Key facts
- SRO Housing, a major nonprofit landlord in Los Angeles' Skid Row, is facing severe financial distress.
- The organization's finances have been known to be precarious for years, with cumulative shortfalls reaching $27.8 million since 2022.
- SRO Housing's debts and liabilities exceed its assets by nearly $70 million.
- The Department of Housing and Urban Development is attempting to withhold nearly $250 million in funding from Los Angeles.
- A House Oversight subcommittee is scheduled to hold a hearing on fraud and failure in federally funded homelessness services.
- Approximately 20% of SRO Housing's portfolio, about 500 units, are vacant.
SRO Housing, a prominent nonprofit dedicated to providing permanent housing in Los Angeles' Skid Row, is confronting a severe financial crisis that could lead to its dissolution. The organization's financial struggles come at a critical juncture for the city and county, which are under intense scrutiny from federal and congressional bodies regarding their efforts to combat homelessness.
The Department of Housing and Urban Development (HUD) is reportedly seeking to withhold nearly $250 million in funding from the region, citing allegations of waste and corruption. Concurrently, a House Oversight subcommittee is slated to examine "fraud and failure in federally funded homelessness services" in Los Angeles. Mayor Karen Bass, citing a scheduling conflict, declined an invitation to testify at the hearing, suggesting it was intended to intimidate the region.
More than 73,000 people are homeless in Los Angeles County, according to recent surveys, and the potential closure of SRO Housing would exacerbate the humanitarian and financial strain on the region's response. The nonprofit's precarious financial state has been a known issue for years. The 2023 collapse of another major nonprofit landlord, Skid Row Housing Trust, highlighted systemic funding challenges for organizations providing permanent housing in an area with overwhelming rates of homelessness, drug addiction, and mental illness. The city had to step in, placing the trust's 29 properties under receivership and spending $30 million to maintain them before transferring ownership.
Concerns about SRO Housing's sustainability were raised by its leaders and city housing officials at the time. An internal memo from a May meeting between SRO Housing leaders and the city housing department indicated that the organization was in "severe financial distress" and anticipated only about six months of solvency without immediate assistance. However, Anita Nelson, a leader at SRO Housing, told POLITICO that she did not state a specific six-month timeline for closure and that the organization is not currently planning to shut down, though she acknowledged communicating the growing crisis to the city.
Nelson stated that the city officials are not grasping the urgency of the situation. Public financial reports show SRO Housing has lost money annually since 2022, accumulating a deficit of $27.8 million. Its debts and liabilities surpass its assets by nearly $70 million. Sharon Sandow, a spokesperson for the housing department, offered a brief statement, saying the department is focused on preservation and developing strategies for struggling portfolios, without directly addressing discrepancies in the timeline of the May meeting.