The trustees who oversee the welfare of Skid Row’s 1,500 tenants are on the brink of bankruptcy, unable to borrow money and piling up $1.7 million in unpaid bills.

The financial situation has deteriorated so badly that trustee Mark Adams, who manages 29 properties owned by the Skid Row Housing Trust, has asked a Los Angeles County Superior Court judge for urgent action. Otherwise it said security had to be lifted. Make a deal, lay off your staff, and abandon your efforts.

“Trustees are literally starving for cash,” Adams wrote in court submissions Friday.

Adams suggested in the filing that the court itself would need to guarantee the loans to operate and repair the building in order to save the trustee.

Adams said in the filing, “Recipients should tell the court that the court is behind them, that they are lending the court’s confidence and will continue to lend it. We are asking the court to reassure potential lenders that

Adams’ request is scheduled to be heard at a court hearing on June 15. If the trusteeship collapses, it would be another devastating setback for Los Angeles’ homeless housing provision, especially for trust property residents, many of whom are elderly, disabled, and have mental health and drug problems. It will be.

Adams was appointed two months ago After years of mismanagement and financial turmoil The trust was unable to pay bills. Skid Row’s largest non-profit housing provider cut staff and maintenance, leaving the building in poor condition.

In response, Mayor Karen Bass and the city’s Mr. Ati said: Heidi Feldstein-Soto pushed Adams to take over a trust portfolio of 100-year-old residential hotels and new permanent subsidized housing estates. Nearly 900 units were deemed vacant, uninhabitable, or left in such poor condition that public agencies refused to pay rent even though tenants were still living there.

The court’s appointment gave Mr. Adams the power to fund repairs and renovations and turn over the property to other affordable housing providers once it stabilized.

Adams then received approval to borrow $5.3 million from Beckloff. This is the amount he estimated he would need to fund his business through July.

But Adams secured only $1.8 million, and financial difficulties threatened the trustee’s survival.

Adams said in court papers that there is a lack of support and funding from city leaders, potential lenders need assurances that they will be repaid, and budgets that have soared far beyond initial projections. Reasons for failure are listed below.

“The demands placed on the recipients are 29 properties, more than 2,000 units, some of which have active tenancy agreements with individuals entitled to government benefits and other protections. It is close to the unimaginable as it relates to the minimal funds available to accommodate the ,” Adams wrote in the filing.

Neither Mr. Adams nor anyone else has developed a full cost estimate to restore the building while it continues to operate. I also don’t know where the money for that will come from.

Typically, the trustee pays for repairs and trustee fees either by utilizing the capital of the property or through proceeds from the sale of the property or rent increases. But the trust is on the verge of bankruptcy, federal and local regulations are preventing tenants from rising rents, and city leaders are trying to keep thousands of apartments for former homeless residents. I’m excited. The city’s housing authority concedes that the city’s finance department will probably cover at least part of the price.

The cost exceeds some of Adams’ original estimates. Adams had to revise his forecast to book $1.3 million in collateral for 29 properties in May alone, more than double his original forecast. Adams said more personnel were needed to guard the building while emergency repairs were made to the building’s fire and physical security.

Likewise, the cost of restoring buildings has proven impractical. Adams said in court in May that he would like to spend an average of $3,000 each on repairs to about 400 homes where the Los Angeles Department of Housing has stopped paying vouchers that cover most rent for tenants.

However, Mr. Adams said in his June 9 application that repairs to the roof of the Rainbow Apartments would be required before he could fix the problem with the top floor unit, destroying the other three units in the complex and making it worse than expected. He said it needed a lot of work. Adams said he estimated the cost of these repairs at $270,000, but this amount is not yet in the budget.

“Therefore, the work cannot be carried out despite the request,” he wrote.

Without repairs, the Housing Authority will continue to withhold rent payments, further straining the trustee’s finances.

City officials have asked Mr. Adams for more detailed accounting of his services, saying the manager failed to include administrative costs, outside attorney fees and his own compensation in his April financial report. ing.

“The city understands that the first month of the trustee has been a period of transition, especially for such a large portfolio,” said Deputy Athi. Alia Haddad wrote in her Monday filing: “At the same time, the nature and complexity of the trustee’s work make it even more important that the accounts are accurate, timely and complete.”

Haddad’s application did not address the trustee’s overall financial problems, and Feldstein-Soto did not respond to a list of questions from The Times.

Adams told The Times that there was $336,000 left in the trustee’s bank account as of Tuesday, with $1.7 million in outstanding debt.

One of the debtors is JRM Private Security, which until May guarded 11 properties in trust. The company’s president, John McKillop, said he canceled his contract after weeks of unpaid salaries and left with an outstanding balance of $910,000.

In preparation for the work, JRM has hired more than 30 security guards and purchased two police cars, McKillop said. And since Adams was a new customer, the contract included a clause to pay bills weekly.

The company began operations on April 18, and McKillop said Adams paid $250,000 in the first week and has received nothing since.

“The moment we said, ‘Are you going to get paid?’ it all went downhill,” McKillop said.

In response to questions from The Times, Adams said he fired JRM as a result of his doubts about its performance, and said he plans to ask a judge how to handle the debt.

Mr. Adams is one of the state’s most experienced receivers, having handled 300 similar cases for more than 20 years.But there are smoldering concerns about his choice for the position. Since The Times reported in May In some of his previous cases, tenants were at risk of eviction and property owners lost their homes, while judges ruled that he inflated his fees by six figures.

Feldstein-Soto told The Times that Adams was the right person for the role and was urgently needed because of the trust’s collapse. But she said the city did not formally scrutinize his resume before recommending him for the appointment.

Feldstein-Soto, Bass and other city officials accused Adams last week. The property management company he hired sent an eviction notice. 451 tenants are in arrears on their rent. Feldstein-Soto said the notice was illegal under city law and violated Adams’ promise not to evict residents solely for nonpayment.

Ms Adams said the eviction notice was sent without her knowledge and that when she became aware of it, she sent a letter canceling the notice.

Adams said a perceived lack of support from city officials has undermined her ability to raise funds.

The city continues to negotiate with investors representing six of the trust’s more financially stable properties to remove the buildings from custody and place them under the control of local nonprofits.

In a filing, Adams said the potential outflow of some of the trust’s most valuable assets terrified potential investors, and the reduction in collateral could force it to demand higher interest rates. said to be sexual.

Trustee loans for troubled properties in need of major renovations usually include high interest rates to lure lenders who fear they won’t get their money back. City officials learned last month that Mr. Adams owed $1.3 million at 15% interest, and sought pre-approval from the courts for any loan with an interest rate above 10%.

Adams told Beckloff that outside lenders were not willing to agree to these terms, and neither the city nor existing investors in the trust property, including prominent banks such as U.S. Bank and Wells Fargo, are willing to provide cash for the time being. He said he wasn’t actively participating.

“These are some of the largest financial institutions in the United States and the City of Los Angeles, and despite all these resources, no action has taken place,” Adams wrote in the filing. “Silence and inaction speaks volumes.”