County May Lose $1 Million in Housing Deal

Orange County may lose $1 million it loaned for a Stanton housing project for elderly people with low incomes. The developer has admitted financing difficulties that have delayed groundbreaking by nearly 18 months, county officials said Wednesday.

The Orange County Housing Authority loaned the $1 million in federal funds to the Beverly Hills-based Jan Development Co. in July, 1990, to help finance construction of 33 affordable apartments for the elderly. The homes are planned as part of a 330-unit complex called Park Stanton, housing authority documents show.

But Bob Pusavat, the county’s director of housing and redevelopment, said the housing authority’s money has already been spent on unspecified pre-construction expenses. County officials say there is “much concern” the complex may not be built, even though the terms of the county loan do not require repayment to begin until 1995.

Pusavat and Tom Watford, the county’s housing development finance manager, said they have turned down repeated requests by Edward Czuker, the development company’s executive vice president, for additional money to close a reported $4.5-million shortfall on project financing.

Neither Czuker nor other company officials connected with the project, planned for the 7700 block of Katella Avenue in Stanton, could be reached for comment late Wednesday.

“We don’t have any other projects that have these problems,” Pusavat said. “We’re fed up. We’re not going to give them any more money.”

However, Michael M. Ruane, director of the county’s Environmental Management Agency, which oversees the public housing program, was more hopeful for a positive outcome.

“Bob has pulled projects out of the fire before,” Ruane said. “The economic times have been difficult. I’m optimistic, given the amount of time and resources that have been invested, Bob will make something work. It’s going to take a lot more time than anticipated.”

Watford said development company officials have complained that the project has fallen victim to hard economic times, making it difficult to secure additional financing for the $25-million complex.

“The financial market has changed with the economy,” Watford said. “I don’t think they tried to pull a fast one on us. They claim that they are continuing to look for additional investors all the time, including some from Japan and other foreign investors.”

The county is one of two government entities in partnership with the developer. The city of Stanton has agreed to commit about $17.7 million in funding from the sale of revenue bonds. But that money cannot be drawn from the construction fund until all financing requirements are met, Stanton City Manager Terry Matz said.

Another $500,000 is to be contributed by the city’s Redevelopment Agency, but is protected under the same financing conditions.

“We’re still hopeful that the project will proceed,” Matz said, adding that the Redevelopment Agency in September agreed to give the company until next month to begin construction. “This is an important project for us. . . . We’ve done all we can to assist in making this project happen.”

Meanwhile, Pusavat said the county has granted the developers at least three extensions of the July, 1991, deadline to begin construction, with the latest delay set to expire in conjunction with the City of Stanton’s 1993 deadline.

“It looks like they are not going to meet it again. . . . We’ve bent over backward to make this deal happen. We’re all concerned,” Pusavat said.

Both county officials said they have continued meeting with the developer in hope of reaching some agreement that would somehow make the project cheaper to construct.

Watford said the county has suggested possible design changes or a phased construction that could possibly keep the county’s investment alive. Watford said none of the design changes suggested by the county were acceptable to the developer.

“The public has been the one that has suffered,” Watford said. “Our position is that we would like to see a project developed. We’re in the business of providing housing for poor people. . . . We would like to see some project materialize.”

Pusavat said the loan funds were drawn from the housing authority’s operating reserve account. Money in that account accumulated from federal funds originally allocated for local Housing Authority staff expansions.

At the time the loan was made to Jan Development, Pusavat said, the account was governed by a conservative philosophy toward low-income housing and was rarely used for projects like the one proposed in Stanton. Recently, however, those guidelines have been loosened to promote more construction of affordable housing.