Oxnard Seeks $14-Million Loan to Help Lure Business

Oxnard will apply for a $14-million federal loan to help businesses move to the city, despite having to pledge some annual federal grants as security to qualify for the program.

After a public hearing Tuesday on the risks and benefits of the loan, offered by the U.S. Department of Housing and Urban Development, the Oxnard City Council unanimously voted to submit the application, citing the opportunities the money would create.

“I think we need to aggressively pursue the type of jobs we want in Oxnard,” said Councilman Tom Holden. “I think it’s a very exciting opportunity.”

Steven Kinney of Oxnard’s Economic Development Corp., which contracts with the city to lure business to the area, suggested that Oxnard apply for the program.

Many businesses want to move to the city but lack the necessary funds, he said. To revive Oxnard’s lethargic economy, the city needs to loan those businesses the money they need, he said.

“We’ve been making (small) loans to businesses here . . . for 10 years,” Kinney said. “The loans have all been repaid.”

If approved by HUD, the $14 million could be available in four months.

Loans would have to be repaid within 20 years, but if individual loan payments were not delivered on time, HUD would withhold future Community Development Block Grant funds.

The city has received $2.8 million in CDBG funds for 1994-95. Those funds must be used to eliminate urban blight or to benefit low- and moderate-income residents.

Of the cities that have applied to the loan program, none has ever had its funds taken away, Kinney said.

But low-cost housing advocates, who recently pressed the city to use more CDBG funding to build dwellings for low- and moderate-income residents, said they were concerned that the businesses could default and HUD would withhold money.

Barbara Macri-Ortiz of the Channel Counties Legal Services Assn. said Oxnard needs to draft a set of rules to govern the loan process and ensure that the city does not play favorites with the money or find itself in a bad deal.

She warned that the city was putting itself in a dangerous position, essentially mortgaging its CDBG funds to insure loans to businesses.

“It’s like the father that goes in and signs the daughter’s car loan,” Macri-Ortiz said.

The council agreed to vote on each loan application to ensure that they receive enough scrutiny.

Eileen McCarthy of California Rural Legal Assistance was worried that any jobs created through the loan program would be undesirable.

“Oxnard should not use money to create minimum-wage jobs with no benefits,” McCarthy said. “What the citizens of Oxnard need are higher-paying jobs with more benefits.”

McCarthy and Macri-Ortiz said the city should use some of the $14 million to fund low-cost housing. If there is no housing for their workers, businesses will not want to move to Oxnard, McCarthy said.

The money from the program would be used to help businesses move to Oxnard and to buy industrial land in the city that could be resold to a manufacturer.

Macri-Ortiz warned that the city may get stuck with land nobody wants, losing its CDBG money and paying HUD for a worthless purchase.

“It’s like buying a dress just because it’s on sale, only to stick it in your closet,” she said.