A $600,000 city loan to help pay for cost overruns in the Bryant Street-Vanalden Avenue redevelopment project in Northridge was approved Wednesday by a Los Angeles City Council panel.
The Grants, Housing and Community Development Committee sent the loan request to the council, where it is expected to be approved Tuesday.
"The purpose of the loan is to pay for unforeseen cost overruns and expenses which, if not addressed, might halt rehabilitation work at the project," the city's legislative analyst said in a report to the committee recommending approval of the loan.
The council in December, 1986, voted to issue $20.8 million in tax-exempt bonds and lend another $4.2 million to developer Devinder (Dave) Vadehra to buy and renovate 453 units in 46 buildings.
Vadehra has asked the city to lend him another $600,000 because, he said, he has had to make more repairs to units than expected. He also said that he has had to wait longer than expected for units to become vacant, forcing him to extend the contracts of workers.
Councilman Hal Bernson, a proponent of the redevelopment project, which is in his district, supports the loan. Bernson said the loan poses no financial risk to the city because it is guaranteed by a $2.5-million letter of credit from the developer.
Under the terms of the proposed loan, Vadehra would be required to repay the city at an 8.5% annual rate of interest over 3 1/2 years. He proposes to repay the city from the higher rents that will be charged to tenants of renovated units.