City audit cites slow payments
Los Angeles City Controller Laura Chick released an audit on Monday that found that the city’s Housing Department was delinquent in collecting some of the money it had lent to developers of affordable housing.
The audit found that 558 loans had defaulted in some way. But the audit did not disclose any monetary losses by the city, nor did it list the names of any developers who defaulted. A loan default can mean many different things, ranging from a failure to repay a lender to failure to file the proper paperwork.
The audit also found that the city had lent money to developers already in default, thereby increasing the city’s risk. And the audit criticized the housing agency for too often lending money to the same developers, which can be risky.
“The dollars we’re looking at are incredibly important and needed to develop and preserve decent and affordable housing, especially for our low-income residents,” Chick said.
The political implication of this, Chick said, is that she will refuse to back any affordable housing bond measures until the Housing Department can demonstrate that it is using its money better. A $1-billion bond failed to pass in November’s election, and Mayor Antonio Villaraigosa has indicated he would like to try again next year.
Los Angeles, like many other cities, lends money and provides matching dollars to developers who agree to build housing that is affordable to moderate- or low-income people.
Mercedes Marquez, general manager of the housing agency, said that any monetary losses by the agency probably are small. She said the agency had monetary defaults on about 320 of the 4,550 loans it had made since 1990 but couldn’t provide the exact number of dollars lost.
“The Housing Department since 2004 has committed itself to being a player in the market, and we are working hard to transform ourselves to public sector entrepreneurs,” Marquez said.
“We have implemented so much change on our own.”
