Decision on Rehab Loans Expected

When Paula and Ken Hutton applied for a $20,000 housing repair loan from the county 1 1/2 years ago, it seemed like a great deal.

The couple earn about $20,000 a year, and they needed the 3%-4% loan for a new roof on their 45-year-old house, for new ceilings and carpets to replace the ones leaks had soiled. Then came the delays. A start date in January came and went. El Nino storms battered the house. Up went the tarps, and out came the buckets, which needed emptying every 15 minutes during the fiercest downpours.

Today, a frustrated Paula Hutton will ask county supervisors to reinstate the rehabilitation loan program that has been suspended since last year while the Sheriff’s Department investigated allegations of shoddy work. In January, the review of 230 projects resulted in two criminal charges filed.

“I don’t think it’s fair that we’re still waiting,” said Hutton, a who works in a school cafeteria and as a part-time teacher’s aide. Her husband works at a warehouse in La Habra. “I understand there were problems. But our home is in severe need of repair. All we’ve been given are delays and promises and lies.”

The county has loaned $26 million since the program began 20 years ago. The money, which the county receives from the federal Department of Housing and Urban Development, is available at well-below market interest rates to low-income families who qualify. About 6,000 units in older residential neighborhoods throughout the county have been refurbished.

About 160 families are on a waiting list for work pending the decision today by county supervisors. About $1.7 million in funding this year is at stake.

Those who want the program continued include county Housing and Community Development Director Robert E. Wilson. Wilson took over the department about a year ago from Dongchai Pusavat, who left the job after suffering a stroke.

“Unfortunately, these people were waiting when [the controversy] broke and everything was put on hold,” Wilson said. “It’s now up to the board to decide where we go next with it.”

Federal rules require the county to show that the money is being used for a variety of housing assistance programs. If the housing rehabilitation program is ended, the county must use the money to help blighted neighborhoods in other ways, or lose it, according to Wilson’s report to the board.

Supervisors placed the program in limbo awaiting the Sheriff’s Department inquiry and an internal audit of the housing department. The investigation concluded in December that there were no instances of homes in significant danger from unsafe work, and the audit praised the housing department for improving operations under new management.

The report on the rehabilitation loan program details five possible actions by supervisors:

* Reinstate the program with revised procedures, including limiting eligibility to one- to four-unit properties and excluding mobile homes.

* Reinstate the program but limit it to unincorporated areas.

* Move the program to a nonprofit organization or to cities near the proposed projects.

* Contract with a consortium of banks to administer the program. Housing officials said this option, as with turning the program over to a nonprofit group or to cities, still would leave the county responsible for compliance with HUD rules and for program performance.

* Discontinue the program and move the money to another HUD housing program. However, “the existing need for low-income housing rehabilitation won’t be met,” the report said.

“The board has very mixed emotions about the program,” Supervisor Todd Spitzer said. “Housing rehabilitation is a very messy and complicated issue that requires utmost oversight. There’s a frustration that, even with improvements in place, we’ll still have disgruntled recipients.”

The Huttons, meanwhile, are ready for the repairs to begin. The couple and their two teenagers moved their furniture and other belongings into a storage unit in December in anticipation of the work starting. They spent $375 to remove several trees and another $700 to move a brick wall.

Paula Hutton said the family might have tried to get a conventional home-repair loan months ago if they had known about the long delays with the county, but she doubted they could afford the interest rate.

“We pray every time it rains,” she said. “We just want a home we can be proud of.”

Times staff writer Erika Chavez contributed to this report.

Jean O. Pasco can be reached at (714) 564-1033 or e-mailed at jean.pasco@latimes. com