When the AIDS Healthcare Foundation began acquiring aging, single-occupancy hotels on skid row three years ago, its president, Michael Weinstein, lambasted L.A.'s handling of the homelessness crisis and boasted that he could house people at a fraction of the cost.

Some questioned why the nonprofit powerhouse, which operates 64 outpatient healthcare centers and 48 pharmacies in 15 states, was jumping into housing at the same time it was tangling with the city over “mega-developments” near its Hollywood headquarters. Others welcomed a fresh approach to tackling the intractable homelessness and affordable housing crisis.

But now, questions are arising about whether the foundation has gotten in over its head. Tenants at the Madison Hotel on 7th Street on skid row, the first single-occupancy — or “residential” — hotel in its growing housing empire, have filed a lawsuit accusing the foundation of allowing slum-like conditions to fester at the aging 220-unit building.

The suit filed on Wednesday cites persistent mold, as well as bedbug and roach infestations, and plumbing and electricity problems. One of the most serious accusations involves the elevator, which has been out of order for nine months, tenants say, forcing elderly and disabled renters to labor up to five floors on foot.


The AIDS Healthcare Foundation owns the Madison Hotel, a 220-unit building on 7th Street on skid row. (Gary Coronado / Los Angeles Times)

Also, the shower area has been sitting, half-renovated, behind duct-taped plastic, leaving residents, who have sinks but no private bathrooms, to share a single toilet and shower on each floor, the lawsuit says.

“Indeed, according to class members, AIDS Healthcare Foundation is just The Madison’s newest slumlord in a long line of slumlords,” according to the lawsuit.

Speaking at a news conference Friday, Weinstein said the tenants’ concerns are legitimate. But he pointed the finger at the city and the Department of Water and Power, which he accused of delaying for months an inspection of a new electrical system to support an elevator that the foundation installed as part of a $2.4-million renovation.


“We do not want people walking up five flights of stairs,” said Weinstein, adding that all tenants had been offered the option to move to the first floor or to the Baltimore Hotel downtown, which the foundation also owns. “One hundred percent of the responsibility rests with the city and DWP.”

City records indicate that renovations to the shower area were shut down because proper permits weren’t issued and because a plan to protect tenants during construction was rejected.

A spokesman for Mayor Eric Garcetti said a DWP inspector had been at the Madison Hotel on Friday and denied that the city had impeded the foundation’s plans.

“City departments have worked quickly to get this project open and have not caused any delay,” spokesman Alex Comisar said.


Anthony Thomas, 65, shows where communal shower area at the Madison Hotel on skid row. Tenants, who have sinks but no private bathrooms, must share a single toilet and shower on each floor, the lawsuit says. (Gary Coronado / Los Angeles Times)

Annette Morasch, an attorney representing Tammy Davis, a tenant at the Madison Hotel and the lead plaintiff in the class-action lawsuit, didn’t buy that the city was responsible for the building’s failings.

“How is the city preventing them from fixing the building?” she asked. “Did the city make them take out bathrooms without permits?”

Weinstein said the Madison was in rough condition when his foundation took it over. Indeed, in 2015, tenants sued the then-owner, real estate investor Kameron Segal, and his management company, William Holdings, over slum-like conditions.


“We jump into the toughest situations and they’re not easy,” Weinstein said. “We’re new at this, but we’re learning fast.”

Since 2017, the foundation, which generates $1.4 billion a year from its healthcare centers and pharmacies, has acquired six hotels and a motel in locations stretching from the north San Fernando Valley to East Los Angeles. It now owns 791 residential units that typically rent for $400 to $600 a month. It is also building low-income units in Florida and has a goal of expanding its housing efforts to even more states.

Weinstein said he didn’t anticipate having “issues with the city” of Los Angeles.

Edwin Linwood takes the stairs at the Madison Hotel. The elevator has been out of order for nine months, tenants say. “We do not want people walking up five flights of stairs,” said Michael Weinstein, president of the AIDS Healthcare Foundation. (Gary Coronado / Los Angeles Times)


In a lawsuit filed by the foundation late last year, it argued that L.A. improperly turned down its request for nearly $25 million in bond money to build supportive housing. The foundation had proposed building a tower with more than 200 supportive housing “micro-units” on the parking lot next to the Madison Hotel, which was included in the $8-million purchase price.

In rejecting the request, the city docked the foundation points over financing and organizational structure, experience and capacity.

But while the AIDS Healthcare Foundation was seeking to expand its housing stock, tenants said the Madison Hotel was sitting half-empty. Court records show the group may have evicted as many as 40 tenants since 2017, Morasch said.

Weinstein countered that the foundation evicted only those involved in violent incidents against staff and others or who had quit paying rent. The rooms will be refilled when an improved electrical system is approved by the city, he said.


“In order to make the project financially viable and build self-sufficiency, we exercise tough love on paying the rent,” said Weinstein, adding that counselors were available to help tenants catch up.

Alisha Lucero, 41, now living in a friend’s tent on skid row, says she was illegally evicted in January 2019 from the Madison Hotel, according to a lawsuit she filed against the hotel. (Gary Coronado / Los Angeles Times)

Several tenants said the foundation gave them little or no chance to make up rent payments when they fell behind. And in a separate lawsuit, tenant Alisha Lucero said she was illegally evicted in January 2019 after the foundation refused to honor an agreement she had with the previous owner to work as the building’s on-site manager in exchange for free rent.

Lucero, in the suit, alleges that police took her to jail for trespassing while the foundation threw out her belongings. The 41-year-old said she lived in her car until it was taken, and then began tent-surfing on skid row.


“It’s just horrible,” Lucero said Friday during a brief conversation in a tent around the corner from the Madison Hotel. “How could they do that, and they’re a nonprofit?”