Loans to Rebuild Quake ‘Ghost Towns’ OKd

The owners of five damaged apartment buildings located in so-called ghost towns created by the Northridge earthquake will get $7.75 million in federal loans to rebuild the structures, the Los Angeles City Council decided Friday.

The interest-free loans are the first from a $109-million pool of emergency funds provided by federal housing officials to help owners of apartments, condominiums and single-family homes who were turned down for Small Business Administration loans after the quake. The city’s Housing Department is managing the loan program.

About $20 million of the pool has been set aside for severely damaged apartment buildings within clusters of vacant buildings that have been overrun by criminals and the homeless, areas known by housing officials as ghost towns.

The city has already launched a multi-phased plan to eliminate 13 ghost towns in the San Fernando Valley, Hollywood and Mid-City areas. Private security guards have been hired by the city to keep vandals out of damaged buildings there.

Fred Teherani, who was awarded a $1-million loan Friday, owns a 59-unit apartment building in Chatsworth that he said was “lifted and thrown down again” by the temblor. It now sits vacant.

He said he was in dire straits when the SBA rejected his application. But now Teherani says he will be able to repair and rent out his apartments within four months.

“If this wasn’t available, believe me, not only the building would have been destroyed but all our work and effort would have been destroyed,” he said after the council decision. “I’ve been on my knees praying about this situation.”

The largest loan--for $2 million--went to Jean Weir and Richard Fuchs, co-owners of a 61-unit apartment building on DeSoto Avenue in the same Chatsworth ghost town.

Weir said the federal loan provided through the city was a welcome relief after the SBA rejected their application. “There wasn’t any other alternative,” she said. “You kind of expect the SBA to be helpful in this but we didn’t get their help.”

The city may have saved itself some money and problems because without the federal loan, Weir said, the city probably would have been left with the task of demolishing the building.

Owners of 3,400 other apartment units who failed to get SBA loans have also lined up for the 30-year loans. A housing committee of the council recommended Friday that the city give the next $1.1 million loan to the owner of a heavily damaged Northridge apartment building.

The city is expected to loan $30 million of the federal money by mid-August and the entire $109 million by fall, said Gary Squier, general manager of the city’s housing department.

But the loan money is expected to fall about $375 million short of the total needed to cover all the repair work rejected by the SBA, he said. City officials do not yet know how that gap will be filled, Squier said.

The loans have one catch: Apartment building owners must set aside 20% of the units for affordable housing. But Squier said the owners have not complained about this requirement. “We don’t see this as a problem,” he said.