Neophyte Group Fails to Repair Last ‘Ghost Town’

Repair work in one of the areas most devastated by the 1994 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 a poverty-stricken corner of North Hills, in the mid-San Fernando Valley, city-financed repair work has barely begun. There, the work was assigned to a nonprofit organization that has failed to complete the job 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 organization, 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 ghost town area surrounding Orion Avenue and Parthenia Street, and a sixth located close by. Yet it has completed work on only one small building in the ghost town area.

NEED has close political ties to Los Angeles 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 Avenue 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 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:

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

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

* Repair costs have skyrocketed while deterioration and vandalism have taken their toll.

By 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. . . . 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 said 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-infested, 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; a 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. Chain-link fences have gaping holes, and plywood lies on the ground by the windows it is supposed to cover.

“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.”

At 14643 Blythe St., three families have been living amid 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 in 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. She said NEED officials repeatedly assured her 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.

The group’s vice chairwoman, Carol Silver, also unpaid, worked on Alarcon’s campaign. Sylmar Democrat Tony Cardenas, elected to the Assembly last fall from the East 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 was going to support the $3.6-million rehabilitation of one of the buildings in the Orion ghost town cluster.

The 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.

Sewill said her agency made a mistake by letting NEED take on too much at once.

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

Critics argue that experienced nonprofit and for-profit developers were eager to get the low-interest, long-term loans available from the Housing Department.

But housing officials said few other developers stepped forward. So they accepted NEED’s applications.

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

In one case, a finance officer complained that the organization’s failure to submit a signed partnership agreement with a co-developer had stalled processing for three months. The delay lasted another two months.

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 nonprofit,” said an unsigned Housing Department memo on 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 for four of six projects because the organization 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 they 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 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 vandalism and deterioration continued.

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, partly occupied building that city inspectors ordered repairs, and then officials ordered rents reduced because of slum conditions.

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

Faced with the rejection, Acevedo, Alarcon’s ally who founded NEED, informed Senior Inspector G.L. White that 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 inspectors’ 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 said 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 prevail 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 organization.

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 an 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.

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.”

* LINGERING EFFECTS: A family is still struggling through the Northridge quake as they fight a legal battle. B1