City officials say they plan to make $150 million available on a yearly basis for loans to property owners along the Downtown stretch of Broadway in hopes of spurring renovations that will help attract tenants to the upper stories of many buildings that currently have little commercial activity other than ground-floor retail.
14th District Los Angeles City Councilmember Jose Huizar, who represents much of Broadway in the Downtown area, recently announced the plan, which counts on funds from the U.S. Department of Housing and Urban Development. The city’s Community Development Department manages the pool of funds, and typically uses the money to make secondary loans to fill any financial gaps in developers’ plans for land acquisition, construction or renovation, and various related costs on projects deemed worthy of public aid.
The latest plans calls for the funds to be used for primary loans on renovations, with the intention of easing the ongoing credit crunch that has pinched commercial lending in recent months as the economy has struggled and stock markets have faltered.
“We need to get creative,” said Huizar. “We have more than 1 million square feet of vacant or underutilized commercial space along Broadway right now—that’s a million square feet providing no jobs, and no revenue for the city.”
Huizar said he is working with officials at the Community Development Department to craft a plan that would allow borrower’s with significant equity in real estate along Broadway to qualify for primary loans from the pool of federal funds.
Huizar said he intends for the plan to require borrowers to obtain other financing to replace the loan from the city once credit markets have improved and such a switch becomes feasible. He said borrowers would also have to meet specific requirements on providing public benefits under federal regulations. Projects funded by the loans would be expected to create one job for every $35,000 borrowed, for example, and approximately half of the positions would have to be made available for low- and moderate- income workers (low- and moderate-income levels generally range below $70,000 a year for families of four and $50,000 a year for individuals, according to federal guidelines).
Huizar said he hopes the first loans will be made under the program early next year.
The announcement of the plan for the loan program follow a recent decision by the City Council to approve of a Bringing Back Broadway Commercial Reuse Task Force to develop incentives to encourage commercial use of now-vacant upper floors of buildings along Broadway and nearby areas.
