Two top officials at the Weingart Center Assn., one of Los Angeles’ most prominent homeless services providers, have been placed on leave while the nonprofit conducts an internal review into its housing projects.
Weingart has retained an outside law firm to probe “certain” homeless housing projects “in light of recent reporting raising questions concerning the valuation” of the projects, a spokesperson said in a statement Friday.
The two officials — Kevin Murray, a former state senator who serves as president and CEO, and Ben Rosen, director of real estate development — could not immediately be reached for comment.
“During this time, the Board has assigned Chief Operating Officer Tonja Boykin to lead and ensure the continuity of Weingart’s mission to empower and transform lives by delivering innovative solutions to combat homelessness in Los Angeles,” the spokesperson, Stefan Friedman, said in the statement.
The statement did not specify which housing projects, but the move comes after The Times raised questions about two projects.
One is at the center of an ongoing criminal case in which federal prosecutors have accused a real estate executive of using fake documentation to buy a nursing home in Cheviot Hills for $11.2 million, then quickly selling it to Weingart for $27.3 million.
A second project would have converted a Torrance hotel into apartment units for homeless people. Weingart planned to purchase the hotel for $30 million — a price that was probably significantly higher than the hotel’s actual value, The Times found.
In both cases, Weingart used, or planned to use, state and local funds designated for housing homeless people.
Weingart was awarded up to $20.5 million from the city of Los Angeles and $26.6 million in state Homekey funds to acquire and convert the Cheviot Hills nursing home into homeless housing, with a $1.4-million developer fee going to Weingart.
Earlier this month, the real estate executive was charged with nine felonies over allegations that he used fake bank statements to get loans and lines of credit to buy the property for $11.2 million before flipping it to Weingart for more than double the price.
The project has yet to open. Prosecutors have said they are investigating what the city of Los Angeles and Weingart knew about the executive’s actions.
In Torrance, Weingart planned to use Homekey+ funds to purchase a 122-room Extended Stay America hotel for $30 million and convert it into permanent supportive housing for people who are homeless or at risk of being so.
Several independent experts interviewed by The Times criticized the appraisal that Weingart used to justify the $30-million price of the Torrance hotel, with one expert valuing the hotel at $21.5 million and another at $22.7 million, depending on what the buyer would eventually do with the property.
“I cannot imagine a world in which this is worth $30 million,” said Richard Green, director of the USC Lusk Center for Real Estate.
Torrance officials, who opposed the project, commissioned an appraisal that determined the hotel was only worth $10.2 million.
Weingart had sought $37.7 million in state Homekey+ funds, and L.A. County committed $12 million for the project. Weingart would have pocketed a developer’s fee of more than $2 million and also would have received a subsidy to run the facility. In the face of community opposition, Weingart ultimately decided not to pursue the project.
The state Homekey+ program is an offshoot of Gov. Gavin Newsom’s Homekey initiative to quickly shelter homeless people by buying buildings such as hotels and motels and converting them into apartments. Homekey+ projects — funded by Proposition 1, which was approved by voters last year to increase treatment and housing beds — are required to serve veterans and individuals with mental illness or substance use disorders.
California has poured $3.6 billion into three rounds of Homekey proposals since the start of the pandemic, according to the Department of Housing and Community Development, which has helped cities, counties and homeless services providers fund more than 250 projects to create more than 15,800 units of housing. The state has awarded additional funds from Proposition 1 for Homekey+ projects.
Headquartered in Skid Row, Weingart is one of the area’s most prominent homeless services providers, operating or developing more than a dozen housing projects across L.A. County. Friedman said Weingart serves nearly 2,000 people daily through its network of interim and permanent supportive housing sites.
Mike Mauno, a former Torrance city council member, said that after he complained to the FBI about what he suspected was the Extended Stay America hotel’s overvaluation, an FBI agent asked him for a copy of Weingart’s appraisal.
“It’s overvalued dramatically compared to the market,” he told The Times. “They’re overpaying for these projects — the question is why?”
Weingart pulled out of the Torrance project in August, with Murray blaming the city’s resistance.
“It is a shame that the City of Torrance is leaving approximately $50 Million of State and County Funding on the table which could have gone to permanently and supportively house their most vulnerable residents,” Murray said at the time. He added that developer fees “are used to cover the overhead and risk of developing and managing a complicated Real Estate Project.”
Murray had argued that the project cost, which is equivalent to $414,000 per unit, including a manager’s unit, was a good deal. He said it was significantly less than building new apartments, which could run more than $700,000 a unit, making the proposal “extremely viable and cost effective.”
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