State Approves L.A. Bonds for Earthquake Rebuilding

A state panel on Wednesday approved Los Angeles’ request for permission to issue $15.7-million worth of bonds to rebuild earthquake-damaged apartments.

“I’m happy,” said David Perel, a finance officer with the city Housing Department, who had been confident that Los Angeles would get the green light. “We just hope that, in the course of the rest of the program, we can get future allocations.”

The California Debt Limit Allocation Committee’s action clears the way for the city to issue bonds to provide low-interest loans to people who have recently bought, and are fixing up, quake-damaged apartment buildings.

Four apartment buildings in Northridge and Tarzana tentatively have been identified to be the first recipients of the loan program. The Los Angeles City Council must still formally approve the bond sale, which it is expected to do in June.

The property owners bought the four buildings at various times last year with bank loans and received no-interest earthquake rehabilitation loans from the city to do needed repairs. Under the new program, landowners would get low-interest loans ranging from $2.4 million to $6.25 million to refinance their current mortgages and begin to pay back the rehabilitation loans.

“It gives them better long-term financing to induce more investment in these damaged neighborhoods,” said Perel, in a phone interview from Sacramento, “and it better stretches out our lending resources, so we can do more.”

The appeal of the bonds to potential buyers is that interest on them will be tax-exempt.

After the property owners refinance their mortgages, the interest rate they will pay will vary from about 5.5% to 7.5%, with the rate capped at 7.5%. The bonds are to be repaid by the property owners from rental income.