Helping Hand for Apartment Owners : Revised federal programs are brought into play in aftermath of the earthquake
A major challenge to rebuilding the parts of Southern California ravaged by the Northridge earthquake lies in restoring damaged residential rental units. The huge shortage of affordable rentals that now exists poses the biggest multifamily housing problem in the nation, according to city officials.
Of the more than 250,000 residential structures damaged in the earthquake, 88%, or about 220,000, were apartment units. The damage to these apartment buildings is estimated at close to $1 billion.
Many families were displaced from their homes, and as these tenants scattered to shelters or the homes of relatives their former landlords often feared that declining property values would make repairs not worthwhile.
Enter the federal Department of Housing and Urban Development. In an unprecedented effort to help apartment owners rebuild and tenants return, HUD Secretary Henry G. Cisneros recently made available various financing plans to repair and rebuild apartment units. Disaster relief programs had been skewed toward helping homeowners rather than apartment owners.
That certainly was the case in the aftermath of the 1989 Loma Prieta earthquake. A recent UC Berkeley study found that disaster recovery efforts after that temblor failed to provide the assistance needed to restore affordable apartments. Three-fourths of the 12,000 housing units lost in the Bay Area earthquake were in multifamily buildings and about half remain unrepaired or unreplaced four years later. In contrast, homeowners received 62% of the more than $1 billion in housing relief provided for the Bay Area, even though single-family homes accounted for only 40% of the damaged units.
HUD and other agencies, in light of these findings, now are seeking to encourage apartment rebuilding. The Small Business Administration will try to make more apartment owners aware of its loan programs. Los Angeles city housing officials announced a new federally backed $30-million low-interest program for owners of damaged rental units, enabling them to borrow up to $15,000 per unit for repairs. In addition, the state treasurer has agreed to purchase a $145-million bond from the Federal Home Loan Bank of San Francisco, with proceeds going to finance earthquake repair loans.
So apartment owners now have greater alternatives and resources to rebuild and hang on to their investments. But in taking advantage of these new programs, apartment owners also assume an obligation to use the funds to restore affordable rental units and honor the rights of their former tenants.