Seven years ago, Ricardo Carrillo lived with his parents next to the then-proposed Villa Marengo town house development in Pasadena.
Today, all smiles, he, his wife, Artemisa, and their two toddlers are among the first residents of the development.
Also smiling because Villa Marengo is finally completed is Leslie Lambert, Pasadena's housing development manager.
However, if the developer, Glenfed Development Corp., had a corporate face, it might be shedding a few tears--even though Villa Marengo sold out quickly and has a waiting list.
Firm Lost Money
That's because Glenfed says it lost money, a result of carrying the property since 1980.
"We lost about $275,000. A year-and-a-half ago, we projected we'd lose more than $800,000. However, even the $275,000 doesn't include the cost of seven years of management time," said Kathy Dantagnan, Glenfed's vice president/director of sales and marketing.
The $7,285,000, 80-unit town-house project is in the 500 block of N. Marengo Avenue in a largely low-income Latino neighborhood. While Glenfed is the developer, the effort included the City of Pasadena and California Financial Express.
"The City of Pasadena is delighted with Villa Marengo," Lambert explained, "because it accomplishes our goals. It preserves the mixed racial and income character of the community. And because it's attractive without being lavish, it's encouraging neighboring homeowners to fix up their property."
The project was stalled because of opposition from community groups.
"They thought that Villa Marengo was just another elitist community in a Latino neighborhood," said Mel Wynn, president of Glenfed.
Another fear by some neighbors was that the project would raise property values and rents and force out residents.
The city's financial participation was designed to keep the houses affordable to families like the Carrillos.
But from 1980 to 1986 the project sat with Glenfed's financial meter running.
Then in 1986, with community opposition overcome, Glenfed scrapped the city-approved plans for 100 units and went for 80 units, believing this would be better received by the neighborhood. Prices for the two- and three-bedroom town houses ranged from $81,900 to $92,900, with a $120 monthly homeowner fee.
Projecting a loss of $800,000 because of the delays, Glenfed decided to complete the project rather than sell the land.
Even after the new plans were approved, Glenfed added a pool and cabana at its own expense.
Then, when the project was ready for sale, another problem arose--getting government financial assistance to 51% of the buyers who would need it. The problem was that federal, state and city agencies had different standards.
A Pasadena minority-owned firm, California Financial Express, was brought in to work this out.
"Getting the loans took up to 90 days instead of a normal 60 days," said Jimmy Morris, president of the firm.
The city wanted to sell the project to a mixture of low-, moderate- and high-income buyers.
"At first we didn't think it could be done," Morris said.
Subsidies for Some
Happily, it did work. Morris said the mixture was achieved because of the attractiveness and low cost of the town houses which, although in a low-income area, were convenient to freeways and Pasadena's business center.
It was planned that while all buyers would pay the same price, 51% would be subsidized, and even these would be paying different interest rates and getting different deals.
Some families with incomes under $20,000 wound up paying 7.5% interest for 30-year fixed-rate loans, while other families with incomes perhaps only $2,000 more paid interest rates of 9.5%.
The 39 buyers who did not qualify for the low and moderate financing were able to get 8.4% loans. Down payment and other requirements also varied.
The city put up more than $1.1 million in the form of a $305,000 site improvement loan and $800,000 for an average of $20,000 for each of the low- and moderate-income buyers in the form of "silent" second mortgages.
Owners make no payments on the silent second mortgages. The principal of the silent loan is assumable by a low- or moderate-income subsequent buyer, according to Lambert.
If the buyer is a higher-income person, the second mortgage and interest will have to be paid off at the time of sale. In this way the city hopes to preserve low- and moderate-income housing in the project.
Range in Income
Morris said the final racial mixture came out about 25% white, 50% Latino, 20% black and 5% Asian. Family income ranges from under $20,000 to $70,000 a year.
"Even those who received subsidies are working people with good credit ratings. They had to put down at least 5% of the purchase price," Morris said.