Compton Acts to Recover Part of Loan

The City Council has approved a plan to recover some of the $5 million it has loaned over the last decade to a nonprofit housing firm that failed to build townhouses and produce jobs as promised.

Between 1978 and 1984, city officials steered a $2-million federal grant to the firm, Hub City Urban Developers Inc., along with $3 million in direct city loans to help set up a factory to manufacture prefabricated houses.

The firm spent the money without producing the houses or creating permanent jobs, and several inquiries by the city and the federal government failed to explain what happened. According to federal auditors, Hub City did not keep required financial records.

Authorities in the U.S. Department of Housing and Urban Development have been pressing the city to foreclose and recover at least the federal portion of the money.

Under the agreement approved last week by the council, Hub City will deed the city a parcel of land near the Compton Auto Plaza.

Another $538,059 will be paid to the city out of profits from a housing development in which Hub City is a partner with a private developer.

Voting to accept the payment plan were Mayor Walter R. Tucker and Council members Floyd A. James and Jane D. Robbins.

Council members Robert L. Adams and Maxcy D. Filer voted against the agreement. Filer said it allows Hub City to escape paying its debts. “Where are our ($3-million city) loan monies?” Filer asked. “Why don’t we foreclose. . . .”

The city, Filer said, has the power to foreclose on the firm and take all its assets, including its factory site on Alondra Boulevard.