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Minority Developers Build Up Their Skills at USC

Real estate: Intensive summer course teaches students how to convert neglected urban properties to better use.

July 03, 2001|ROGER VINCENT | TIMES STAFF WRITER

Few Southern California home builders have evicted squatters or knocked down methamphetamine labs as part of the job. The men who created Panorama City in the San Fernando Valley after World War II, for instance, carved housing tracts out of wholesome ranchland as curious sheepherders looked on.

Half a century later a developer determined to build another housing tract on an abandoned patch of the Valley's prototypic suburb had to face down squatters, motorcycle gang drug dealers and a host of regulatory hurdles that never troubled the GI Generation. Yet those challenges are typical of what developers who want to reclaim urban land must face, said Carlos Mesa, who took back that piece of Panorama City and recently built 15 single-family homes that sold for as much as $268,000 each.

The buyers who will move in this month are beneficiaries of an intensive summer course at USC that teaches minority developers the rules of the real estate game, said Mesa, a 1993 graduate of the class and president of Santa Fe Group of Los Angeles.

"Plenty of builders today focus on fringes of suburbia," Mesa said. "A program like this allows people to go work on small pieces of property in the inner city and convert them to higher use."

Better uses for stagnating or troubled urban land is exactly what USC's Minority Program in Real Estate was created to accomplish. The L.A. riots of 1992 gave birth to several well-intentioned nonprofit developers who often lacked the skills to implement their aspirations, said Stuart Gabriel, director of the USC Lusk Center for Real Estate. So the Minority Program was kicked off the following year to give would-be builders some street smarts in the unforgiving arena of real estate finance and working knowledge of such arcana as cap rates, valuation and pro formas. It also gives them a foot in the door of a clannish industry in which the right contacts can make or break a deal.

"If you build it they will come," said student Henry Casillas, who hopes to develop affordable housing in Ventura County. "But you have to do market analysis and run the statistics."

Giving that dose of pragmatism to often idealistic students is a critical mission of the program. Many of this year's participants were quick to declare towering ambitions to create housing, retail and other commercial properties in struggling neighborhoods. The USC training has been sobering, said Compton-born Robert Zomalt.

"We all had to take a deep breath and realize how much we have to deal with," said Zomalt, who hopes to build housing in Oxnard with Casillas. "You have to make sure your data supports your passion."

The 28 Latino, African American and Asian students who just completed this year's intensive two-week session arrive on the development scene at a time when the real estate industry's interest in the central city is growing. High-profile successes such as Magic Johnson Theatres in Baldwin Hills have encouraged historically skittish lenders to fund projects in neighborhoods they might have balked at a few years ago.

Graduates have built a high school in Watts, affordable housing in East Los Angeles and a shopping center in the Crenshaw district. Many of the projects are built by nonprofit organizations, but some are constructed to rent or sell at market rates. Idealism and capitalism occasionally clash in class.

"For-profit [developers] learn to be a little more thoughtful, nonprofits to be a bit more cut-and-dried," Zomalt said. "You have to think like a for-profit to get funded."

It's what you do with the money you make that matters, said Maria Villagrana, a student who manages property for the Pasadena-based Southland Cos. and raises her children on her native Eastside.

"I see dollar signs, but I would invest it right back in my community," she said.

There aren't enough retail options there now, Villagrana said. "I make so much money that I have to go to Pasadena, Santa Monica or Long Beach to spend it."

A former professional heavyweight boxer from Miami uses less romantic terms. "I want to be a tycoon," said Buster Mathis Jr., who won 20 bouts before being knocked out by Mike Tyson in 1995 and still speaks with combative flair. "By going through this program you know better. You know how to protect yourself."

Some self-protection may indeed be required of the graduates. Many of the successful inner-city developments going on across the country involve partnerships of local minority business leaders who know their communities and experienced hands in the real estate business who know the bottom line. A grounding in development fundamentals makes for more savvy participation in the process, said program director David Dale-Johnson of the Lusk Center.

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