Valleywide : Council Moves to Make Quake Loans

The Los Angeles City Council on Friday voted to seek permission to issue $35 million in bonds to provide low-interest loans to owners of quake-damaged apartments undergoing repairs.

Borrowers could use the below-market-rate loans to refinance their existing mortgages and to pay back city earthquake rehabilitation loans.

Friday’s application to a state bond committee represents an expansion of a recent Los Angeles Housing Department initiative. On May 3, the California Debt Limit Allocation Committee granted the city permission to issue $15.7 million in bonds for a similar purpose.

The city has yet to choose which projects will receive the low-interest loans. Of the 120 projects on a preliminary list drawn up by the Housing Department, 97 are in the San Fernando Valley, according to David Perel, a finance officer with the department.

On Friday, the list came under scrutiny by council members Mark Ridley-Thomas and Jackie Goldberg, who said other areas of the city may have needs that are not reflected in the list. Ridley-Thomas suggested that housing officials meet with council members to discuss projects within their districts that could be added to the list.

Under the program, property owners who have recently bought quake-damaged apartment complexes would be eligible for loans with a fixed interest rate of 7.15%. The program benefits property owners because in most cases, it is better for them to have below-market mortgage and rehabilitation loans than it is to have a bank mortgage and a no-interest rehabilitation loan, Perel said.

It also benefits the city, Perel said, because earthquake rehabilitation loans will be repaid that much faster and the city will have more money available to help fix more buildings.

The state bond committee will consider Los Angeles’ request in Sacramento on Aug. 23.