Business & Economy

New LA apartment building for low income renters sits empty

Nearly 100 seniors and homeless people are still waiting to move into brand new apartments after L.A. Housing officials mishandled a contract to build the much needed units.

A brand new apartment complex in the Westlake area is complete and ready to move in. But the 92 unit building on Bonnie Brae sits vacant – even as the need for low income housing is so great.

The city put in more than $26 million to help the project along, but a new audit shows the City Housing Department mishandled the contract and failed to check out the developers. One of the developers was under federal investigation for misusing public funds and is now under indictment for bid rigging and fraud in a separate case.

No allegations of criminal activity so far in the construction of this building. Still though, the renters will have to wait as the feds investigate whether developers broke contracting rules and procedures.

Sounds like bureaucratic red tape keeping people from moving in. But Rudy Montiel, head of the Los Angeles Housing Authority, says it’s more than that. “It’s federal regulation," he says. When the developer "failed to follow the process," the federal government does not permit the authority to go forward and issue rent subsidies to tenants. He says he "wouldn’t refer to it as red tape. You have to follow the law,“ he says.

Still, tenants are left waiting to move in. The units were supposed to be subsidized by federal Section 8 dollars. But that money isn’t going out to renters while the feds investigate the alleged wrongdoers.

The problem came to light following an audit by City Controller Wendy Greuel. The new leader of the L.A. Housing Department, Douglas Guthrie, asked for the audit and agreed to follow Greuel's recommendations.