Official Seeks Loans for Stalled Valley Repairs

The city’s top housing official wants to lend more money to an inexperienced but politically connected developer that wants up to $1 million to kick-start repair work in one of the most devastated “ghost towns” left by the Northridge earthquake.

Gary Squier, general manager of the Los Angeles Housing Department, said he would ask the Los Angeles City Council next month to approve new loans to Neighborhood Empowerment and Economic Development, or NEED, a nonprofit North Hills organization run by political allies of Councilman Richard Alarcon.

The loans would be used to start work immediately on three damaged apartment buildings on Orion Street in the Orion/Parthenia neighborhood, called ghost towns because they have been uninhabited since they were condemned due to damage in the Jan. 17, 1994, earthquake.

Squier also wants to lend money to help start work on a fourth project just outside the ghost town, he said.

Altogether, NEED officials said they expect they will need an additional $1 million, with the amount sought in city loans undetermined. Some money is being sought from private financing sources. They say work could start in about one month.

The Housing Department has already approved loans of about $3.1 million for the four projects, bringing the potential total to more than $4 million.

Squier outlined the proposals in a status report requested by Mayor Richard Riordan’s office in response to a Times investigation into the recovery problems in the Orion-Parthenia ghost town. Shortly after The Times series, Squier said he would no longer allow inexperienced nonprofit community groups to take on multiple repair projects at once.

A spokesman for Riordan said the mayor has not decided whether he will support Squier’s request for more loans.

“The mayor is pleased to see that progress is being made,” said Steve Sugerman, deputy to the mayor. “He will not be satisfied until all projects are completed. His office will monitor progress very closely.”

The Housing Department has lent NEED more than $11 million to acquire and repair apartment projects in the northeast San Fernando Valley damaged either by the earthquake or through neglect. More than half of that was lent for five NEED buildings in the Orion-Parthenia area, one of 17 quake-damaged communities designated as ghost towns, and for a sixth just outside that neighborhood.

Although work is complete in most of the other ghost towns, it has barely started on NEED’s projects.

NEED has completed work on only one, the smallest of the six, and it started on a second project after The Times began asking questions about the lack of progress.

Alarcon and NEED have blamed the Housing Department for the delay, saying the department lent NEED too little money. Housing Department officials said NEED got as much money as other developers.

Nevertheless, Alarcon on Tuesday praised Squier for the decision to ask for more money for NEED.

“It looks like we are finally making progress,” he said. He predicted the full City Council will approve the new loans.

But not all representatives of the community were pleased. Guy Stadig, an officer of the North Hills Coordinating Council and owner of an apartment building on Orion, said the additional funding should not be necessary.

“They should have been able to do the work with the money they had,” he said. “Now we are going to put more money into something for someone who doesn’t know what they are doing,” he said, referring to NEED.

Under Squier’s proposal, the Housing Department wants to provide NEED with a “bridge construction loan” so work can start immediately on three apartment buildings on Orion Street. NEED would repay them when it completes arrangements for conventional loans and other financing.

He said final budget proposals are expected by Feb. 21, and that he will submit the plan to the City Council by March 14.

Squier also said the Housing Department is processing another loan for a project just outside the Orion-Parthenia neighborhood. He said loan documents for the project, which is on Blythe Street, also would be completed by March 14.