Cisneros and Riordan Tour ‘Ghost Towns’ : Earthquake: HUD secretary says that Congress will approve redistribution of $225 million to lend for rebuilding.

U.S. Housing Secretary Henry Cisneros and Los Angeles Mayor Richard Riordan toured San Fernando Valley “ghost towns” Thursday, drawing attention to a new strategy to jump-start repair work in apartment neighborhoods with heavy quake damage.

Sidestepping rubble and ducking under the roof of a partly collapsed garage, the two leaders met the owners of two Granada Hills apartment complexes, apartments that city officials say might never be rebuilt without the funds the administration hopes to shift from other earthquake programs into housing.

“Ghost towns” are concentrations of uninhabited apartment buildings condemned for quake damage that attract squatters and become centers for drug use, gang gatherings and other crimes, which city officials fear will drag down the surrounding neighborhood.

In response to an appeal by Riordan, President Clinton earlier this month asked Congress to redistribute $225 million from highway and school retrofitting projects to the city governments of Los Angeles and Santa Monica, to be lent to owners of damaged buildings.

The funds would go into 30-year, no-interest loans with no payments due for the first six years.

Although the reallocation has yet to receive congressional approval, Cisneros said he is confident that “Congress is on board,” and that the money will start to reach local officials in “a matter of weeks.”

Riordan, accompanied by northeast Valley Councilman Richard Alarcon, responded by praising the Clinton Administration for its quick response to his request, made “about a week ago,” for the extra housing funds.

In turn, Cisneros said the Riordan Administration’s deft handling of earthquake relief gave him great confidence in entrusting the money to the city.

Rejecting criticism that the money is being taken from other urgently needed projects, Cisneros said it is needed to address a crisis that could leave the city with permanent blight and cause long-term damage to its economy.

“You can see that this is uninhabitable, unacceptable for the long run,” Cisneros said, standing before the eerie facade of a broken 69-unit building on Kingsbury Street that leans in all directions, exactly as it did the day after the Jan. 17 Northridge earthquake.

“Just put yourself in the shoes of an apartment owner who had tenants who are gone after the damage,” Cisneros said. “They can no longer make bank payments and have no choice without help but to walk away. The loser when an apartment owner walks away from an apartment like this is the community.”

Los Angeles housing officials have identified 13 “ghost towns,” either individual blocks of apartment buildings and condominiums or whole neighborhoods that have become virtually uninhabited because so many buildings suffered such extensive damage.

Officials are concerned that these areas will attract crime and squatters and remain blighted for years to come if the owners of the buildings do not receive adequate assistance to rebuild. Because the owners’ equity in some of the buildings is so small, they may not qualify for Small Business Administration loans. In other cases, the damage far exceeds the SBA’s limit of $1.5 million per building.

The new money--$200 million to Los Angeles and $25 million to Santa Monica--will help rebuild about 17,000 units, “about half the number unable to get the necessary funds,” Riordan said.

Individual no-interest loans would be used to supplement other sources of capital, Los Angeles city housing consultant Rich Wallach said.

In the case of the 69-unit building on Kingsbury, for example, the rebuilding package would consist of $2 million in federal loans, $1 million in interest write-downs by the bank and $250,000 cash put in by the owner, Wallach said.

Earlier in the day, during a meeting with the Los Angeles Times editorial board, Cisneros said he believes more attention should be paid to the priorities of future earthquake preparedness to minimize the loss of life.

He said he was moved by a visit to a school room where light fixtures fell on desks and shards of broken glass were embedded in chairs, a scene that illustrated the potential loss of life if an earthquake occurs on a school day.

But there aren’t enough resources to protect every structure from the great potential power of quakes, he said.

Consequently, Cisneros said, he wants the Department of Housing and Urban Development to take the lead in evaluating all aspects of earthquake preparedness--from local ordinances to the federal budget--to give the highest priority to measures that will save lives.

“I went back to Washington convinced that we need to look at areas where for the least amount of money we could save the most lives if this were to happen at an hour when people were in office buildings and children were in schools,” he said.