Valleywide : City OKs Quake Bond to Reduce Mortgages

The Los Angeles City Council voted Tuesday to issue $25 million in tax-exempt bonds that will be used to lower mortgage payments for quake victims who are struggling to rebuild.

The vote represented the third time the council has used the financing mechanism to help quake victims. Soon after the quake, the city approved $17 million in bonds. In August, the city approved another $15.7 million.

According to housing officials, the biggest problem in financing quake repairs for many apartment buildings was that landlords could not afford to pay off a repair loan while also paying off a mortgage loan.

Soon after the quake, the city began a repair loan program funded with more than $300 million in federal grants and loans.

Gary Squier, head of the housing department, said the bonds will be used to refinance the mortgages on as many as 16 apartment buildings. The bonds will provide mortgage rates of about 7.25%, thus allowing the building owners some breathing room to pay off other repair loans that the city has provided.

“The idea is to free up money so we can loan it out to make more repairs,” he said.

The cost to the city to administer the plan is $544,000.

Squier said state law limits the amount of bonds the city can issue at one time and so it must approve the money in increments. He said another bond measure will be before the council in about three months.