Agency Stumbles in Fixing Quake’s Last ‘Ghost Town’

NORTH HILLS —  Repair work in one of the areas most devastated by 1994’s Northridge earthquake came to a virtual standstill after the job was assigned to a politically well-connected but inexperienced nonprofit organization, records and interviews show.

The quake, which occurred three years ago today, was particularly damaging to buildings in 17 clusters that came to be known as “ghost towns.” Recovery is almost complete in 16 of those areas of Los Angeles.

But in one of the poorest and hardest-hit communities of the San Fernando Valley, repair work has barely begun. In the area surrounding Orion Avenue and Parthenia Street, the city-financed repair work was assigned to a nonprofit group that has failed to complete the work long after most other neighborhoods have been restored.

Officials with the Los Angeles Housing Department, the financing agency, conceded that they failed to adequately fund the work, and the shortfall added to the problems.

The group, called Neighborhood Empowerment and Economic Development, has received more than $6 million in low-interest loans for the purchase and repair of five dilapidated, mostly vacant apartment buildings in the Orion-Parthenia ghost town area and a sixth located close by. Yet it has completed work on only one small building in the area.

NEED has close political ties to City Councilman Richard Alarcon, who represents the area. With Alarcon’s support, NEED got low-interest loans to buy and repair the buildings even though it had no experience in housing rehabilitation.

Asked about the delays, Alarcon and NEED blamed the city bureaucracy for squabbles over contractors, haggling over paperwork and failure to provide enough money.

Alarcon, whose grandmother lives in the Orion area, said he has supported NEED’s efforts in the Orion-Parthenia ghost town because other developers, including for-profit companies, weren’t interested in rehabilitating the buildings and because NEED was committed to providing social services to the neighborhood.

“I am trying to fend off developers only interested in maximizing profits,” Alarcon said.

Still, some North Hills residents, tired of waiting, say their neighborhood would be better off if the city demolished the buildings. Others, fed up with living near filth, have moved away.

The buildings in disrepair, magnets for drug users and prostitutes for the past three years, have added to the problems of a neighborhood already reeling from crime and poverty.

An inquiry unearthed several problems hampering recovery in the North Hills ghost town:

* Records show that NEED has been repeatedly late meeting its obligations, from choosing architects and applying for supplemental financing to paying for security and consultants. The Housing Department’s acting general manager acknowledges that the job was too big for NEED.

* Records also show that Alarcon frequently intervened on behalf of NEED, including one instance in which he said he would support a $3.6-million project to rehabilitate one building only if certain demands were met--including the appointment of NEED as head of the effort. At one of NEED’s partially occupied projects, Alarcon attempted to intervene on behalf of the group with a city inspector who had cited the building because it had fallen below living standards.

* As the finger pointing continues, repair costs are increasing rapidly while deterioration and vandalism take their toll.

Last May, city inspectors sought to have five NEED buildings declared public nuisances. One building on Orion had been described in inspection records as “extremely dangerous for law enforcement. . . . Neighboring owners suffer immensely from this crime-racked building that continues to pose serious health and safety threats for local residents. Promises of work in the future can no longer be an acceptable reason to further delay legal action.”

But the buildings never were declared nuisances and no action was taken against NEED or those buildings, officials said, because the group told them repairs were imminent.

Work on NEED’s first building did not start until late last summer, a year after the Housing Department had approved a loan for it. Work was completed in mid-December. Work started on another building in November, about two months after The Times raised questions about NEED and about two years after approval of the loan for that project.

The Orion-Parthenia area lies east of the San Diego Freeway in a transient, gang-ridden, high-crime area. More than 40% of the area’s residents live below the poverty level.

Five of NEED’s buildings are in the Orion Avenue neighborhood; the sixth is on Blythe Street, about a mile away.

In both areas, drug users lurk in abandoned apartments, and prostitutes emerge from the shadows to solicit business. Gaping holes in chain-link fences and plywood planks on the ground by the windows they are meant to cover illustrate the futility of trying to secure the buildings.

“We spent three years trying to get those buildings cleaned up,” said Harry Coleman, president of the North Hills Coordinating Council, a community improvement organization. “We have called everyone we know to call.”

Tenants living next door to NEED’s building at 8920 Orion Ave. tell of hearing breaking glass, gunshots and other noises at all hours of the night.

One woman moved out, writing her landlord that she and her roommate felt “in danger of our lives.”

Apartment manager Jose Almeida said he can’t blame them. Several times a week, he said, he confronts gang members who have entered his building to sell drugs.

He said residents in his building, particularly on the second floor, have a view of the seedy activities below.

“Tenants there,” he began, pointing to a windows on the second floor, “see them having sex here.”

Nearby, NEED is landlord of a 20-unit apartment building at 14643 Blythe St., where three families have been living in the midst of the decay and filth. In the back of the building, sewage dripped from one apartment, before code inspectors forced NEED to make repairs.

A woman, her brother and a small child lived there. A bucket sat on the floor catching water and cockroaches infested the rooms, sometimes crawling over her child, said the mother, who asked not to be identified.

As late as October, she was still complaining about conditions in their apartment and throughout the building. She said NEED officials repeatedly assured her that work would start soon.

NEED was founded in September 1994 by James Acevedo of Sylmar, a former hospital administrator, political activist and longtime friend of Alarcon. Acevedo, the unpaid chairman of NEED, was Alarcon’s political consultant in his 1993 City Council campaign.

NEED Vice Chairwoman Carol Silver, also unpaid, worked on Alarcon’s campaign. Tony Cardenas (D-Sylmar), who last fall became the first Latino elected to the state Assembly from the Valley, was its first treasurer but is no longer involved.

Alarcon said that although he did not create NEED, “I encouraged it. I have no problem with that.”

He denies pressuring housing officials to loan money to NEED. But in a memo written Aug. 31, 1994, Alarcon said NEED would have to be the managing general partner if he were going to support the $3.6-million rehabilitation of one of the buildings in the Orion Avenue ghost town cluster.

Housing Department loans are made with federal money, most of which comes from the Community Development Block Grant Program. The department loans the money to developers at low interest rates, usually 5%.

In loaning money to NEED, Ann Sewill, then acting general manager of the Housing Department, acknowledged that her agency checked with Alarcon before approving its applications. But she said the agency routinely clears loans with the council member representing the district where the request originated.

“I don’t know if he insisted on NEED so much as he insisted on getting the neighborhoods rebuilt,” Sewill said.

She agreed that her agency made a mistake by letting NEED take on too much at once.

“In retrospect, yes [it was],” she said. “It is unusual that a very new community development corporation would have started with so many projects that were so difficult in that they were so tough, in a tough neighborhood with a tough history and lots of earthquake damage.

“But it was NEED or nobody,” she said.

Critics argue that the Housing Department did not have to rely on inexperienced organizations like NEED, because experienced nonprofit and for-profit developers were eager to get the low-interest, long-term loans available from the agency.

“With that kind of financing and the terms they offer, I would have paid that,” said Gary Stadig, who owns two buildings next to a NEED property. “And I would have had it cleaned up by now.”

Stadig, a member of the North Hills Coordinating Council, said he tried but failed to buy the 44-unit building at 8920 Orion from the original owners, an investment firm, in 1994 after the quake. When he later told Housing Department officials he wanted the building, he was told it was going to NEED, Stadig said. He could not recall with whom he talked.

If he or other developers were interested in the properties, few stepped forward, housing officials said. So they accepted NEED’s applications.

Working with inexperienced developers is nothing new for the Housing Department. But NEED, at times, seemed to try the agency’s patience.

In one case, a finance officer complained that NEED’s failure to submit a signed partnership agreement with a co-developer had stalled processing for three months. Another two months elapsed before the agreement was signed.

At the same time, Housing Department officials blamed NEED for delays at another building in the Orion cluster.

“We have worked with you to develop this project to nurture your capacity as a developing non-profit,” read an unsigned Housing Department memo July 28, 1995, to NEED Executive Director Ruben Romero, whose salary is about $30,000 a year. “However, it is not our customary role to provide this much support to developers.”

And in a Nov. 4, 1995, memo, Dan Falcon, head of the department’s ghost town finance unit, blamed NEED for delays on four of six projects because NEED had not selected architects and contractors.

Romero, however, blamed Falcon, charging that Falcon refused to budget developer fees so he could hire more staff. On several projects, he said, Falcon forced him to use a general contractor whose subsequent bids were so high, he had to seek new ones.

Poor planning caused delays and raised costs at the largest renovation project, a 61-unit building at 8750 Memory Park Lane in the Orion cluster. In September 1994, the City Council approved the $3.6-million plan to buy and renovate the structure, which had survived the quake “in overall fair condition,” an appraiser wrote, and was still 35% occupied.

Work was to start in January 1995 and be completed in April. But in April, the Housing Department approved NEED’s plans for major changes, such as enlarging a proposed recreation center, installing central air conditioning and other upgrades. The city’s cost increased about $200,000 and NEED had to seek additional money elsewhere.

Months passed. Crime and neglect grew worse. Tenants left.

In January 1996, the City Council approved the revised proposal. By then the building had been vacant for nine months. Costs ballooned to more than $5 million as continued vandalism and deterioration contributed to the rise in expenses.

Plumbing repairs had increased $216,700. The cost of painting rose $73,420. Fire and vandalism contributed to a $95,000 increase in drywall replacement.

Romero said some of the delays occurred because he was not familiar with exploiting a nonprofit organization’s tax advantages in private fund-raising.

Work finally started last November, almost two years late.

Delays were particularly hard on tenants at NEED’s Blythe Street building. Conditions were so poor in the 20-unit, partially occupied building at 14643 Blythe St. that city inspectors ordered repairs and then reduced rents because of slum conditions.

NEED did some repairs on the building, but inspectors from the Los Angeles Building and Safety Department said they were “cosmetic” and rejected them as insufficient. Alarcon stepped in.

Faced with the rejection, Acevedo, Alarcon’s ally who founded NEED, informed Senior Inspector G.L. White he would take the matter up with Alarcon. Soon afterward, Alarcon left White a message asking him to call.

Alarcon also wrote Chief Inspector Richard Sanchez reminding him that NEED had a loan commitment from the Housing Department, noting that additional repairs had been done and urging the two city agencies to cooperate. The department took no further action.

“Once management gets involved, we proceed more carefully,” White said. “They got involved because the councilman got involved. We don’t like it, but it happens.”

Alarcon denied trying to deflect inspectors’ actions. He said he welcomed the scrutiny because it pressured the Housing Department.

Sanchez said Alarcon’s involvement did not influence his decisions on Blythe either. He said his department has not given NEED projects any special consideration. He added that at last report the violations at the occupied units had been corrected and the vacant units boarded.

Asked why the department did not seek penalties against NEED, Sanchez said the department probably would not succeed in legal action because the group was at least trying to comply with city housing codes.

Mistakes have been made, Romero said, acknowledging that at times he felt overwhelmed running the fledgling nonprofit.

But he and Alarcon said the Housing Department shares much of the blame because it underestimated construction costs and refused to provide enough money for NEED to hire adequate staff.

Despite the history of discord between housing officials and NEED, optimism prevails. Romero and Acevedo, saying the disputes are over, predict that three of the four stalled projects will get underway in about a year.

Work on the fourth project could commence within 45 days, NEED officials said.

Sewill agreed. New budget proposals are being prepared, and the squabbling is history, she said.

“The system has broken down in a number of ways,” she said. “The question is not whose fault, but how are we going to fix it?”

* CASE STUDY: Alarcon and NEED were hampered by lofty goals. A21

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

NEED Ghost Town Projects

At the third anniversary of the Jan. 17, 1994, Northridge earthquake, recovery is nearly complete at all 17 ghost towns except one. Repairs have barely begun in the Orion-Parthenia area, where Neighborhood Empowerment and Economic Development, a politically well-connected nonprofit group, is managing most of the repair work. Here are descriptions of each building NEED is managing:

*--*

PROJECT AMOUNT FUNDED NO. OF UNITS LOAN REQUESTED 8920 Orion Ave. $1,645,000 40 3/9/95 8727 Orion $524,000 10 Mid-1995 8735 Orion $524,000 10 Mid-1995 8852 Orion $490,000 10 3/2/95 Memory Park Ave. $2,637,000 53 5/14/94 Blythe Street $400,000 20 8/4/95

PROJECT STATUS 8920 Orion Ave. No work 8727 Orion No work 8735 Orion No work 8852 Orion Completed 12/96 Memory Park Ave. Work started 11/1/96 Blythe Street No work

*--*

Source: Los Angeles Housing Dept.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

The Projects

1) 8920 Orion Ave.

2) 8852 Orion

3) 8727 Orion

4) 8735 Orion

5) Memory Park Lane

6) Blythe Street