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Saturday, Dec 9, 2023

Red Tape Tangles New Credit Union

Four months after its scheduled opening date and eight months since receiving its charter, Pacoima Development Federal Credit Union still has no home. The credit union, the first of its kind in the San Fernando Valley, has all the deposits it needs and more, and officials said they plan to go ahead anyway and open in temporary quarters this week. But in the meantime, a building acquired to house the credit union lies vacant, the result of regulations that have made it difficult to find a contractor to make the needed repairs and red tape that has slowed the contract approval process. “It’s not a big project,” said Roberto Barragan, president of the Valley Economic Development Center who spearheaded the establishment of the credit union. “That’s what’s so frustrating. It just continues to be indicative of the city’s challenges in terms of doing community development in our least developed communities.” When the VEDC received federal approvals for the PDFCU, it acquired a building that had housed a pawn shop on Van Nuys Boulevard and set about seeking a contractor to renovate the property. The job is relatively small, under $1 million, but because the credit union is receiving federal funding, it requires that a contractor pay so-called “prevailing wages,” essentially a wage scale comparable to union wages, to anyone working on the project. Prevailing wages in even entry level construction jobs average about $30 an hour, an amount that made the job financially prohibitive for many contractors. After two requests for proposals, the VEDC finally found a contractor, but then a shortfall in the initial funding for the project required the agency to go back to the city for additional funding. “The prevailing wage by itself was not the problem,” Barragan said. “It’s been the enormous amount of additional regulation that the city requires with the money they put in it.” Funding for the credit union came through grants from the Economic Development Administration, Community Development Department and the city of Los Angeles. The funding does not affect the credit union’s ability to operate funds for making loans and other financial transactions come from deposits, which have already reached $1 million. The Credit Union and the contractor have completed the paperwork and now it’s up to the city to approve the project. “We’ve been asking the city for weeks now,” Barragan said. “I put in calls to the deputy mayor (Bud Ovrom) and got no calls back. I’ve been talking to the EDA to get them to expedite the whole thing. What’s worse is the EDA is saying that our money plus another $9 million of money allocated by the city needs to be spent by December or the city loses it.” Ovrom did not return calls seeking comment. As a result, officials said they plan to go ahead and set up shop in the VEDC’s Pacoima offices. “It will be confusing, but the location is pretty well known,” Barragan said. “There are signs on the building. There will be a teller window, computer systems and cashing services will be there. It will take some outreach but we’re setting that up right now.” Officials at the VEDC and the Credit Union discussed the possibility of using the agency’s offices as the credit union’s permanent location, but they ultimately decided that the pawn shop location was much more centrally located to the community that could most benefit from the services, some 200,000 area residents who, until now, have had few financial options and often relied on check-cashing services charging exorbitant rates. “We’re hoping we can get in there before the end of this month,” Barragan said. “We’ve responded to all the requests in terms of information and justification for hiring this particular contractor. We’re just waiting.”

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