Red Tape, Weak Economy Cast Pall Over Rebuilding : Riot aftermath: Policy designed to restrict return of undesirable businesses to South L.A. adds to frustration.

Drive along any riot-pocked road in Los Angeles and the evidence is clear: Efforts to rebuild the area’s urban corridors are proceeding at a tortoise-like pace.

Government red tape, financing obstacles and property owners’ indecision about reinvesting in a weak economy have left many streets little changed since the spring unrest.

Fewer than 40 permits have been issued for rebuilding the 540 most severely damaged structures in Los Angeles, and progress is just as slow in neighboring cities. Officials say construction at many sites will not begin until well into next year.

The delays have cast a pall over cleanup efforts begun in high spirits in the days after the riots, when residents took to the streets with brooms and trash cans to mend the physical scars left by the disturbances.

“The cleanup is agonizingly slow,” said Tim Taylor, executive officer of the city Department of Building and Safety. “In lots of places, rubble and unsupported walls are still standing from the riots.”

Bernard Kinsey, co-chairman of Rebuild L.A., added: “Anybody that drives down a street in the impacted area has to feel saddened.”

The snail’s pace of reconstruction, however depressing, is in significant respects an outgrowth of public design. Rather than rush to rebuild what stood before, the City Council--under pressure from residents of the riot zone--imposed new rules just weeks after the riots requiring public hearings before the reconstruction of liquor stores and other so-called sensitive-use businesses.

The first hearings before the city Planning Commission are not scheduled to begin until next week. That will mean long delays in the rebuilding of about 200 riot-damaged businesses that hold liquor licenses, along with the countless swap meets, mini-malls, gun stores and auto repair shops that are covered by the new rules.

The regulations were bitterly opposed by liquor store owners and many Korean-American business leaders, who charged that the rules would have a disproportionate impact on the large number of Korean-Americans who operate swap meets and liquor stores.

But they have a far wider impact--affecting even grocery stores and gas stations that sell alcohol.

For instance, seven gas stations owned and operated by the Atlantic Richfield Co.--the area’s biggest gas retailer--remain closed. Three of the Arco stations are awaiting approval from the Planning Commission. Two stations have been sold to dealers who will have to fend for themselves with the city bureaucracy. And Arco is evaluating whether to reopen the two remaining stations.

As a result, some areas of South Los Angeles hit hardest by the riots still have few gas stations in operation.

“We are at the mercy of the city and the planning groups,” said Richard Spake, manager of facilities and maintenance for Arco, noting that the company will spend more than $1 million to improve access for the handicapped, install low-water-consumption toilets and meet other building regulations that did not exist when the stations were originally built.

Planning Commission President Theodore Stein Jr. insists that few objections have been raised to the city’s procedures.

“Our policy decision was to require a public hearing on these sensitive-use businesses,” Stein said. “At this point I have not heard any complaints about the time it’s taking to hold hearings.”

As of Aug. 12, the most recent date for which data is available, the Department of Building and Safety had issued 26 building permits for reconstruction. Another 341 permits have been issued to owners who plan to demolish their buildings. Officials estimate that 540 buildings in Los Angeles were 75% or more destroyed.

Similar bottlenecks have developed in other Southland communities.

About one-third of the 29 Long Beach property owners whose buildings were destroyed in the riots have been issued building permits. In Compton, which suffered an estimated $100 million in riot damage, permits have been issued to reconstruct three of the 94 buildings leveled, said William Edwards, chief building inspector.

Not all property owners with damaged buildings need to obtain approval from local planning and building departments, although it is required for most owners making significant changes to a structure or its use. Meanwhile, government efforts to expedite the restoration of buildings whose owners are not making major repairs--including streamlined inspections--appear to be having some success.

In any event, government is not the sole cause of the delays.

At some sites, landlords are not sure they want to rebuild--a decision they can afford to put off because their insurance policies will pay for lost rental income caused by the destruction of their property.

Dennis Eisenberg, a general partner of Metroplaza Ltd. in Los Angeles, admits he has been dragging his heels about rebuilding his 30,000-square-foot store near Wilshire Boulevard and La Brea Avenue. With two of his tenants having defected to other locations and the sluggish economy dampening demand for retail and office space, Eisenberg sees no need to rush.

“Our policy will pay us rent for a year,” Eisenberg said. “If you finish rebuilding and you are all ready to go, the insurance proceeds dry up. It’s very difficult to lease space, especially in this economy. There are very few tenants out there. That’s what’s holding up a lot of the rebuilding. People say, ‘Let the insurance company pay for the rest of the year.’ ”

In addition, many building owners have been slow in applying for permits because of insurance company delays and difficulties securing construction financing.

Barbie Bostick, owner of Dave’s Corner Market on Compton Avenue in South-Central Los Angeles, said her insurance claim was settled last month--but only after she dickered with her carrier for weeks over the claim.

And although she has submitted her construction plans to the city, she says so many other liquor stores and other “sensitive business” applicants are already ahead of her that the Planning Commission will not be able to hear her case until October.

“I had hoped to start rebuilding in August,” Bostick said. “But the process has been much slower and much more involved than I thought.”

Troy Smith, director of the Homeowners Outreach Center--a unit of the Legal Aid Foundation of Los Angeles--said his office gets two or three telephone calls a week from homeowners and small businesses complaining about the slow handling of insurance claims.

“Most people are saying insurance companies aren’t offering anywhere near what the property is worth,” Smith said. Other callers, he said, complain that “insurance companies are slow to even make an offer; they are taking quite a long time to settle up and take care of the problems.”

Robert J. Gore, vice president of the Assn. of California Insurance Cos. in Sacramento, responded that the handling of insurance claims “is a complex business--and in fairness, insurance companies have to investigate each and every loss.”

The Farmers Group of Insurance Cos., which suffered the largest monetary loss from the riots, says it has settled about 1,000 of its policyholders’ 1,200 claims.

Deydy Antonio Ramos, who owns a nightclub and restaurant near Vermont Avenue and Pico Boulevard, spent weeks navigating the bureaucracy of the federal Small Business Administration before he received a $300,000 reconstruction loan.

Now--like Bostick--Ramos is awaiting the Planning Commission’s action on his application to reopen his restaurant, which has a liquor license. “We’ve been waiting two months,” Ramos said. “It’s frustrating. It’s not just us losing money. The city is losing (tax) money too.”

Also mulling over when and how he will rebuild is Allan Davidov, who owns a 14-acre site that was partially torched during the rioting.

The property, at La Brea Avenue and Rodeo Road, once housed a Thrifty drugstore, a Trak Auto store and a military enlistment center. The tract is also the location of the undamaged Shoppers World swap meet and another building rented by the military, which has three years left on its lease.

Davidov said he wants to reconfigure the corner--a move that will probably require Planning Department review. He said he has already completed site plans, but cannot proceed until the Defense Department determines whether it will continue to maintain its enlistment station on the property.

Government officials could not be reached for comment.

The government’s indecision has complicated Davidov’s search for construction financing. Some lenders, already wary about making construction loans during a real estate slump, have grown even more nervous about investing in South Los Angeles.

“It’s not the best of time to go looking for financing,” Davidov said. “Some of these lenders consider this area like Beirut.”

Meanwhile, beleaguered tenants who have to coexist with the hulking remains of riot-damaged buildings are beginning to share recalcitrant lenders’ view of the riot zone. Mable Wilson, owner of Wilson Divorce Clinics in the Crenshaw Square shopping center, complains that rats and roaches have invaded her office because a landlord next door has not cleared his fire-gutted building.

“It’s been horrible,” Wilson said. “I’ve called the health department several times, but no one has come to do anything about it.”

A spokesman for the company that manages the property said that the firm has obtained a demolition permit but that the contractor hired to do the job cannot start until next week.

Besides inconvenience, the slow pace of rebuilding is exacting a psychological toll that has residents and building owners concerned about the ability of their recovering communities to shake the stigma of the riots.

One Crenshaw district property owner said the charred buildings are an eyesore that “gives the impression that the area is not safe.”

Larry Williams, a lawyer whose office in Crenshaw Square was destroyed during the rioting, agrees. The slow pace of rebuilding “is just demoralizing,” he said. “Just from a mental point of view, it’s hard for healing to take place in the city,” Williams said. “The community looks devastated.”

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