Beverly Hills, Laguna Beach on HUD ‘Most-Needy’ List

WASHINGTON —  Using new guidelines intended to reform a troubled housing program, the federal government has identified the Southern California cities that most need government subsidies to renovate dilapidated rental housing.

Among them are Beverly Hills and Laguna Beach.

Local housing authorities that will not be invited to apply for new rent subsidies by the Department of Housing and Urban Development include cities serving much poorer populations, such as Whittier and Compton in Los Angeles County and Santa Ana and Anaheim in Orange County.

“It just doesn’t make sense,” said one lobbyist for Orange County interests, who asked not to be named. “Santa Ana is a much poorer city than either Laguna Beach or Beverly Hills.”

“I was certainly surprised,” added Gregory C. Devereaux, assistant director of the Garden Grove Housing Authority. “We would like to get further information on the criteria.” Garden Grove already has commitments for 104 moderate rehabilitation subsidies in the Buena-Clinton section, Devereaux said, but it would like more.

HUD suspended rent subsidy allocations under its program to support moderate rehabilitation of rental housing on April 26 after the agency’s inspector general reported widespread favoritism and abuse in contract awards.

Before the program was halted, HUD officials had agreed to provide rent subsidies beginning this year to renovate 100 additional housing units in Santa Ana, officials said. HUD withdrew the commitment for the new units when the 1989 funding was halted.

The community already had been awarded subsidies that will renovate between 40 and 50 housing units.

Early last month, HUD Secretary Jack Kemp announced that he was reopening the moderate rehabilitation program after implementing reforms that would ensure “eligibility for all public housing agencies with severe needs, based on a formula which considers poverty, low-income housing quality and overcrowding.”

Dirk Murphy, spokesman at HUD’s regional office in San Franciso, said of the new guidelines: “Like all national formulas, it may result in some unusual results” in certain areas.

Until April, any public housing agency in the country was permitted to apply for moderate rehabilitation funds.

Now, only those agencies that qualify under the new formula are permitted even to seek funds. Once they apply, their proposal must compete with those of other agencies that qualify under the formula.

The quirk that skewed the results apparently lies in a part of the new formula that gives particular weight to the housing needs of communities in which rents are high.

According to HUD officials and an explanation in the Federal Register, the eligibility formula takes into account several factors.

A weight of 25% is given to the number of rental units in which the head of the household is at or below the poverty level. An additional 25% weight is assigned to the number of housing units built before 1940 in which the household head is at or below the poverty level. Finally, the remaining 50% weight is assigned to any one of the following four factors: neighborhood overcrowding; incomplete kitchen facilities; poor plumbing, and excessively high local market rents.

The high-rent factor is probably what permitted Beverly Hills and Laguna Beach to qualify for subsidy applications, while less wealthy cities did not, Murphy speculated.

“Especially when you’re dealing with a large number of communities on a national list, one factor in a mathematical formula can create some curious results,” Murphy said.

Under the moderate rehabilitation program, HUD provides 15-year rent subsidy commitments to local housing agencies. The agencies select developers who wish to renovate their apartment buildings and commit the subsidies to the developers. The developers then use the long-term financial commitment of HUD subsidies to secure private financing to repair their buildings.