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Quake Repairs Fall Behind in Poor, Old Neighborhoods : Recovery: U.S. loan policies slow effort. In some areas, less than half the affected buildings have gotten permits.


The repair of Northridge earthquake damage is humming toward completion across much of the San Fernando Valley while it is falling behind in older, poorer areas of Los Angeles, building records show.

Hampered by federal loan policies that work against economically depressed areas with low property values, the recovery has stalled in scattered neighborhoods from Hollywood to south of the Coliseum, a Times computer analysis of federal loan statistics and Los Angeles city building permits shows.

Among the signs of lagging recovery in older parts of the city:

* Twenty months after the earthquake, repair or reconstruction permits have been taken out for fewer than half of the red-tagged and yellow-tagged buildings in large parts of Hollywood, East and Northeast Los Angeles and South-Central Los Angeles. In contrast, across the San Fernando Valley, permits are on file for 70% of all red- and yellow-tagged buildings. (A red tag signifies that a building is unsafe to occupy and a yellow tag that part of it is unsafe).

* In many of those older communities, many office buildings, apartments and houses that were not red- or yellow-tagged have nonetheless been vacated or demolished, and the land simply left vacant or put up for sale.

Particularly hard hit is the northern portion of the Crenshaw area of Los Angeles, where dozens of heavily damaged structures--most of them outside the area's only designated "ghost town"--remain just as they were in January, 1994, raising the specter of long-term blight.

On one block of West Boulevard, about a quarter of a mile east of the three-block West Adams ghost town, the walls of an abandoned three-building bungalow court are propped up with old lumber, and two other vacant buildings are fenced and boarded, with no apparent progress toward reconstruction.

Similar buildings dot streets in both directions over a two-mile stretch, with repairs just getting under way on some while others remain derelicts.

"It's getting to be chaos," said a contractor who has several earthquake jobs under way in the Crenshaw district but said he is astounded by the number of damaged buildings still awaiting the first hammer blow.

"People are walking away from the properties because they can't do anything. They can't get rent, they can't pay the mortgage, the bank won't do anything."

The San Fernando Valley also has scattered pockets where repairs are slow getting started. With the exception of the large "ghost towns" areas singled out for special government attention because of concentrated earthquake damage, these too are concentrated in older, less affluent neighborhoods such as Pacoima and Canoga Park.

Rigorous Guidelines

Across the city, disparities in the speed of recovery correspond closely with rejection rates for U.S. Small Business Administration recovery loans. In 15 ZIP codes in central, south and southwest areas, more than two-thirds of all SBA applications were denied or withdrawn--primarily because of insufficient earnings--and the average rejection rate for the central city was 57%, compared to 45% in the San Fernando Valley.

Although SBA loans constitute the primary form of long-term federal recovery assistance, they are intended to be repaid, and rigorous qualification guidelines are applied to protect the public's money, officials said.

"That's disgraceful," City Councilman Nate Holden, who represents Crenshaw, said of the sluggish progress. "This is a housing stock that should be providing shelter for the needy. Two years is much too long."

Los Angeles housing officials insist that they have assembled an adequate safety net of federal housing grants to help those rejected by the SBA and that they have not neglected older neighborhoods.

So far, $177 million has been loaned from the city's $300-million fund, enough to repair 9,000 units, said Robert Moncrief, director of housing development for the Los Angeles Housing Department. Loans for another 7,200 units will be made by next June, he said.

Though a large portion of those low- or no-interest loans were earmarked for the areas designated as ghost towns, almost all of them in the Valley, the Neighborhood Preservation Program has directed $52 million to owners outside the ghost towns, said director Solomon Banks.

Almost no one has been rejected for bad credit, Banks said, and only unusual circumstances would disqualify an applicant.

"It may be the owner doesn't want to rebuild," Banks said. "He just wants to let it sit there and demolish it and rebuild at some future time. Or there may be title problems. There may have been judgments. It probably went into foreclosure and the bank hasn't been able to sell it again. But it certainly wasn't for lack of resources to repair."

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