Ezralow/SFVFeb/24 inches1stjc BRAD BERTON Staff Reporter Developer Marshall Ezralow has figured out a way to rent apartments in parts of the Valley that still face double-digit vacancy rates from the Northridge earthquake. Just drop the price. Ezralow says the units are renting for $100 to $150 less than comparable apartments nearby. His price structure is part of the Los Angeles Redevelopment Corp., a joint effort of Ezralow and St. Louis-based redeveloper McCormick Baron & Associates to purchase and renovate Valley apartment communities damaged in the January 1994 Northridge earthquake. The developers earn key income tax credits by reserving all 500 of the units built or under construction for low- to moderate-income residents. The below-market rent levels are set with participation of the City of Los Angeles’ Housing Department, and the federal government helps residents pay their rents based on family income levels. Residents must meet specified income requirements to qualify. The programs allow L.A. Redevelopment to offer one-bedroom units for about $520 monthly, two-bedrooms for about $625 and three-bedroom apartments for about $715. “We are able to deliver new apartments, which are relatively luxurious compared to the competition, at rents that typically run $100 to $150 below nearby ‘market-rate’ apartments,” Ezralow said. The new and renovated units include appliances and features not typically offered in competing market-rate developments. The partners initially expected to utilize government programs aimed at creating projects combining both “market-rate” units and “below-market” apartments reserved for lower-income renters, Ezralow said. But demand for the affordable units has been overwhelming, the developer added. L.A. Redevelopment’s projects are located in some of the Valley communities hit particularly hard by the Northridge earthquake primarily Northridge, Reseda and Canoga Park. Demand for the affordable units is so strong that completed projects typically have been entirely leased within a week of opening, noted Cristina Agra-Hughes, L.A. Redevelopment’s president. “There’s almost no turnover, and there’s always a waiting list of 50 to 60 (qualified prospective) tenants at each project,” she said. Dan Zander, a partner in the Sperry Van Ness investment property brokerage who specializes in Northridge area apartments, said he’s not surprised that L.A. Redevelopment’s units leased so quickly. “The Northridge area is still struggling with an overall apartment vacancy rate of about 12 percent, but a lot of the renovated and rebuilt properties are only about 2 percent vacant,” Zander noted. The L.A. Redevelopment developers typically receive tax credits for 15 years. The renovated and rebuilt units remain under the moderate-income restrictions for 40 years. Developing and administering affordable housing projects can be tricky, company officials say. “You absolutely need a sophisticated organization and staff that can oversee the entire operation identifying prospective projects, gaining government approvals, securing the financing, performing the physical construction, screening prospective tenants and managing the properties,” said Gary Freedman, a senior Ezralow Co. principal. Once the development team identifies a redevelopment or renovation project and performs extensive physical inspections and other such “due diligence” analysis, it works closely with the Housing Department to prepare plans and set rent levels, Agra-Hughes noted. Then each project competes for the federal tax credits, which the State of California allocates on a point system weighted in favor of distressed neighborhoods, large family-sized units and affordability, Agra-Hughes continued.