Hollywood Drama : A historical neighborhood in in San Juan Capistrano may be bulldozed for a housing project. But ‘you can’t find this anymore,’ a resident protests.

Little Hollywood is a place that change almost forgot.

Nestled amid sycamores, jacarandas and pepper trees near Trabuco Creek, this tiny community in the northern section of the city’s Los Rios Historical District has managed over the years to maintain its rural ambience while condominium complexes, mini-malls and gas stations have sprouted nearby.

Today, its 13 board-and-batten homes, built on a 6-acre parcel during the Depression, stand in open fields and are accessible only by a narrow, one-lane, dead-end road that was first paved just five years ago.

It is a place where clothes are still hung out to dry, birds chirp throughout the day and neighbors are considered family.

But change is inevitable, say city officials, who are gearing up to move ahead with plans to tear down some of the dilapidated houses and replace them with a low-cost housing project sponsored by the Department of Housing and Urban Development.

The plan has drawn mixed reviews from residents of the historical district: Some say that residents cannot hinder progress, but others argue that the development would destroy the district “by inviting crime and congestion.”

Some residents of Little Hollywood bristle at the thought of their community being fought over by city officials and preservationists. Most of the 13 families are Mexican-Americans and American Indians whose homes have been passed on from generation to generation.

Tony Alarcon, 72, has lived in the neighborhood since 1926 and is the unofficial mayor of Little Hollywood. He is torn about the city’s plans.

“You can’t find this anymore,” said Alarcon, pointing at the hummingbirds hovering above his geraniums. “Everything here is so serene. But you have to make room for progress, and with progress comes congestion and everything else.”

Although just 13 houses are in Little Hollywood, it is rich in tradition and folklore, said City Historian Pamela Gibson, noting that the historical district is among the oldest in the state, with some homes dating back to the early days of the 215-year-old Mission San Juan Capistrano.

“When you think about Little Hollywood, you think about the little cottages, the open spaces and the wonderful landscaping,” said Gibson, who has written three books on the history of San Juan Capistrano.

“It is in Little Hollywood where the ghost stories began about La Llorona, the Crying Lady who murdered her children and had to walk the banks of the Trabuco Creek to serve her penance,” she said. “Many people who live in the South County area swear that they’ve heard her terrifying cries at night.”

No one is certain how Little Hollywood got its name. But the most widely accepted version is that it was named after some beautiful young sisters, who had red hair and green eyes, who once lived there.

“When we saw them, we would say, ‘There go the Hollywood stars,’ ” said Evelyne Villegas, 66, a retired schoolteacher and third-generation Juaneno Indian.

Villegas said the neighborhood’s weekly concerts “during the bootlegging days” also contributed to its glitzy image.

Villegas and Alarcon said they knew that change was near after the city paid about $800,000--most of it from HUD--in the early 1980s to buy two estates that make up Little Hollywood.

Cassandra Walker, director of the city’s Community Redevelopment Agency, said the city bought the houses to “preserve their character.” With the purchase, the city became the landlord and receives rents ranging from $125 to $275 a month.

Walker said that the city is mandated under state law to spend a sizable portion of its taxes on housing for low-income people and that Little Hollywood could accommodate 24 single-family houses.

Site plans are being finalized, but the city has yet to make a decision on how many units will be rehabilitated and how many new units will be built, she said.

The design of the two- and three-bedroom houses will preserve the historic character of the neighborhood, Walker said, adding that the new houses will be modeled after older buildings.

“The whole idea is to make sure that they blend in the neighborhood . . . not stick out like a sore thumb,” she said.

The new homes are expected to cost about $60,000 each, Walker said.

“We are trying to provide housing for a section of the community that would not have housing or simply cannot afford it,” she said.

Little Hollywood residents would be given the first choice to occupy the new units, Walker said.

Some Little Hollywood residents said they are not looking forward to the development.

“I like my privacy,” said Barbie Hawk, a 20-year resident of the community who is considered a newcomer. “It’s like a bird sanctuary here . . . and where else can you find a possum in your house? But if they build more units, it’ll be like just any other housing tract.”

The idea of building low-cost homes in a historical district riles many Los Rios residents who live near Little Hollywood.

David Chorak, who runs a bread-and-breakfast in Los Rios, has told the City Council that he would tear down his two 1920s-era cottages if the houses are built.

“I’ve invested $400,000 in this neighborhood, and it’s a crying shame that they want to put low-income housing here,” Chorak said. “Historical district and low-income housing just cannot commingle. You’ll have crime and vandalism. It’s just not going to work, even if you make it look country and Western.”

Chorak’s argument is supported by Councilman Gil Jones, a Los Rios resident. Jones disagrees with some council colleagues who contend that the city has a responsibility to provide low-income housing in the Los Rios district.

“That argument is ludicrous,” Jones said. “We are obligated to preserve the area. Adding another 11 units is only a drop in the bucket. If the city wants, it could purchase the nearby condominiums to address our low-income needs.”

Mayor Kenneth E. Friess said the city’s goal in building the project is to “simply provide additional housing for people who are getting priced out of the market.”

He said the city decided to use the open space in Little Hollywood because the community has historically provided low-cost housing for residents of the preserved area.

Friess called the view that the new homes would destroy the neighborhood’s historical character “a bunch of malarkey. Our completed drawings show that the cottages will be very compatible. . . . The Los Rios district has boasted a wonderful mix of people over the years, and it’s important to try to retain that for the future.

“If we don’t put these cottages in, people would put in much larger and expensive homes, and the essence of the district would be lost.”

Gibson, the historian, said she believes that both sides could compromise. The city could “rehabilitate” as many of the old houses as possible and ensure that new units are replicas, she said.

“It’s important that the city preserves this neighborhood,” Gibson said. “But the value of a home is the people in the home, not the actual walls.”