Stung by the plunging real estate market, UCLA administrators are scrambling to sell $42 million worth of new faculty homes in Westchester before they are forced to start paying off loans for the project from campus funds next year, interviews and documents show.
The tract of 86 homes--which range from $409,000 to $609,000--represents UCLA's most ambitious attempt to entice faculty candidates with subsidized housing.
At one time, administrators were confident that prospective professors would snap up the spacious homes--named "The Bluffs" because some lots offer hilltop views spanning from the ocean to Downtown--because they are located only 30 minutes from the Westwood campus and were supposed to be priced as much as 35% below market value.
But so far, not one professor has bought a home, although the first ones were ready in February. And now that virtually all of the houses are finished, UCLA administrators are aggressively hunting for the first homeowner to move into what looks like a suburban ghost town.
Asked what went wrong, Chancellor Charles E. Young reacted testily during an interview Wednesday: "Because the bottom fell out of the real estate market. Isn't that obvious? I mean, do you really have to ask that question?"
Young said that the drop in Southern California housing prices, unforeseen when the project was approved by the UC Board of Regents during the real estate boom of the late 1980s, means the 86 homes are not as much of a bargain as he had hoped. Today, the homes are only slightly less expensive than comparable developments.
The chancellor also blamed the slow sales on a recruiting crunch. Due in part to budget cuts, UCLA will be offering appointments to only 80 professorial candidates in 1993-94, compared to the 100 appointments a year it made through the 1980s, he said.
Problems with the housing sales come at a bad time for Young, who has angered many faculty members and students by planning to dismantle or downgrade several professional graduate school programs. Citing budget cuts, Young has announced that he wants to suspend undergraduate degree programs in nursing, and masters and doctoral studies in library science. He also wants to "disestablish" four graduate schools, including architecture and public policy.
On Thursday, Andrew Shaw, executive director of the UC Students Assn., called the project "outrageous." Sen. Tom Hayden (D-Santa Monica), a vocal critic of university spending, said the fact that UCLA appears stuck with 86 homes is a "total fiasco."
"This sounds like a plan premised on a mistake--that plush, single-family homes are needed to attract faculty," Hayden said. "This is while student fees are going up, student housing is absolutely miserable. Where are the priorities?"
According to the loan agreement signed by the regents, Young would be obligated to use campus funds to begin paying back all or part of the $42-million construction loan from First Interstate Bank if the school fails to sell enough homes to cover the debt. At 4% interest, UCLA officials estimated the yearly payment to be $1.6 million.
Young said that the money would come from nearly $27 million he controls in unencumbered discretionary funds, money the school receives as overhead in government grants and uses to pay off a number of capital projects. He acknowledged that any payments made on the construction loan would mean "reducing the future allocations we're currently making for academic program purposes of one kind or another."
But Sam J. Morabito, UCLA's assistant vice chancellor of business enterprises, said administrators hope to avoid the problem of using campus funds by selling off all 86 homes by June--a goal that would allow the school to "essentially break even" and pay for the loan from proceeds from the development.
Morabito said UCLA's goal is to sell 12 homes a month, a target that one Los Angeles real estate expert said was unrealistic in today's market. Steven LaTerra of the Meyers Group, a real estate information and consulting service, said it is unlikely that the school's project would sell so fast when people can buy comparable homes at $300,000.
LaTerra added that school officials are making it more difficult for themselves by trying to sell the homes only to faculty and staff members. If the homes were offered to the public, they would possibly sell quicker but still at a pace less than what UCLA expects, he said.
Young said he is resisting pressure to take the "easy route" by offering the homes to people outside the university. But if he eventually does, it will probably be at prices higher than those offered to UCLA employees.
The Bluffs is UCLA's most ambitious effort to help prospective faculty members get over the sticker shock of Southern California real estate when considering an appointment at the Westwood campus. Young said that many potential faculty members have turned down jobs at UCLA because of the high price of housing.