Plans to build low-cost apartments for senior citizens on the edge of the Uptown Village shopping district apparently have collapsed, dealing a major blow to the city's efforts to attract housing that its burgeoning elderly population can afford.
For the second year, a Quaker church group's bid to secure low-interest federal loans to build a 75-unit complex on the former site of the William Penn Hotel appears doomed.
A ranking official with the U.S. Department of Housing and Urban Development said this week it is "very unlikely" the California Yearly Meeting--parent organization of the state's Quaker churches--will land the construction loans, because the group does not own or hold a long-term lease on any portion of the 2.3-acre site on Philadelphia Street, two blocks from Whittier College.
"It's unfortunate, but without site control of that property at the time the application is filed . . . their application will be rejected again," said Joe Hirsch, executive director of HUD's Housing Development Division in Los Angeles. "I'm afraid (the Quaker project) is finished this time around."
David Isaacs, a commercial and residential builder based in south Orange County, has been negotiating with a Santa Ana firm since last November to buy the historic hotel site for $1.2 million. He wants to build his own senior citizen housing on the southwest corner of the property and sell the rest, about an acre, to the Quaker group.
But for the Quaker group to qualify for the federal money, Isaacs had to close escrow by May 15, the application deadline for HUD housing loans. He failed to do so, apparently torpedoing the Quaker's proposal and placing his own project in jeopardy.
Builder Lost Face
City Council members who had been willing to help Isaacs finance his 125-unit project by selling up to $12 million in tax-free mortgage revenue bonds said this week their confidence in Isaacs as developer of the property has been shaken.
Mayor Myron Claxton said Isaacs went before the council twice in April, and announced he was prepared to close escrow within 24 hours if the city would help with financing.
"Twice he promised he'd close the deal and twice he failed to deliver," Claxton said. "Yes, I'd say we have a problem. It's called credibility."
Councilwoman Sabina Schwab agreed: "It will be difficult for me to consider anything from that developer again. It would take some nerve for him to come the council now and ask for our support. This is a big disappointment. It was a golden opportunity to solve a serious problem in this city."
Isaacs, who has never before built such a housing project, said he now plans to close escrow on the Penn Hotel property the first week of June. He said liens against the property that prevented him from closing the deal in recent weeks have been cleared up.
Officials for Niagara Investments Corp., which bought the property in 1965 when the hotel was still operating, confirmed that those liens have been settled.
"I'm sorry the (Quaker) project did not work out, but it was just unrealistic to close escrow in time," Isaacs said. "But it's time to push on. I know I've lost some credibility and I'll have to do my best to recover my standing with the city fathers."
Without the Quaker housing, Isaacs said, he will submit to the city plans for developing the entire site. These will include a three-story, 200-apartment complex with dining facilities, a recreation yard and parking facility.
Reserved for Seniors
About 20% of the units would be reserved for seniors with low or moderate incomes, he said. If escrow is closed and the council approves the project by mid-summer, Isaacs believes he can begin construction by the end of the year.
"I still believe my project is a good one," Isaacs said, "and I'm confident the city will support me."
Councilman Lee Strong, lone opponent of the council's decision to help Isaacs finance his development with the mortgage bonds, said the developer and the city may still be able to come to terms on the project.
"The council is committed. They've shown it by supporting Isaacs to this point," Strong said. "And, I believe Isaacs still wants to build the project. We have a common interest in solving the city's senior housing dilemma. It can still work."
A year ago, the Quaker group applied for federal assistance to build a similar project on the same Whittier site, but its application was turned down because it did not own the property.
Don Kruse, chairman of the advisory committee for the city's senior center, called this setback for the Quaker project "a real blow." He said the complex is sorely needed, because roughly 19% of the city's 69,000 residents are older than 60.
"This city needs low-cost housing for its seniors," said the 80-year-old Kruse, who is also a member of the Quaker church. "Sure, there's a lot of wealthy people in this town, but there is a segment of the population that is suffering, that needs special housing. I'm sad."
Even if the Quaker group owned the hotel property, however, there would be no guarantee it would get the federal building loans.
Rush for HUD Loans
Housing administrator Hirsch said competition for HUD loans is stiff this year. By May 15, the agency's Los Angeles office had received 44 applications from groups seeking a share of the $33.8 million available in loans for senior housing projects in the Southern California region, defined as stretching from north of Santa Barbara to the Mexican border.
Nationwide this year, more than $470 million is available to build about 10,300 units.
'It's very competitive this year, because it may be the last time these loans are offered until 1987," he said.
In the federal budget now before Congress, the Reagan Administration has proposed a two-year moratorium on HUD loans for senior citizen housing projects.
'Twice he (developer) promised he'd close the deal and twice he failed to deliver.'