99% of 'Ghost Town' Owners Get Quake Aid

By HUGO MARTIN

Nov. 22, 1995 12 AM PT

TIMES STAFF WRITER

Using a massive infusion of federal money and innovative loan programs, the owners of 99% of the vacant, quake-damaged buildings that constituted Los Angeles’ decaying “ghost towns” have received financing to make repairs, city officials announced Tuesday.

The ghost towns--pockets of destruction that became overrun by vermin, criminals and homeless after the Northridge earthquake--were billed as the toughest challenge for the city’s recovery program.

But after a nearly two-year struggle by housing and public works officials and more than $300 million in public and private funding, authorities proclaimed a significant milestone in the battle to revive the areas.

In addition, city officials said repairs have either been completed or are in progress in 80% of the hardest-hit properties.

“They did a super job,” said Councilman Hal Bernson, who heads the city’s Ad Hoc Committee on Earthquake Recovery and who issued a commendation Tuesday for the city’s so-called Ghost Town Task Force. “We are at the very end of the ghost town program.”

Last year, the city identified 17 ghost towns with 1,030 damaged apartment buildings, condominiums and homes throughout the city, including 29 buildings that were eventually demolished and 301 that were completely vacant.

But by Oct. 31, city officials said they had helped secure government loans or private financing for 297 or 99% of the vacant buildings. The remaining 700 buildings in the affected areas had minor damage, required minimum financing and remained occupied, according to a city report.

Of the vacant buildings, repairs have been completed on 155 or 51% of the structures and work is in progress on another 88 or 29% of the buildings, according to the report.

City housing officials credit strong support from federal, state and local officials with providing financing for the repairs.

In fact, soon after the city identified the ghost towns as serious problems, the Small Business Administration adopted a policy that gave top priority to loan requests from property owners in the areas.

In August, President Clinton announced that the federal government was going to free up $200 million to Los Angeles for repair loans “to solve this ghost town problem.”

“The support was in place,” said Robert Moncrief, chairman of the Ghost Town Task Force, a 15-member coalition of department managers and supervisors. “We had senators, Congress members and city leaders all touring the ghost towns and giving us support.”

But he also gave city staff some credit. “Once the resources were in place, it was up to the city and the departments to manage it well, and I think we managed it well,” Moncrief said.

However, the financing and the repairs have come slowly to low-income neighborhoods, where crime and depressed property values have made it difficult for landlords contemplating making repairs.

An example, according to housing officials, is a complex in North Hills near Orion Avenue and Parthenia Street, vacated after the earthquake, where boarded-up apartments are ringed by barbed wire and furniture sits unclaimed on the sidewalks.

The surrounding neighborhood, the busiest in the LAPD’s huge Devonshire Division, is home to many large families crammed into one- and two-bedroom apartments.

“It’s a horrible neighborhood,” said 18-year-old Daniel Pino, who moved to the area a month ago.

“That building there,” he said, pointing to one boarded-up two-story apartment complex, “you can see where they bend the bars to get in. It’s like a squatters’ camp.”

Pino said lights can be seen in the Orion-Parthenia apartments at night--even though the complex is ringed by barbed wire and boarded up.

Rachel Tucker, 35, sent her two young children to live with her mother in New York City after the quake because she didn’t want them living in the area. She’s not surprised that there’s been little progress in fixing earthquake damage in her neighborhood.

“It’s because we’re minorities . . . that’s the bottom line,” said Tucker, who is black. “Most people here can’t take off their jobs and go Downtown and fight City Hall.”

She also acknowledged that landlords have little incentive to invest in their buildings. “Most of the people, even if they fix it up, won’t come back.”

In contrast, city officials say repairs have been made quickly in higher-income neighborhoods, such as Willis Avenue in Sherman Oaks, where dozens of condominiums and apartment complexes were under renovation, and several had reopened within the past few months.

But not everyone is happy with the progress.

“This is not better,” sighed Thel Levine, standing outside her townhouse. Her building had been green-tagged after the quake, and only now had word come that it was to be retrofitted, forcing her to move. “This is not over--for us, the earthquake is not over.”

Across the street is the skeleton of an apartment complex. “Facing this is awful,” said Levine, 63. “For some of us it’s been a long, hard two years, watching all this destruction. We’ve seen them pulling all the decayed stuff out. We’ve had garbage piled high.”

The driving force behind the city’s efforts has been the city’s Housing Department, which created several zero- or low-interest loan programs and dispatched a team of finance experts to persuade banks and other lending institutions to give building owners a break on mortgage payments so they could afford to take on repair loans. The city loans are funded through federal grants and bonds.

Through the Housing Department, the city has approved $85 million in loans for 99 properties and is in the process of approving another $29 million in loans for another 30 properties, according to city reports.

The Federal Emergency Management Agency and the state Office of Emergency Services has spent $6.5 million in emergency grants to ghost town property owners.

“This shows another step in the disaster recovery effort, which we are happy to see,” said Leland Wilson, the federal coordinating officer for FEMA. “We are pleased that FEMA has been a partner in this effort.”

About $220 million in additional funding poured into the ghost towns through private insurance, loans from the SBA or loans from private banks, according to city officials.

However, credit for the progress was also doled out to banks and property owners who were willing to take on more debt to repair damaged buildings.

Dan Falcon, who heads the task force’s financing unit, said a key challenge in the recovery was convincing landowners to take out repair loans. Some landlords, he said, were already over-leveraged and were taking a risk by taking on more debt.

Falcon said a financial specialist working for the city met with groups of landlords from ghost town neighborhoods to assure them that it made financial sense to rebuild. Often, he said, housing officials drafted financial projections to demonstrate that a landlord could pay off a repair loan and still make a profit.

“We had to convince everybody psychologically that it was a good idea,” he said. “That was no easy task either.”

Housing officials could not say exactly how many properties in the ghost towns fell into default or were sold since the quake, but Falcon said a majority of the owners stayed with their buildings.

The “Loan to Lenders” program, a funding effort initiated by the city, provided banks the money to issue low-interest loans to building owners.

Home Savings of America, one of the banks participating in the program, has already issued $500,000 in loans and is considering more applications, said Mary Trigg, a bank spokeswoman.

She said her bank and other lending institutions had to be extremely flexible with landlords to keep the properties from falling into foreclosure. But Trigg said it was in the bank’s interest to help landlords make repairs and reoccupy the units with paying tenants.

“We felt it’s in everybody’s interest if the owner can maintain ownership of the property and get it fixed up,” Trigg said.

Correspondent Nicholas Riccardi also contributed to this story.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

‘Ghost Town’ Recovery

Loans and other funding are speeding the recovery of the San Fernando Valley’s “ghost towns”--neighborhoods where vacant, damaged buildings attracted drug dealers, squatters and prostitutes following the Northridge earthquake. The owners of 99% of the buildings that make up ghost towns have secured funding to make repairs, city housing officials said Tuesday.

THE NIEGHBORHOODS

1. Colbath

2. De Soto

3. Devonshire

4. Hubbard

5. Plummer/Reseda

6. Kingsbury/Blackhawk

7. Lassen

8. Orion/Parthenia

9. Roscoe/Schoenborn

10. Willis/Natick

11. Alabama/Saticoy