Disaster Aid Uneven, Study Says : Recovery: UC Berkeley report on Bay Area quake finds that most relief efforts help middle-class homeowners rather than apartment dwellers.

As Southern California struggles to heal the gash left in its housing stock by the Northridge earthquake, a new UC Berkeley study warns that disaster recovery programs are skewed toward middle-class homeowners and fail to provide the assistance necessary to repair affordable apartments.

In a detailed analysis of the aftermath of the 1989 Loma Prieta earthquake, researchers found that three-fourths of the 12,000 housing units lost in that disaster were multifamily buildings, and about 50% remained unrepaired or unreplaced four years later.

At the same time, homeowners in the Bay Area received 62% of the more than $1 billion in housing repair funds, even though single-family homes accounted for 40% of the damaged units, according to the report by the university’s Institute of Urban and Regional Development.

It is too soon to know how severely and permanently the Northridge earthquake will affect the affordable rental stock, Los Angeles officials say. But they acknowledge that they are worried about many of the problems spotlighted in the report, and are rushing to devise solutions that will limit long-term housing losses.

“This is the biggest multifamily housing (recovery) challenge that has ever been faced by the nation,” said city housing department chief Gary Squier, noting that about 18,000 apartment units have been vacated in the city of Los Angeles. Authorities fear that many of those could be abandoned by their owners because falling property values and high pre-earthquake vacancy rates make them poor candidates for additional investment.

Central to the problems of bringing back affordable units, the UC Berkeley study said, has been a historical bias in disaster programs toward homeowners. Relief programs generally evolved in response to disasters in more rural, sparsely populated settings, such as floods in the Midwest and hurricanes in the South, the researchers said.

Although several disaster housing programs focus on helping homeowners with uninsured losses, only one or two--chiefly Small Business Administration loans--are available to apartment owners, often at rates only slightly better than those offered by private lending institutions.

“Virtually all the agency recovery programs are designed for a prototypical, or ideal, victim who owns or rents a housing unit which is adequate, conventional and replicable,” says the study, which was being finalized when the Jan 17. Northridge quake hit.

By contrast, a significant portion of Loma Prieta victims lived in “old, poorly maintained, overcrowded, structurally unsound buildings because they could not afford better quality accommodations. For these victims, there was no existing agency program to rebuild housing units at pre-disaster rents,” the study said.

Mary Comerio, an associate professor and co-author of the study commissioned by the California Office of Emergency Services, said: “The two earthquakes in California should be sending the message that the (old) model is not really applicable anymore. . . . This is a national problem that could affect all cities.”

Typically, she said, disaster relief programs have wrongly assumed that marketplace forces can address housing imbalances caused by disasters. But the Bay Area earthquake highlighted the marginal economics of many older, lower-rent buildings in big cities, and the limited ability of owners to raise rents and service additional debt, Comerio said.

The study offers a series of recommendations for improving recovery programs for affordable housing units, including a more balanced distribution of aid between single-family homes and apartments, streamlining the application process for apartment repair loans and offering special incentives to repair and rebuild rental units quickly.

Los Angeles and federal officials say they recognize the problems experienced in the Bay Area and are trying to adjust the response effort.

To encourage reinvestment in rental units, Los Angeles Mayor Richard Riordan and U.S. Secretary of Housing and Urban Development Henry Cisneros last week led a major financing and public assistance workshop at the Convention Center for owners of quake-damaged apartments.

City housing officials also announced a new federally backed, $30-million low-interest loan program for owners of damaged units. They would be eligible for up to $15,000 per unit in repair loans, repayable at 3% interest, but only after cash flow increases to cover the additional debt load. Still in the talking stage is a pool of low-interest funds for private lending institutions that would allow them to ease the debt costs for owners of quake-damaged buildings.

“Our theme is we are encouraging the lenders to stay in, and we are encouraging owners to stay in,” said Bob Moncrief, director of major projects for the Los Angeles housing department.

Apartment industry groups say some apartment owners clearly need financial aid to rebuild, but they say no one knows how many quake-damaged units are in jeopardy of being abandoned, or how that might affect the affordable housing rental market in the city.

“I have no idea. I don’t think we are going to know for three or four months,” said Dan Faller, president of the 12,000-member Apartment Owners Assn. of Southern California.