L.A. Official Is Linked to 2 Defaults

Two partnerships involving Los Angeles Harbor Commissioner James Acevedo are in default on $4.1 million in city loans used to buy land in the San Fernando Valley for two unsuccessful housing projects, officials said Friday.

One partnership once also included a company headed by a Los Angeles Recreation and Parks commissioner, Christopher Hammond. His firm dropped out in 2003, though it is still listed in the partnership papers.

One City Hall watcher complained that two politically connected commissioners were able to get city loans, but failed to carry out their promises to build affordable housing.

“It raises the issue of whether these loans were in the taxpayers’ best interest,” said Jon Coupal, president of the Howard Jarvis Taxpayers Assn. “Then you have the additional question of what was going on behind the scenes because these guys are City Hall insiders.”

The two Acevedo partnerships have been told they were in technical default because they failed to begin building the apartments, said Mercedes Marquez, general manager of the city Housing Department.

The partnerships had until last Sunday to reimburse the Housing Department for the money owed. But the deadline has passed without payment, so a city committee plans to meet next week to decide whether to initiate foreclosure proceedings.

“It’s incredibly unfortunate,” Marquez said. “We will make sure the city’s interests are protected and we get our money back.”

Acevedo, an appointee of Mayor James K. Hahn to the Harbor Commission, did not return calls, but a spokesman blamed the defaults on skyrocketing construction costs that have outpaced financing and also on community opposition to affordable housing.

“One of the reasons this and other projects are in default is there has been a 30% to 40% increase in hard construction costs,” said Mark Ryavec, a spokesman for Acevedo.

He said Acevedo hopes to avoid foreclosure, either by persuading the city to provide more money to cover construction costs or by selling the properties and using the proceeds to repay the city loan.

“There is clearly a solution,” Ryavec said.

Acevedo is a politically powerful developer. Beyond his ties to Hahn, for whom he worked during Hahn’s first campaign for mayor, Acevedo has served as a political advisor who helped elect Council President Alex Padilla and Councilman Tony Cardenas.

Padilla said Friday he would ask the Housing Department for a report on the two failed projects in his district. “I have to find out what happened,” he said. The City Council president has denied showing any favoritism to Acevedo.

Acevedo is a partner in Foothill Family Housing L.P., which was lent $2,762,000 by the city in 2002 to buy property near the corner of Pierce Street and Foothill Boulevard in Sylmar and to do design and other preconstruction work for a 77-unit apartment project that was never built. About $2.4 million is still owed.

The city also granted the project a zoning change to allow affordable apartments.

“We helped them purchase land, and they never got around to building the developments,” Marquez said.

Ryavec said the financing is now insufficient to cover construction costs, including materials, which have skyrocketed in price because of building booms in Southern California and overseas.

Acevedo is also the unpaid president of the nonprofit Neighborhood Empowerment and Economic Development Inc., which is a partner in the second project.

The partnership owes $1.7 million plus interest for a loan from the city it used to buy a site at 11681 Foothill Blvd. in Lake View Terrace that was proposed for a 56-unit apartment building.

That project, on a hillside called “The Bluffs” overlooking Hansen Dam, drew strong opposition from Lake View Terrace residents because it was low-income housing and would create a visual blight.

Residents protested in 2000 that Padilla intervened to get city regulators to relax some building requirements for the project, known as Lakeview Manor.

The original project also included Capital Vision Equities, the Hammond company, which later dropped out when community opposition did not die down.

At that time, Acevedo was an appointee of Mayor Richard Riordan to the city Fire Commission, and some development opponents complained that he seemed to have the political pull to overcome their opposition.

However, public opposition stalled the project, and Padilla proposed in 2003 that the city try to find grant money to develop the property into parkland.

Ryavec, who is interim executive director at the Neighborhood Empowerment nonprofit, said the park proposal also died.

“There was no money available to turn it into a park,” he said.

Marquez said that, because of the risk, the Housing Department no longer provides land-acquisition loans such as the kind given to Acevedo’s partnership.

Although the Neighborhood Empowerment nonprofit has six other developments in the Valley that were successful, the group has been controversial before.

In 1997, The Times disclosed that the nonprofit had been lent more than $7 million by the city to repair six earthquake-damaged apartment buildings in the Valley, even though the group had no experience in housing rehabilitation.

After The Times reported that the repairs had been significantly delayed, city housing officials announced they would never again let inexperienced developers take on so many buildings at once.