In a creative marriage of public and private goals, the county Housing Authority approved Tuesday a $60-million bond issue to build five privately owned apartment projects for low-income senior citizens in the Southeast and the San Gabriel Valley. Once the bonds are issued, probably within a month, construction can begin on 845 apartments in Lakewood, Whittier, Monrovia, La Verne and the Diamond Bar area, housing officials said.
Completion is expected within about one year, said David Dobson, deputy executive director of the Housing Authority.
About half of the apartments will be reserved for low-income residents, but developers say they expect about 85% of all tenants to qualify as low income.
Rents Will Vary
Rents for low-income residents will range from $330 to $375 a month, while non-subsidized apartments will cost $475 to $570, a project spokesman said.
The largest of the five apartment complexes will be a 241-unit project at 1024 Royal Oak Drive in Monrovia. The other four will consist of 201 units at 3120 South St. in Lakewood; 169 units at 12251 and 12271 Washington Blvd. in Whittier; 149 units at 2375 Highland Valley Road in Diamond Bar, and 85 units at Bonita and Damien avenues in La Verne.
The projects will address Southern California's "chronic shortage" of affordable rental housing, which is reflected in a countywide vacancy rate of about 2%, compared to the 4% to 7% rate of a healthy housing market, Dobson said.
The shortage has grown worse in recent years as federal housing funds have dwindled and new laws have been passed that restrict tax-exempt bond issues for government-owned housing projects.
Although the new bonds will bear the Housing Authority's name, it will incur no cost, will not be involved in construction and will own none of the apartments, Dobson said. Nor will it guarantee repayment of money raised by the sale of the bonds, he said.
"The county's involvement is an endorsement," Dobson said. "The Los Angeles County name makes selling the bonds easier. And, in a more direct role, we're arranging financing."
The projects' owner will be the nonprofit Corporate Fund for Housing, a private three-person Culver City company formed under the aegis of the Southern California Assn. of Governments in 1985 to promote affordable housing throughout the region. Representatives of the county, the cities of Los Angeles and Orange, and SCAG are on its board of directors.
Ironically, the Internal Revenue Service code that restricts bond issues for government projects encourages the issuance of bonds on behalf of nonprofit companies building low-income housing, said Fred Kahane, president of Corporate Fund for Housing.
It wasn't until 1986 and the change in tax law that private companies began to show serious interest in large low-income housing projects, Kahane said.
Even today, "most of the nonprofit companies, particularly in this area, are doing $2 million, $3 million or $5 million (in housing construction) a year. So this type of deal is unprecedented in scope and size as far as we know," he said.
Kahane's company, by comparison, has built just three projects with fewer than 100 units since 1985, he said.
In addition to its size, the five-project package is unusual because Calmark Development Corp., a Los Angeles developer that has built several senior citizen projects locally, will both construct and help manage the new projects, Kahane said.
Continental Insurance Corp., a large bond underwriter, will guarantee repayment of 70% of the $60 million in bonds, which has resulted in a triple A rating for that portion of the sale, he said. Two other bonds issued for the remaining $18 million will be unrated, he said.
If tentative agreements with the developer, bond counsels and underwriters are signed as expected, construction could begin on the three San Gabriel Valley sites as early as April, Kahane said. The Lakewood and Whittier projects will start no later than June or July, he said.