Last week, Politico reported that SRO Housing is facing “severe financial distress” and could dissolve within a matter of months. SRO Housing is the largest nonprofit housing corporation in Los Angeles; they manage 33 buildings with about 2,600 units of affordable housing for formerly unhoused people, primarily in Skid Row. Skid Row, a majority Black community, is home to the highest concentration of poverty and houselessness in the city. If true, the potential dissolution of SRO Housing would add substantially to the housing crisis and be a disaster for the Skid Row community. City officials must take action.
Permanent housing, including with supportive services for those in need, is the proven way to end houselessness. SRO Housing, founded in the 1980s, provides permanent supportive housing (PSH) on a large scale for single adults, particularly seniors, veterans, substance users, people with chronic mental health conditions, and people with HIV/AIDS. Without this housing, most of these people would be living on the streets. SRO Housing also provides some emergency shelter and non-permanent “transitional” housing. Many residents in the permanent “single room occupancy” units have Section 8 vouchers that subsidize their rent payments.
Unfortunately, SRO Housing’ financial liabilities are nearly $70 million greater than their assets, and their total expenses in 2025 were almost $9 million greater than their revenues, according to its Form 990 filings. They have been running at similar rates of loss for the past few years. Without a much deeper audit, we cannot say what is causing these deficits, though many factors could be contributing, including deterioration of the buildings requiring major repairs and maintenance, lack of adequate subsidies from the federal government, mismanagement, and the inability to fill vacancies– 500 units of SRO Housing remain empty while people sleep on the sidewalks outside the buildings. It is critical that the sources of the financial distress be revealed and addressed.
However, regardless of the source, city officials must protect this stock of permanent housing and to keep the people living in it from falling back into houselessness.
Politico reported that in May 2026, SRO Housing executives met with officials from the Los Angeles Housing Department (LAHD) to warn them of the financial difficulties and to seek their urgent help. They asked for more city funding, assistance selling the Rosslyn Hotel, and support in accessing greater subsidies and financing through federal HUD-funded RAD conversions, according to LAHD’s notes from the meeting.
LAHD’s notes said that they also discussed assistance in changing permanent supportive housing units to “interim housing” and to explore using time-limited subsidies to cover rents. While these two proposals may help ease SRO Housing’s financial burden in the short-term, they are absolutely unacceptable and counterproductive.
Interim housing is essentially shelter. It is a room or a bed for a short period of time, with no rights to tenancy, draconian rules, and, most importantly, no permanence of tenure. A person in interim housing is still houseless and, without a permanent home to move to, will either remain stuck in shelter limbo or return to the streets. Interim housing programs, like Mayor Bass’ Inside Safe, which presses people into hotel rooms, or Tiny Homes, which warehouses people in boxes the size of tool sheds, have terrible track records for transitioning people into permanent homes. More people leave these programs back to the streets than find actual housing.
TLS are also a form of interim housing. While they do provide a subsidy for an individual to rent their own apartment, they expire after no more than two years, leaving the person to either pay full market rent or face eviction. Given the population SRO Housing serves, people whose income is mostly disability payments and General Relief, very few will keep their homes once the subsidy ends. LACAN members with expiring TLS are facing evictions currently and government and service providers are struggling to keep them housed.
Converting permanent homes run by SRO Housing to interim housing or TLS will reduce the overall permanent housing stock and only add to the houselessness crisis. The city has a responsibility to find a way to save SRO Housing without converting it to a shelter.
City officials should also consider the fate of the buildings formerly owned by the Skid Row Housing Trust (SRHT) and not repeat the same terrible mistakes that have put hundreds of tenants in those buildings at risk of losing their homes. SRHT went bankrupt in 2023, just as SRO Housing may do soon, and the city placed its buildings into receivership, spending tens of millions of dollars to maintain them.
After one year, the city sold 21 of the most distressed SRHT buildings to a private, profit-motivated developer, Leo Pustilnikov, for a mere $10 million. The sales agreement stipulated that, in exchange for this exceedingly low price, he would adhere to a repair schedule and make the buildings safe and habitable. He has failed to do so. He has left the buildings in disrepair, while boasting of how little he is spending. Meanwhile tenants, nearly all formerly homeless like at SRO Housing and with few, if any, other options, are leaving his buildings in large numbers. He recently vacated one building, the St. George, and only relocated the remaining tenants because they organized with LACAN and forced him to uphold their rights. We expect him to continue to empty his other buildings. Pustilnikov has stated that he intends to turn his Skid Row building portfolio into a “continuum of housing” that includes shelter/interim housing, PSH, and market-rate housing. If his plan succeeds, he will reduce the stock of affordable housing so desperately needed to help people out of houselessness.
City officials must ensure that they do not simply offload the SRO Housing portfolio onto a slumlord like Pustilnikov. They need to maintain every unit of permanent housing and resist any efforts to convert to interim housing, including TLS. They must make sure that either SRO Housing remains solvent or that any new ownership arrangement requires commitment to full occupancy, conducting repairs to make the buildings habitable, protecting the existing tenants, and making sure every unit is permanent housing for those with the greatest need.
To do so will cost a lot of money. There is no solution to houselessness without funding. However, the amount of money needed, when compared to the amount spent on current policy, including shelter/interim housing, sanitation sweeps, policing and criminalization, as well as emergency services for people on the streets, is much better spent on something that actually works– permanent housing.
The time to act is now. We have seen the results of failure to act and of taking the wrong approach. The city must preserve every unit of SRO Housing’s permanent housing.