$87-Million Aid Earmarked for 23 Cities : Grants: Los Angeles to share in funds provided by joint U.S. and private alliance for housing and business development.

Hoping to accelerate renewal of ravaged city neighborhoods, an unusual alliance of corporations, foundations and the U.S. Department of Housing and Urban Development said Monday that it has pooled $87.6 million for low-interest loans and grants to community development corporations in 23 cities, including Los Angeles.

The alliance, known as the National Community Development Initiative, expects its $87.6 million will generate an additional $660-million commitment from other sources.

At a news conference with corporate and foundation officials, Housing Secretary Henry G. Cisneros hailed the “historic partnership” in which the government will serve as an equal, not as the bureaucratic master running the show.

At President Clinton’s request, Congress gave Cisneros’ department a one-year, $20-million appropriation for the housing and business development program but the secretary said that the Administration may ask for $50 million or $100 million more next year if it proves a success.

Traditional federal support of urban development has consisted mostly of community development block grants and urban revitalization demonstration grants, both given to local governments with varying restrictions.

Cisneros said that an important element of the new program is the use of two experienced intermediaries, the Enterprise Foundation and the Local Initiatives Support Corp., to distribute funds to local community development corporations as they see fit.

The two national organizations will provide technical expertise and training.

Decisions have not yet been made on allocation of funds among the cities.

In addition to the federal government’s $20 million, the Prudential Insurance Co. of America contributed $15.1 million to the new pool of money; the Rockefeller Foundation, $15 million; J. P. Morgan & Co., $12 million; John D. and Catherine T. MacArthur Foundation, $6 million; Metropolitan Life Foundation, John S. and James L. Knight Foundation and the Pew Charitable Trusts, $5 million each, and Surdna Foundation, Annie E. Casey Foundation and McKnight Foundation, $1.5 million each.

The funding is the alliance’s second round of support for urban rejuvenation. The first effort, announced in 1991 without HUD participation, committed $62.8 million and has generated more than $350 million in additional contributions.

In Los Angeles, the original funding helped support the Los Angeles Collaborative for Community Development, an umbrella group of national and local foundations, corporations and the city of Los Angeles.

The Collaborative has provided operating support and training to more than a dozen community development corporations, enabling them to take on bigger projects.

Alliance funds have been loaned to those corporations primarily for housing development expenses, such as site acquisition and construction costs. More than 1,000 units of housing have been put in the pipeline. In the South-Central area, money from the alliance and others has led to the creation of a community child-care center in commercial space within a housing development.