Quake Loans OKd for Valley ‘Ghost Towns’

The owners of five damaged apartment buildings located within 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 no-interest loans are the first from a $109-million pool of emergency funds provided by federal housing officials to help apartment, condominium and single-family home owners 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 located 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 attack 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 buildings located in such areas.

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

He said he was in dire straits when the SBA rejected his application. But now Teherani predicts he can 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 within 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 kinda expect the SBA to be helpful in this, but we didn’t get their help.”

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

“So, it accomplishes a lot for a lot of people,” she said.

Owners of 3,400 other apartment units who failed to get SBA loans also have 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 out $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 amount needed to cover all the repair work rejected by the SBA, he said. City officials don’t 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.

The $109-million fund is also designed to help pay for repairs of the city’s damaged housing stock after voters rejected a $2-billion earthquake repair bond measure that was expected to provide $576 million in housing repair loans.

The quake knocked out about 50,000 dwelling units in the city of Los Angeles, about 30,000 of which are expected to be repaired with the help of SBA loans and other funds, housing officials said.

In the 13 ghost towns alone, about 6,000 housing units were destroyed.

The $109-million federal pool and other city funds are expected only to fund the repair of about 4,400 of the remaining 20,000 damaged units, according to housing officials.

The loans approved Friday are the first major loans to apartment owners. The Housing Department has already approved three or four smaller loans totaling about $300,000.