LOS ANGELES : $240-Million Shortfall Seen in Quake Loan Program

A Los Angeles loan program to repair earthquake-damaged homes and apartments will fall up to $240 million short of helping qualified applicants, according to a city report obtained by The Times.

The shortfall in the Housing Department’s loan program is projected in the department’s annual report, a 23-page document that focuses mostly on the efforts to rebuild the city’s quake-ravaged housing stock. The report is scheduled to be released to the City Council next week.

The projected gap appears to contradict housing officials who developed the $314-million program in July and promised that it would provide enough funding to repair all housing units that qualify.

Gary Squier, head of the city’s Housing Department, blamed the shortfall mostly on early damage estimates by city building inspectors that underestimated the cost of many repairs.

The loan program was devised as a funding source of last resort, providing 30-year, no-interest loans to landlords who fail to get funding from the Small Business Administration and traditional lending institutions. It is funded through state and federal grants.

The program will fall about $152 million short of funding the more than 25,000 housing units that are in the program’s application pipeline, Squier said. That number is projected to grow to about $240 million because the city continues to receive referrals from 20 to 40 landlords daily who have been rejected by the SBA, he said.

Based on estimates that it costs $20,000 to repair an average housing unit, the shortfall could leave 12,000 damaged housing units without funding.