Window of Opportunity for Homeowners, Buyers : Housing: A $350,000 loan from the city will help finance a nine-unit townhome complex for first-time buyers.

The city has made its largest investment yet in affordable housing with a $350,000 loan to help finance a nine-unit townhome complex for first-time home buyers.

The loan will go to La Habra Neighborhood Housing Services, a nonprofit organization that will manage the project as part of ongoing efforts to revitalize the Whittier Park neighborhood, an area that the city almost gave up on.

“This will be a project to clean up some substandard commercial lots and rental units and turn it into owner-occupied dwellings,” Mayor Bob Henderson said. “It’s a real showpiece as to what can happen when you have a concerned community that wants to save and improve itself and a city government interested in cooperating with them.

“The townhouse program is the culmination of the restoration of that entire neighborhood.”

Four years ago, city leaders had been on the verge of demolishing much of the deteriorating four-block neighborhood in order to build a senior housing complex. The city backed down after vehement protests from residents.

The revitalization strategy for the Whittier Park area is in its second year. At the heart of the plan are the La Habra housing organization that has taken on similar projects in Orange County, and a dedicated group of residents.

La Habra Neighborhood Housing has managed a city-financed revolving loan fund to pay for home improvements. The group also has obtained private grants and donations of about $100,000. The city in turn allotted $280,000 in federal funds to renovate Whittier Park itself, which used to be little more than a field of patchy weeds and rusting playground equipment.

Area residents have organized communitywide cleanups and increased neighborhood watch activities. Local residents recently drew praise from Whittier Police Chief Brad Hoover. He noted that the Whittier Park neighborhood had one of the lower crime rates in the city, despite being near some comparatively high crime areas.

The residents also participated in the design of the proposed townhomes. Their objections led to the redrawing of the original plans, which called for a complex surrounding an inner courtyard. In the rejected plan, none of the entrances faced on the street, said Glenn Hayes, executive director of La Habra Neighborhood Housing.

“In our first look, we turned our backside to the neighborhood in one sense,” Hayes said. “We got the message from the people in the neighborhood, and rightfully so, that this (project) should be part of the neighborhood.”

Under the revised plan, six of the nine townhomes open directly onto the street. Single-family homes border the site at the corner of Penn Street and Union Avenue. Whittier Park is directly north.

The project will be developed on two vacant lots and land occupied by a metal storage building and two dilapidated rental units. The displaced renters get top priority for buying the townhomes, then neighborhood residents, city residents and outside buyers.

The city loan will be used to buy the remaining land needed for the 21-acre, $1.4-million complex. La Habra Neighborhood Housing will pay back the loan as it sells the townhomes. The city will then re-loan the money, at 3% interest, to home buyers to make the two- and three-bedroom townhomes more affordable.

Home buyers would not have to begin payments on the city loan for 10 years. If the buyer sells the property, the proceeds would be used to pay off the loan. The unit and the loan could then be recirculated to help another first-time buyer.

The city will loan up to $40,000 to families purchasing a two-bedroom townhome. A family buying the three-bedroom townhome could borrow up to $26,000. In addition, the La Habra organization will offer a $5,000 grant to each home buyer.

The effect is to reduce the price of townhomes--valued from $145,000 to $160,000--to as low as about $105,000, including closing costs.

As a result, the two-bedroom townhome would be affordable for a family of four earning $41,000 a year. A family of five earning $49,800 a year could afford to purchase the three-bedroom townhome, said Anthony Ybarra, Whittier’s housing development manager.

Neighborhood residents said they worried that the units would still be too expensive for first-time buyers.

Though the project has received near universal praise, officials and housing experts concede it will barely dent the need for affordable housing.

According to a recent city staff report, about 1,600 new housing units could be necessary by 1994 to meet local needs. There is not enough space for that many new units, Ybarra said.

The city has an estimated 1,400 illegal rental units, mostly converted garages, said Jim Stratton, an administrator for Catholic Charities who served on a city housing task force. He estimated that 10% of the city’s population is living in illegal, substandard housing.

Nonetheless, Stratton praised the townhome project as a step in the right direction.

“It’s always easy to knock something because it’s too small,” he said. “It’s sure a lot better than nothing. . . . To these nine families, it sure makes a difference.”