California Elections : Earthquake Preparation Proposition Rattles Libertarians

The backers of Proposition 77, which would authorize a $150-million bond issue to repair substandard housing and strengthen apartment buildings prone to earthquake damage, argue that the measure is a prudent investment in California’s future.

“This proposition . . . will protect us from extraordinary losses” when the inevitable “Big One” shakes the state, said Assemblyman Dominic L. Cortese (D-San Jose), one of the measure’s sponsors. “I think you need to look at this as an investment that will protect lives and property.”

But the bond issue’s only publicly declared opponent, the Libertarian Party of California, characterizes the plan as overly costly and a cynical attempt to evade the government spending restrictions enacted by voters in 1979.

Libertarians Opposed

“If buildings do need to be brought up to standard, then the owners should . . . do that” without government assistance, said Ted Brown, the Libertarian Party’s state chairman and its candidate for the 22nd Congressional District seat held for the last 16 years by Rep. Carlos J. Moorhead (R-Glendale).

Proposition 77 was not a part of the original package of bonds proposed by Gov. George Deukmejian, but was added at the insistence of Assembly Speaker Willie Brown (D-San Francisco). The Speaker signed a ballot argument in favor of Proposition 77 with Cortese and Assemblyman Richard Floyd (D-Hawthorne).

Proposition 77 is made up of two parts.

The first would provide $80 million in low-interest, deferred payment loans to the owners of unreinforced masonry apartment buildings occupied mainly by poor people. The loans would be used to pay for repairs to make the buildings less likely to crumble during a major earthquake.

Expand Concept

The Whittier earthquake last Oct. 1, which claimed three lives and caused up to $358 million in property damage in greater Los Angeles, prompted the Legislature last year to enact a limited, $15-million deferred-payment loan program to repair homes and apartment buildings damaged in that temblor. The proposed bond issue would expand on that concept by financing a loan program throughout the state to make repairs in anticipation of an earthquake, not in its aftermath.

The second part of the bond issue would provide $70 million to greatly expand two existing housing rehabilitation programs. Both offer property owners 3% loans. One program pays for the repair of apartment buildings or single family homes occupied by the poor, while the second finances the purchase or repair of housing for the elderly or the mentally or physically disabled. Repayment of the interest and principal is deferred for at least five years, and in some cases as long as 30 years.

The first of the existing programs was established in 1978, and to date has provided $10.4 million in loans to finance renovation of 2,500 apartments or homes. The second program has loaned out $9.6 million to buy or fix 1,197 housing units since its inception in 1983.

Agency in Charge

Like the existing programs, the earthquake reinforcement effort would be administered by the state Department of Housing and Community Development, working through local government agencies or nonprofit corporations.

To qualify for an earthquake repair loan, a property would have to be included on a list of buildings designated by the local city or county government as being prone to earthquake damage.

Like all the bond initiatives on the June ballot, the bonds sold to finance the loan programs would be paid off with money from the state’s general fund, which is financed largely by individual and corporate income taxes and the sales tax. Loan proceeds would be put into a revolving fund to make more loans.

Assuming that the bonds are sold at an interest rate of 7 1/2%, the $150-million bond issue would cost the state $270 million over 20 years. The average repayment cost would be about $13 million a year, according to a report prepared by the office of the state legislative analyst.

‘Very Expensive’

“The bonds are a very expensive way of financing,” said Brown, the Libertarian Party chairman. “We’ve opposed every bond issue, ever.”

Brown said he believes that legislators purposefully use bond issues to finance popular programs, such as those for veterans or housing rehabilitation, because bonded indebtedness is not subject to the limits on state spending enacted by voters nine years ago.

Brown also argued that market interference by the government through such programs as rent control and community redevelopment has contributed to the disappearance of low-income housing. “Now they want our hard-earned money to be spent trying to correct the problem,” the Libertarian Party states in its ballot argument.

Speaker Willie Brown, Cortese and Floyd say in their ballot argument that the government has an obligation to help make the state’s estimated 875,000 substandard apartment units liveable.

$350 Million in Losses

Cortese noted that the Oct. 1 earthquake centered in Whittier caused an estimated $350 million in losses and that 80% of the apartment buildings that were damaged were constructed of unreinforced brick, concrete or cinder blocks.

“Proposition 77, for once, will have government act to avert a crisis--not simply pay to clean up after one,” the legislators state in their ballot argument. “It is a responsible and responsive housing program for the health and safety of all Californians.”