Home Ownership Seen as an Antidote to Blight : Neighborhoods: Study calls it the key to post-riot renewal. Inner-city rents are often close to mortgage payments, but lending rules are an obstacle.

Expanded home ownership opportunities are the top recommendations for improving conditions in Los Angeles’ most neglected neighborhoods, according to a post-riot planning study by a coalition of multiethnic Los Angeles community organizations that develop subsidized affordable rental housing.

“You can’t stabilize blighted neighborhoods without building stake-holders,” emphasizes the report released Thursday by the Coalition of Neighborhood Developers, an organization made up of 56 nonprofit grass-roots civic, church and economic development agencies based in Central and South Los Angeles.

The report sets no price tag for the aid needed to help significant numbers of low-income residents purchase single-family homes--nor does it downplay the necessity for additional inexpensive rental units in a city where officials say 500,000 households cannot afford decent accommodations.

However, the report does emphasize that many inner-city residents could afford to purchase homes that are now rented if lending institutions were more flexible about their requirements for down payments and credit histories.

More than 50% of the residents in inner-city neighborhoods pay rents near or equal to the median mortgage payment in their neighborhood, according to the report’s editor, Denise Fairchild, director of the Local Initiatives Support Corp. office in Los Angeles.

Indeed, unlike pricier West Los Angeles neighborhoods, where rental units have typically gone for 20% to 40% of the median mortgage price, renters in South-Central pay 60% to 80% of the median mortgage cost in monthly rents, the report shows.

“The key stumbling block is not (weekly wage) income but how we structure the financing,” said Gloria Farias of the Pico Union Housing Corp., a member of the coalition’s executive committee. “Banks have often been very slow in approving loans and they ask for too many things from people in these communities who don’t have a long credit history.

“Most people who are low-income don’t believe in buying a lot and owing a lot. But banks can sometimes see that as a negative in establishing credit.”

The 18-month planning study was released at a news conference at which recent development projects of Coalition of Neighborhood Developers member agencies were highlighted.

Since 1987, coalition agencies have built 1,500 affordable rental housing units with the financial assistance of corporate investors who earn federal tax credits that more than offset their investments.

The coalition’s study also calls for new job opportunities and improved educational and recreational programs for youngsters as critical factors for rebuilding the city’s long-impoverished neighborhoods.

Youth services providing an alternative to gangs, crime and drugs are a wise investment in communities where people under 18 years of age make up anywhere from 29% to 57% of the population, the study says.

And while the mayor’s office and RLA have increasingly argued that the best way to revitalize inner-city neighborhoods is to nurture small businesses, the report argues that such an approach will fall short in “providing long-term, stable and high-volume employment opportunities in the near future.”

The study calls for major employers in impoverished neighborhoods to hire more local residents. Of the 145 full-time employees hired after the Los Angeles Convention Center expansion, according to the report, only six lived in the nearby Pico Union and MacArthur Park neighborhoods.

At the news conference, leaders of LISC, a national organization started by the Ford Foundation to channel private sector financial resources to nonprofit developers, announced a new $32-million commitment to the coalition’s projects, including affordable rental housing, development of a commercial plaza to include a supermarket, and single-family housing.

In recent months, several initiatives have expanded home financing opportunities in neighborhoods that suffered the brunt of the spring 1992 riots.

Under a $10-million program funded by the Federal National Mortgage Assn. and administered through First Interstate Bank, qualified residents of southeast Los Angeles County and East Los Angeles have been offered the chance to buy homes with down payments as low as 3%.

On Central Avenue in the heart of South-Central Los Angeles, Coast Federal Bank is scheduled to open a loan office in the historic Dunbar Hotel building on April 26.

And in Leimert Park, a loan-processing and financial counseling center sponsored by the Glendale-based Fidelity Federal Bank is due to open in May. The Operation Hope Vision Center will help needy clients build their credit ratings in order to qualify for first-time home purchase, according to Operation Hope Chairman John Bryant.

Bryant, who founded the nonprofit banking consortium in the wake of the riots, said homeownership increases pride in neighborhoods and can also eventually provide access to capital needed to launch new businesses.

“In most cases, start-up entrepreneurs use equity from their home as a leverage for starting a business,” Bryant said. “And of all the structures burned or trashed in the civil unrest, not one of those was a home.

“You don’t burn that which you own.”

Not that the picture is entirely rosy.

“Even a 5% down payment is a big piece of change,” said Sister Diane Donaghue of the Esperanza Community Housing Corp., citing neighborhoods such as Hoover-Adams where the annual median household income is $16,600.

Moreover, in a region where housing values have plummeted in recent years, prices have remained stable or increased slightly since 1990 in many inner-city neighborhoods. For example, the median price for a three-bedroom home in ZIP code 90044, a riot-wracked South-Central neighborhood between Vermont Avenue and the Harbor Freeway, actually increased from $120,000 in 1990 to $134,750 last year, according to Dataquick Information Systems.

Housing Needs

Home ownership opportunities are needed more than anything else to improve conditions in the city’s most neglected neighborhoods, according to a new study by community development organizations. The map shows how the median rent payment in various areas compares to the median mortgage payment. Sources: Local Initatives Support Group