Compromises Play Crucial Role in Future Developments : Simi Valley: Company says it will drop low-income housing rather than delay project for more study.

A Simi Valley developer may scuttle plans to build 31 houses for low-income residents--part of a project initially designed to replace dwellings damaged in the Jan. 17 earthquake.

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Griffin Industries said it will drop 31 low-income homes from a 122-house project rather than conduct an environmental study needed to qualify for a federal loan.

The Simi Valley City Council in May agreed to loan Griffin $750,000 in federal emergency earthquake funds to build the low-income dwellings as part of a larger development at Los Angeles Avenue and Madera Road.

But the federal Department of Housing and Urban Development said it would not release the loan funds for the development unless Griffin provides an environmental assessment of the project, a process that could delay construction at least six months.

Environmental assessments are a standard requirement for most HUD-funded development projects, said Aurora Madrigal, a program manager for the agency.

In order to comply with state regulations, Griffin has already conducted an Environmental Impact Report on the project, known as Simi Village. But Madrigal said that report would not meet HUD requirements.

Griffin Vice President Richard Niec told the city’s Affordable Housing Subcommittee that his company cannot afford to postpone construction to do an additional study. The company wants to break ground next summer and must have the HUD approval soon to meet that timetable, he said.

“The time is becoming very short,” Niec said. “Should the city not be able to assist with the loan, we will proceed with the project without the affordable units. That would not be our choice, but without help from the city that is the reality.”

City Manager Lin Koester said he will try to persuade HUD to drop the requirement before the council’s Sept. 19 meeting, when Griffin is expected to announce its final decision.

Councilwoman Judy Mikels denounced the HUD requirement.

“If this is supposed to be emergency funding to replace lost shelter, this request is dumber than the ground,” Mikels said. “It seems to me to be absolutely ludicrous that the federal government is asking for an environmental assessment on top of the impact report.”

But Madrigal said that despite the fact that the funds bear the name “emergency,” too much time has passed since the quake for HUD to waive the study requirement.

“We are talking about an emergency-type activity that happened on Jan. 17,” Madrigal said. “If (the developer and the city) had moved with the project at that time, we wouldn’t have had a problem with it. But six months have gone by and (they) can no longer avoid doing the environmental assessment.”

The earthquake displaced as many as 4,000 Simi Valley residents, causing an estimated $150 million in damage to nearly 500 houses and 600 mobile homes, the city has reported.

Initially, Griffin had asked the city for a $1-million interest-free loan to build 70 condominiums it planned to sell for $90,000 apiece. The units, planned for low-income residents, were intended as part of a 280-home development.

But after studying market conditions and discussing its proposal with the city, Griffin scaled back the project. Plans now call for a 122-home development, including 31 detached single-family units to be sold at $30,000 below the market rate to low-income buyers.

The City Council had agreed to make the loan to Griffin out of a $5.5-million federal Community Development Block Grant it received for earthquake relief.

The council set aside an additional $600,000 for other development projects. But on Wednesday, the Affordable Housing Subcommittee rejected two projects vying for those funds, saying they would not be built in time to address the needs of residents who lost their homes in the earthquake.

“I think we should really concentrate on using these funds for projects that are ready to go now,” Mikels said. “That’s why it’s so frustrating that the Griffin project is getting stalled.”