city.
Sewill stated that the goal is to stabilize the trust properties as safe places to live until each property can be transferred to a replacement general partner or owner.
“We need to have confidence that what’s happening with these buildings — with these properties — is at the level of performance that we would expect in that situation,” Feldstein Soto said.
“And for all of these reasons, it’s very difficult to admit a mistake. But I think part of our job is to correct mistakes when they happen.”
