Two partnerships involving Los Angeles Harbor Commissioner James Acevedo are in default on $4.1 million in city loans used to buy land in the San Fernando Valley for two unsuccessful housing projects, officials said Friday.
One partnership once also included a company headed by a Los Angeles Recreation and Parks commissioner, Christopher Hammond. His firm dropped out in 2003, though it is still listed in the partnership papers.
One City Hall watcher complained that two politically connected commissioners were able to get city loans, but failed to carry out their promises to build affordable housing.
"It raises the issue of whether these loans were in the taxpayers' best interest," said Jon Coupal, president of the Howard Jarvis Taxpayers Assn. "Then you have the additional question of what was going on behind the scenes because these guys are City Hall insiders."
The two Acevedo partnerships have been told they were in technical default because they failed to begin building the apartments, said Mercedes Marquez, general manager of the city Housing Department.
The partnerships had until last Sunday to reimburse the Housing Department for the money owed. But the deadline has passed without payment, so a city committee plans to meet next week to decide whether to initiate foreclosure proceedings.
"It's incredibly unfortunate," Marquez said. "We will make sure the city's interests are protected and we get our money back."
Acevedo, an appointee of Mayor James K. Hahn to the Harbor Commission, did not return calls, but a spokesman blamed the defaults on skyrocketing construction costs that have outpaced financing and also on community opposition to affordable housing.
"One of the reasons this and other projects are in default is there has been a 30% to 40% increase in hard construction costs," said Mark Ryavec, a spokesman for Acevedo.
He said Acevedo hopes to avoid foreclosure, either by persuading the city to provide more money to cover construction costs or by selling the properties and using the proceeds to repay the city loan.
"There is clearly a solution," Ryavec said.
Acevedo is a politically powerful developer. Beyond his ties to Hahn, for whom he worked during Hahn's first campaign for mayor, Acevedo has served as a political advisor who helped elect Council President Alex Padilla and Councilman Tony Cardenas.
