Homeless Shelter Takes Shelter in U.S. Bankruptcy Court
The San Fernando Valley’s largest homeless shelter has filed for protection from its creditors in federal Bankruptcy Court in a last-ditch effort to stay open, officials said Tuesday.
“The shelter could not continue to survive without this,” said Sydney Irmas, chairman of Los Angeles Family Housing Corp., the nonprofit organization that operates the shelter. “It had to have some relief from the mortgage payments . . . none had been paid in 1989.”
The North Hollywood shelter filed under Chapter 11 of the federal Bankruptcy Code on April 7. The action freezes the shelter’s $2.24 million in assets and prevents creditors from suing or foreclosing on its building. The shelter’s mortgage payment is $21,000 a month.
Meanwhile, shelter directors must reorganize their finances and work out a court-approved plan to pay back debts that total $2.47 million, most of which result from a trust deed on the building.
While bankruptcy proceedings are going on, the 72-room shelter will remain open and will continue to provide food, counseling and health services to the 150 homeless people it sees each month, said Arnold Stalk, executive director of Family Housing Corp.
Shelter officials hope that the debt-repayment plan, which has not yet been worked out in court, will end the shelter’s financial problems.
The shelter, at the former Fiesta Motel at 7843 Lankershim Blvd., was purchased in 1986 for $2.2 million by the Valley Interfaith Council, a charitable coalition of churches and synagogues.
By the end of that year, however, the organization was swamped with unexpected building expenses. Church leaders decided that they lacked the management skills to operate the shelter’s services, which include mental-health counseling and housing placement.
The Interfaith Council turned over shelter operations to Los Angeles Family Housing Corp., which also operates an East Los Angeles shelter and also builds housing for the poor.
The North Hollywood shelter has become a Valleywide resource for poor and homeless people, offering emergency housing, food and clothing to about 3,600 people during its two years of operation, officials said. Its staff has joined Los Angeles city officials in operating an emergency cold-weather shelter at the Van Nuys Armory.
But Stalk said it has been a monthly struggle to make ends meet under the $21,000 mortgage payments.
“It’s scary because it’s hard to raise that kind of money every month,” Stalk said, adding that the shelter had no cash reserves when his agency took over. “We have to go out and plead and beg to foundations and churches every month.”
$88,260 in Federal Funds
Gene Boutilier of United Way, which distributed $88,260 in federal funds to Family Housing Corp. this year, praised the shelter. He said the Bankruptcy Court filing does not threaten federal funding.
“Our position is that they are restructuring their debts, and as long as they continue to provide reliable services, we feel our money is being properly used,” Boutilier said.
“That shelter is very important to the Valley. We want it to stay open.”