Council to Fund Housing Loans With HUD Grant : Aftermath: In stopgap measure, tens of millions of dollars will be made available to displaced tenants and owners of damaged property.

With thousands of people displaced from their homes and apartments, the Los Angeles City Council voted unanimously Friday to spend tens of millions of dollars in federal housing funds to make emergency low-interest loans to displaced tenants and residential property owners who have suffered earthquake damage.

Tenants who apply for federal help at disaster assistance centers will be given $500 vouchers immediately--and up to $2,000 for first and last month’s rent and security deposits--which they will have to repay to the city when their federal assistance checks are issued.

City officials said landlord associations have indicated that their members will accept the vouchers.

The housing rehabilitation loans, normally available only to property owners with low and moderate incomes, would extend for two years and be available to owners of houses or apartments in the city regardless of their incomes.

Owners would qualify as long as the total encumbrances on their property--including the value of the new loan--did not exceed the property’s appraised value.

Interest would accumulate at 5%, but no principal or interest payments would be due until the two-year period is over.

“We have a responsibility to be rather aggressive to get funds into the hands of people who have been disadvantaged by earthquake damage,” said City Councilman Mark Ridley-Thomas, who introduced the measure.

Assistant General Manager Barbara Zeidman of the Los Angeles Housing Department said the city probably will fund the rehabilitation loans with at least $25 million to $30 million of an advance on its $109-million federal Housing and Urban Development grant for next year. Conceivably, she said, the council could authorize use of almost the entire HUD grant.

Zeidman anticipates the city spending another $2.5 million in federal money on emergency assistance to renters displaced by the earthquake.

Money would go only to renters who had applied to the Federal Emergency Management Agency or the Small Business Administration for assistance and were waiting for it to come through.

Zeidman said experience with past disasters shows that it takes about three weeks for FEMA to begin efficiently processing applications for help. When FEMA is fully up and running, she said, the agency should be able to offer an applicant a check within three to five days.

In deciding to provide rental assistance to displaced tenants applying for FEMA help, Zeidman said, “we were after a product that will fill a three-week gap.”

Housing rehabilitation loans were also aimed at filling a gap, officials said. They will have to be paid off or refinanced after two years, said city Housing Department Administration Director Matthew Callahan. If a loan recipient has a high income and wants to extend the loan, he or she would be asked to pay the going interest rates. Low-income recipients might only be required to repay the principal of the loan upon selling the property.

Zeidman said the city will be able to complete property appraisals and fund the loans within 10 days, while federal agencies are expected to take weeks.

Those interested in the loans--which are available regardless of the amount of damage incurred--can find out about them at disaster assistance centers or by calling the Housing Department at (800) 946-4444.

The council approved the use of its federal funds after receiving pledges from HUD officials that they would advance next year’s grant soon and eventually ask Congress to reimburse Los Angeles for money spent on earthquake relief.

The city ordinarily uses its HUD money for a variety of community-development projects, including job training, low-income housing construction and, last year, $16 million in housing rehabilitation loans to low- and moderate-income property owners or owners in blighted areas.

In another matter affecting tenants, the City Council temporarily tightened eviction regulations in the wake of the quake.

Evictions will not be allowed during the next 45 days because an apartment is overcrowded or a property owner discovers that it has been sublet without his or her knowledge.

Evictions would still be permitted for failure to pay rent, but Councilwoman Jackie Goldberg, who made the motion to forestall them, asked the Housing Department to request that landlords show forbearance.

Faced with mountains of debris from the earthquakes, Mayor Richard Riordan and the City Council also gave emergency approval Friday to putting private garbage-collection companies on the streets today to assist city workers in the cleanup.

No sooner had the plan been announced, however, than it stirred concern among city labor leaders, who have worried about Riordan’s attempts to privatize services.

“I hate to be paranoid, but it’s hard not to be,” said Julie Butcher, a representative of the union Service Employees International Union Local 347, that represents city trash collectors.

“We’re not going to stand in the way of getting people’s debris picked up, but in terms of residential refuse, we’re right on top of it,” Butcher said.

Charles Dickerson, president of the Board of Public Works, said city officials are extremely sensitive to the fears of city workers. But he insisted that the 200 or so private contractors to be brought in will not pick up residential refuse. That will remain the duty of city workers, he said.

In addition, the city administrative office said the Board of Public Works’ bureau of engineering will launch a program to demolish unsafe buildings at no cost to owners who are uninsured.