LOS ANGELES, CALIFORNIA - JUNE 28: A person walks past an encampment of unhoused people in the Skid Row community on June 28, 2024 in Los Angeles, California. The U.S. Supreme Court ruled today that cities can ban people, including those who are homeless, from camping and sleeping outdoors in public places, overturning lower court rulings. Skid Row is home to thousands of people who are either experiencing homelessness on the streets or living in shelters. (Photo by Mario Tama/Getty Images)
Los Angeles, California – The failure of the Skid Row Housing Trust, one of Los Angeles’ largest supportive housing providers, underscores severe weaknesses in the region’s system for housing the city’s most vulnerable populations. A new report, Redesign Required: Lessons for Permanent Supportive Housing from Skid Row Housing Trust Buildings, outlines how inconsistent and insufficient rental subsidies, along with systemic inefficiencies, contributed to the trust’s collapse and continue to threaten the viability of other housing providers.
At its height, the Skid Row Housing Trust operated around 2,000 units across 29 properties, many of which were aging single-room occupancy (SRO) hotels in and around Skid Row. In early 2023, after years of deteriorating conditions, the organization declared it could no longer sustain operations. Buildings suffered from serious maintenance issues, including broken elevators, unsanitary facilities, and security problems. By January 2024, the trust had declared bankruptcy and dissolved, with the city stepping in to transfer the properties to new owners at a cost of nearly $40 million.
The report, based on internal financial data and interviews with over 30 individuals familiar with the trust’s operations, points to a chronic funding shortfall as the root cause. Public rental subsidies, intended to fund both housing and social services, were often too low and came through multiple sources with little consistency. In some cases, nearly identical units in different buildings were subsidized at rates differing by as much as $600 per month. Even newly constructed properties ran significant annual deficits once long-term maintenance and operational costs were factored in.
The coordinated entry system, implemented citywide in 2015 to prioritize housing for those with the highest needs, also played a role in the trust’s financial decline. While designed to streamline access, the system has been widely criticized for slow placements and for concentrating residents with severe mental health and addiction challenges in buildings without the appropriate resources to support them. Following this change, vacancies rose, and spending on security increased sharply—from around $50,000 per year in 2016 to over $1.4 million by 2022.
The COVID-19 pandemic exacerbated these challenges, leading to a further decline in staffing and property conditions. The report also highlights that concentrating individuals with complex health needs in shared SRO housing proved to be an ill-suited model for many residents, particularly in older buildings with communal bathrooms and kitchens.
While the city avoided a total collapse of services by stepping in, the financial rescue did not resolve the structural flaws in the region’s supportive housing framework. Other nonprofit providers, such as SRO Housing Corp., have already reported significant maintenance and financial challenges, raising concerns that more failures could follow.
The report calls for immediate reforms, including standardized and increased rent subsidies that reflect the full cost of housing and support services. It concludes that without fundamental changes, Los Angeles risks further loss of critical housing and increasing burdens on taxpayers to manage future emergencies.
