Firm Brings Low-Income Homes, and Controversy

With little fanfare or publicity, a controversial East Los Angeles economic development firm is venturing into the San Fernando Valley with the construction of a 75-unit senior housing project in Pacoima.

The low-income project on Mercer Street will sit on what is now a weed-covered lot strewn with discarded furniture and soiled mattresses. Graffiti covers nearby brick walls.

The $6-million project is significant partly because it will be built by the East Los Angeles Community Union, or TELACU, one of the county’s largest minority-owned businesses, a group with 850 employees and annual revenue of $100 million.

TELACU President David C. Lizarraga said the project is part of his group’s effort to help meet the Valley’s “tremendous need” for low-income housing.

“We would be very interested in continuing to work in the Valley,” he said.

But TELACU’s venture into the Valley makes other economic development groups in the region nervous. They worry that they can’t compete with TELACU’s considerable influence and money.

“They have the political influence that no one else has,” said the head of one Valley business group who asked to remain anonymous. “They have a reputation for taking over a market.”

TELACU is a multifaceted organization that has built more than 1,000 low-income housing units for the disabled and senior citizens and has operated a community thrift and loan, a building-supply firm and a chic Mexican restaurant called Tamayo in East Los Angeles.

According to campaign records, TELACU has contributed $15,650 to city officials and candidates over the past five years, including $1,400 to Councilman Richard Alarcon, who represents the Pacoima neighborhood where TELACU’s latest project is to be built.

TELACU boasts strong ties to Latino politicians in East Los Angeles, such as Councilman Richard Alatorre.

But it also has a controversial history, dating back to a 1982 federal audit that found TELACU received $1 million from the federal government to make low-interest loans to the poor but failed to make a single loan.

TELACU repaid the $1 million at the order of a Los Angeles federal judge.

More recently, TELACU became part of a controversial business team that applied for a lucrative Eastside subway contract and is being investigated for failing to disclose a $1,000 campaign contribution to Mayor Richard Riordan, who is a member of the Metropolitan Transportation Authority board that approves subway contracts.

MTA rules forbid board members to vote on contracts benefiting companies or individuals who have contributed more than $250 to their political campaigns in the previous year.

Riordan, a lawyer who did legal work for TELACU before he took office, returned the group’s contribution.

TELACU’s latest project, the Pacoima senior citizens center, sailed through the city’s approval process with little trouble, even though the center will be built on a secluded site with nearly twice as many units as allowed on the 1.8-acre lot.

Last month, the City Council approved a $250,000 low-interest loan to allow TELACU to purchase the land for the project.

Planning officials say the approval of such an increase in density--called a density bonus--is unusual. In the past year, only three such increases have been approved, the largest for a 55% increase. The TELACU project received a 94% density increase.

Planning and housing officials, however, say the project was approved without a great deal of debate because senior-citizen centers tend to be more dense than other housing projects.

TELACU’s move into the Valley has so far provoked mixed reactions.

James Acevedo, president of North Hills-based Neighborhood Empowerment and Economic Development Inc., said TELACU has a good reputation for building low-income housing but he worries TELACU may not work with Valley groups that have been in that business for years.

“There is a lot of home-grown talent here that really needs to be a part of any process,” he said.

County Supervisor Zev Yaroslavsky, whose district includes parts of the Valley, acknowledges TELACU’s controversial history, saying the group tends to “rub some people the wrong way.”

But he said he has “a very high regard” for TELACU’s housing projects.

“TELACU has done some excellent work in the East Los Angeles area,” he said. “Housing is one of their strong suits.”

Alarcon, who has a reputation for having extremely high standards for housing projects in his northeast Valley district, said he supported the TELACU Pacoima project because it met his criteria.

He rejected any suggestion that TELACU won his approval because of the group’s influence.

“I will work with anyone who has a good idea to improve the community,” he said. “I will evaluate each project on a case-by-case basis.”

But the project did not meet the standards of some neighbors.

Marie Harris, a Pacoima activist, said she would like to see a senior housing project built in the community but opposes the TELACU project’s location.

She notes that Mercer Street is very narrow in front of the project site, providing no room for a sidewalk that senior citizens can use to get to nearby stores. Harris added that the view from the project will be the loading platforms in back of a supermarket across the street.

“There will be no trees, no scenery,” she said. Harris also worries that the project’s location is too secluded, making it an easy target for criminals.

“Anything can happen and no one could hear them,” she said.

As part of the conditions for the project, city officials are requiring that TELACU close off Mercer Street in front of the site so residents won’t have to worry about traffic.

In addition, the city wants TELACU to build a path for residents to take to a nearby multipurpose senior-citizens center.