County to Loan Funds to House Working Poor : Development: Plan calls for conversion of Costa Mesa Travelodge into county’s first single-room-occupancy hotel, with $456 rents. Public, private financing involved.

County supervisors agreed Tuesday to loan $1.7 million for what could be Orange County’s first single-room-occupancy hotel for the working poor, an idea that has been dogged locally in recent years by financial problems and public resistance.

The action is a key financial victory for Costa Mesa Village, a $4.5-million project that is to combine public and private money to provide affordable housing for people who have found it increasingly tough to meet the county’s rising rents.

Project developers plan to buy the Travelodge at 2450 Newport Blvd. and convert it into a single-room-occupancy hotel, or SRO, with 96 rental units. Anyone who earns no more than $18,450 per year, less than half the county’s median income, will be able to apply for housing in small, furnished rooms at a monthly rent of $456, officials say.

“We’re reaching a segment of the population who would be considered the working poor and who are really just a step away from being homeless,” said Muriel Berman, redevelopment project manager for the city of Costa Mesa, which is helping in the SRO financing.

Supervisor Harriett M. Wieder, whose district includes the Costa Mesa site, told the supervisors that the village should serve as “a model for the creation of innovative, free-enterprise solutions to our affordable-housing shortage.”

Advocates for the poor said the rent at the village will still be out of reach for many of the local poor who rely on limited government assistance, but they applauded the county for taking an important step in meeting the housing problem.

“They’re actually coming up with the money?” Crystal Sims, director of litigation for the Legal Aid Society of Orange County, said when told of the supervisors’ vote. “There was so much discussion of this for so long, but it seemed to die out. I’m certainly pleased to see it happening now. . . . We desperately need housing.”

While SROs have been established in San Diego, Los Angeles and other neighboring counties in recent years, the idea has been hampered by problems here.

Last year, for instance, county transportation officials abandoned plans for a 240-unit project to be built above a Huntington Beach bus terminal. Orange County transit officials blamed the collapse on financial problems, administrative delays and neighborhood opposition, as some residents wrote what were described as hateful letters against the idea of bringing poor people into the area.

The city of Santa Ana also ran into financial problems, which halted negotiations on a proposal to turn the old YMCA building at 205 W. Civic Center Drive into a 150-room SRO that would have charged $300 to $400 monthly rent. But that plan is now back on course after the city agreed in July to buy the building. It hopes to open the units in two years.

And in Costa Mesa, planners had initially hoped for an opening by this summer at the Travelodge site. But there, too, plans were pushed back by financial problems after a key private investor reduced its pledged commitment by $700,000. The county agreed to make up the shortfall by increasing its loan, and officials now hope to open the complex late this year.

“We all look forward to that opening,” said Board of Supervisors Chairman Roger R. Stanton, who has been a strong proponent of bringing SROs to Orange County.

The loans were approved unanimously by the five county supervisors, acting in their capacity as the Board of Commissioners of the Orange County Housing Authority.

Under the plan approved Tuesday, the county will loan up to $500,000 to the city of Costa Mesa to fund the project, and $1.2 million more to the Costa Mesa development firm of Butler-O’Bryon & Associates, at interest rates ranging from 3% to 5%.

Developer Merrill Butler said he expects that private investors will account for about 65% of the funding, while public agencies will finance the remainder. Costa Mesa has already committed about $200,000 to the project, but has yet to give final approval on several regulatory and financial issues, city officials said.

With an estimated 16,000 people in the Costa Mesa area earning less than the $18,450 income cutoff, Butler said the complex should fill a much-needed gap in affordable housing. “And I hope I can make some money for myself as an entrepreneur too,” he said.

Officials said Costa Mesa Village will exhibit many of the characteristics associated with SROs:

At 380 square feet apiece, the apartments will be smaller than most studios. They will be furnished and will include private bathrooms, kitchen facilities, color TVs and linens. Since many residents may not own cars, the site will have less parking than most residential complexes. A bus stop is close by. Security at the complex will be tight, said project redevelopment manager Berman.

Butler said the Orange County Housing Authority will accept applications for the residential hotel and check eligibility, while the complex will be managed by his company in conjunction with a Glendale-based nonprofit group that has run SROs elsewhere.

Sandy Genis, a Costa Mesa city councilwoman who also serves on the Orange County Housing Commission, said the project should help wake the county up to the need for affordable housing.

“This is a unique project,” Genis said. “And since this is the first one in Orange County, we want to make sure we do it right. . . . This is not a flophouse for bums--this is for people who are at the bottom rung on the ladder and are working their way back up.”