The AIDS Healthcare Foundation announced Monday that it has purchased a historic — and nearly unoccupied — downtown hotel as the next step in its initiative to provide affordable housing for homeless people.
The foundation's new homeless division will refurbish the King Edward Hotel on the edge of skid row and lease its 150 rooms at rates as low as $400 per month, President Michael Weinstein said.
At a reception in the lobby of the 1906 building near 5th and Los Angeles streets, Weinstein said the project will demonstrate how homeless people can be housed quickly and at far lower cost than through the housing construction program being pursued by the city.
The foundation's goal, Weinstein said, is to open 10,000 units in five years. The city plans to add the same number of units of permanent supportive housing with help from funds authorized by Proposition HHH, but in 10 years.
The measure, approved by city voters in 2016, authorizes $1.2 billion in borrowing over 10 years to augment other sources of public and private funding for construction of homeless housing, shelters and other facilities.
Weinstein challenged the city to follow the foundation's lead in finding underused existing buildings and adopting the single-room occupancy model to speed up and reduce the cost of housing the homeless.
Permanent supportive housing being partially funded through Proposition HHH is costing more than $400,000 per unit, city records show.
"If we spend $400,000 to $500,000 per unit to house a single person, then we're going to run out of money very quickly," Weinstein said. "We have to look at a maximum of $100,000 per unit if we're going to make a dent in this problem."
The nonprofit organization is a philanthropic powerhouse that operates a global network of clinics and pharmacies and plasters cities with provocative billboards for HIV and STD testing.
It has also become a polarizing player in local and state politics, bankrolling ballot measures on drug pricing, condoms in adult films and Los Angeles real estate development. It poured millions of dollars into the campaign for Measure S, which would have imposed a moratorium lasting up to two years on L.A. building projects that require zoning changes and other alterations in city rules.
The King Edward is the third project of the foundation's new housing arm called the Healthy Housing Foundation.
It has also purchased the nearby Madison Hotel on 7th Street, whose 220 single-occupancy units are about three-fourths leased, and the Sunset 8 Motel in Hollywood, which it is using for family housing.
"We believe that is the long-term answer to solving the homeless problem," Weinstein said. "We should be able to utilize a market model to have modest accommodations for people of very low income."
A spokesman for the foundation said the purchase, which closed Wednesday, was for $15.25 million. Not counting about $4.7 million for commercial and retail space, that works out to $70,446 per unit, he said.
The foundation will spend from $3,000 to $5,000 per unit on paint, flooring and fixtures and will lease the units as they are finished. The building currently has 35 tenants who will be moved into the renovated units, Weinstein said.
He said the foundation is still looking for other properties and challenged the city to do the same.