The sale of a portfolio of 17 affordable residential properties in Downtown Los Angeles’ Skid Row neighborhood received court approval this week, and the buyer is a familiar name to anyone who has followed Southern California’s commercial real estate industry recently.
Developer based in Beverly Hills Leo Pustilnikov will pay $19 million for the buildings, which include a total of 1,200 housing units used by formerly homeless tenants. The judge in the case said the sale was in the best interests of tenants and taxpayers who had footed the bill for the properties since last spring. according to the LA Times.
Pustilnikov will receive $9 million of that total to cover renovation and other costs, and will have the option to claim an additional $1.3 million for litigation costs related to the properties.
At the same time, the court approved the sale of another building in Skid Row for $2.1 million, which New Genesisto a subsidiary of the Washington, DC-based company Dalian developmentThis is in addition to 11 others in the neighborhood that were recently sold to various nonprofit developers, according to Just.
All 29 buildings were formerly owned by the Skid Row Housing Association (SRHT), a nonprofit organization founded in 1989 to transform run-down hotels and apartment complexes into affordable and permanent housing for the city’s formerly homeless population. But after years of leadership and financial problems, and despite receiving government rental subsidies, SHRT announced early last year that it could no longer afford to maintain its 2,000-unit portfolio.
In fact, many of their The residents lived in miserable conditions As a result, such as apartments with defective utilities, bad smells and vermin infestation, according to the Just.
A few weeks later, the portfolio was placed into judicial receivership at the behest of the Mayor of LA to manage the properties and search for new owners. Karen Bass and other city officials as fears grow that the city could lose such a large inventory of emergency shelters.
“The buyer appears to me to be a responsible and qualified operator,” Kevin SingerPresident of Specialists in insolvency administration, he said in a court document earlier this week“The vulnerable population living in the properties for sale need a permanent owner/operator, and without such an owner/operator, the alternatives for these tenants could be disastrous.”
The costs for taxpayers have been considerable since the bankruptcy proceedings last spring, because the city’s bill for this amount to at least 37 million dollarsaccording to the JustHowever, it is expected that the money from the sale of the properties to Pustilnikov and others will pay off at least part of that bill.
“I want to thank the city, county and state for their efforts to protect this vulnerable population and look forward to continuing to work with the mayor, city council and county executive to restore these difficult and neglected properties,” Pustilnikov told the Just in a statement after the judge approved the purchase. The developer has also agreed to maintain social services for the building’s tenants as a city condition.
Pustilnikov made headlines last year for his innovative, if controversial, use of California’s The builder’s remedy Rule, a previously little-known government regulation that allows Developers to circumvent local zoning restrictions if a particular city does not comply with state housing regulations. However, some of Pustilnikov’s attempts to apply this rule have failed due to legal and procedural challenges, particularly in particularly wealthy communities such as Beverly Hills, where his plan to build a 19-storey residential tower was effectively rejected by the city council at the end of June.
Nick Trombola can be reached at [email protected].
