No Preference for City’s Elderly : Montebello Decries HUD Housing Lottery

Mayor William M. Molinari used to feel proud when he would drive by the construction site of Casa La Merced, a desperately needed public housing complex for low-income seniors. But now, he only feels hoodwinked.

“Quite honestly,” the mayor said last week, “I don’t know precisely where to fix the blame.”

What has soured him so on such a worthwhile project revolves around a question of fairness.

Molinari contends that a federal agency stood silently by in 1984, when the city gave developers $1 million in land and improvements while under the false impression that it would earn prospective Montebello tenants some priority.

Federal officials disagree that they were in any way remiss.

But they acknowledge that the 234 Montebello seniors who have applied for the 127 available apartments--thinking the competition was first-come, first-serve--must instead bet their hopes on the luck of a lottery. And the hopper will contain names of 800 other applicants from throughout Los Angeles County--plus two or three from out of state.

Up to Lady Luck

Montebello residents could conceivably win all. Or none. Or about 23% if the hopper tumbles in rhythm with the law of averages.

And that, said Molinari, is unfair.

“Had we known that our residents wouldn’t be given any preference we certainly would have considered the option of taking that $1 million” and building some other housing more certain to serve the city’s substantial elderly population, he said. “How do we justify the large contribution of local taxpayer money to a project that in some respects doesn’t affect our residents?”

So, the process of selecting tenants for the $8-million, five-story building, just north of where Montebello and Whittier boulevards cross, has fallen weeks behind because the city has asked the federal Department of Housing and Urban Development to give the city’s residents some preference. Molinari said he is prepared to argue at least the principle of fairness all the way to the White House.

A letter from federal officials responding to the city’s concerns is expected any day. But the delay already means that there is at least a chance that no tenants will be ready to move in when the project opens on Sept. 15.

“It may jeopardize the financial position of the project,” said Clive Graham, Casa La Merced’s managing agent, looking at the worst possibility. “Unless we have tenants in there, who’s going to pay the mortgage? We may go into default.”

Graham said that would be unfair to the seniors, as well as to Los Angeles-based El Centro Human Services Corp., the developers who obtained a $7.6-million HUD loan so Casa La Merced could be built.

Resigned to Lottery

If there are no tenants to immediately pay rent, El Centro Senior Vice President Louis Bernardy agreed, then the nonprofit social service agency “will be responsible for making payments to HUD, which will be disastrous because we have no income.”

Everyone agreed that that is not likely to happen because Molinari said the city has no intention of blocking the building’s occupancy. He said city officials have largely resigned themselves to the fact that the lottery will go forward, perhaps within a week or so.

But the mayor said it will be a long time before he gets over the frustration he feels because neither HUD nor El Centro “clearly stated” that local residents would have no special consideration. And he may never get over the resentment he holds for local HUD officials, whom he regards as inflexible and “overbearing.”

“They give you the impression that (HUD regulations) are etched in stone on the mountain, and were given to Moses. . . . They treat us like we’re doing something wrong.”

HUD officials said that attitude is unfair to them.

Because federal tax money went toward building Casa La Merced, said regional fair housing director Thomas F. Honore, the agency has a responsibility to see that all applicants enjoy an equal opportunity to become tenants--regardless of race, origin or proximity to the project.

‘Misunderstanding’ by City

“It really boils down to, I think, a misunderstanding on the part of the city,” Honore said. While city officials may have thought their participation would give local residents “kind of a guarantee, that has never been a promise made by this office.” Honore said the city’s dealings were strictly with El Centro. “I can’t know when there’s someone in the wings, long after the project has been approved,” who doesn’t understand HUD’s fair housing requirements.

The lottery might well have been limited to applicants from the Montebello area, Honore added, if the city only had the same ethnic makeup as does the county. But even though at least 59% of city residents are Latino (compared to 27% countywide) and about 14% are Asian (compared to 6% countywide), “unfortunately . . . the proportion of blacks is not as great.” Blacks in Montebello make up less than 1%, while they are 13% of the county’s population.

Countered the mayor: “I don’t think there’s a community of our size in the area that has the population of ethic groups that Montebello does. We are a very, very diverse community” despite the smaller number of blacks and American Indians.

“We have no intention and no desire to discriminate against anyone,” Molinari insisted. “We don’t want to limit it to Montebello residents. We don’t want to exclude anyone. All we want is some consideration.”

Molinari said HUD officials should acknowledge that federal regulations in this instance are being carried too far and are penalizing a city that is trying to do all it can for its senior population, roughly 11% of total residents.

‘No Incentive’

“If every community faces the same kind of frustration we have,” he said, there will be no incentive for them to build such senior housing.

Most frustrating, the mayor said, is HUD’s admission that this kind of misunderstanding has come up “quite frequently” in its dealings with other cities. “Yet they do nothing to attempt to clarify that. . . . They’re acknowledging that a problem exists but they’re not doing anything about it.”

Casa La Merced will actually have 130 studio and one-bedroom apartments, but five have already been reserved for a resident manager, two local residents who were displaced by the construction and two for physically handicapped applicants. The rest of the units will be open to seniors who are at least 62 and on limited incomes. Because the federal government will also subsidize rents, single residents will qualify only if they make no more than $11,600 a year. And couples cannot have a gross annual income greater than $13,300.

After each applicant’s name is drawn, Graham explained, project officials will make sure they qualify financially and try to judge whether they would be suitable tenants as well. “We’re not going to take some dirt bag,” he warned.

The lion’s share of construction money came from the HUD loan, but the Los Angeles County Community Development Commission provided about $125,000, and Atlantic Richfield Co. added another $150,000 for development expenses.

Tried to Donate Land for $1

Montebello officials were so hungry for more senior housing when the project was first proposed that they tried to effectively donate the 1.3-acre parcel to El Centro for $1. But when federal officials insisted that a more realistic value be established, the city agreed on a selling price of about $600,000. However, El Centro won’t have to start paying that money until it has paid off the HUD loan--40 years from now.

Molinari finds little solace in knowing that about $2 million--the sale price plus interest--will eventually come back to Montebello. “It will be beyond my lifetime and beyond the lifetimes of these senior citizens who now need a place to live.

“These people were just totally devastated by the fact that after all these years of waiting they may not be able to get into this building,” he said.

El Centro’s Bernardy said his agency “basically” supports the city’s position, but is bound by the HUD regulations.

“Perhaps it wasn’t discussed (with the city) in enough detail,” Bernardy said. “I don’t think there was any intent on anybody’s part to mislead anybody, but again it’s unfortunate for the residents of Montebello.”