Burned and looted, family store rises from the ashes. (Mixed Messages-10 Years After the Riots).

IT'S been 10 years, but Terry Steele Jr. still remembers arriving at his family's furniture tore at Vermont Avenue and 54th Street and seeing the place in smoldering ruins.

"There were firefighters trying to put it out while people were shooting and running down the streets with our couches. It was devastating," said Steele, whose father started Terry's Interiors as an upholstery business in 1961 before expanding into furniture retail.

In the end, looters carried off more than $300,000 in merchandise and refinishing equipment. Damage to the 7,000-square-foot building ran more than $1.2 million.

Shutting down the business altogether was one option. So was relocating. But in the end the Steeles decided to stick it out where they were.

"After the store was gone, I asked my dad what he wanted to do, and he said, 'I want to come back,"' said Myron Steele, 31, who began running Terry's Interiors after his father died last year at the age of 67. "He didn't even think twice."

Except this time, he chose to turn his property into a two-story mini mail that would provide space for his store and up to eight additional tenants.

"My father wanted to have a building to give all the entrepreneurs and business in the area office space," said Myron Steele. "The people here supported him, and he wanted to support them by putting something up just as nice and beautiful as in Beverly Hills."

Although the store is a leaner version of its former self, with nearly $230,000 less inventory and about half as much showroom space, Terry's enjoys a steady cash flow from two tenants that occupy most of the space in the mall and whose leases bring in about $100,000 annually. Terry Steele Jr., a professional singer and songwriter, also recently opened a recording studio in the mall.

Cutting costs

The store's revenues last year were $150,000, compared with $250,000 in 1992, but leasing fees have helped bridge the gap and the company has cut overhead over the years to make up that difference, Myron Steele said. The store, which its owners said is profitable, has improved margins by having a smaller payroll than in 1992, reducing the number of its suppliers, and subcontracting much of its upholstery and refinishing work, which accounts for about 40 percent of Terry's revenues.

While Terry's Interior managed to rebuild, the path to recovery was fraught with obstacles.

Weeks after the store was razed, Terry Steele Sr. had to take out an emergency $70,000 loan from the Small Business Administration to comply with a demolition notice from the city.

Then came news that insurance would only cover $300,000 of the damage. Searching for a loan to develop the strip-mall, Steele obtained $500,000 from the SBA and an additional $800,000 from American Pacific State Bank.

But even $1.3 million in loans wasn't enough to get the store up and running. Steele used $100,000 in savings, while his son Terry Jr. sold his condominium to raise money for the project.

After a series of construction problems that were complicated by the 1994 Northridge earthquake, the mall opened in early 1996. The first tenants included a beauty salon and the Los Angeles Community Development Bank, which settled on the site "to show the bank's commitment to help the community," said LACDB President William Chu.

Although Terry's Interiors returned, many businesses along the Vermont corridor and in similarly hard-hit areas closed or relocated. Whether a business returned depended largely on who owned the property.

"If you owned the land you controlled your destiny," said Linda Griego, former president and chief executive of RLA, formerly Rebuild L.A. "If you were a tenant you couldn't really afford to wait (to finish rebuilding)."

The capital problem

Gaining access to capital proved another barrier for some small businesses. The recession caused banks to sharply curtail credit to merchants looking to rebuild along Vermont and in other transitional areas.

"Banks would discount business based on ZIP codes' Griego said. "They were just looking at addresses. They said these neighborhoods were too 'transitional.' There was virtually no credit available."

Marva Smith Battle-Bey, president of the Vermont Slauson Economic Development Corp., estimated that 70 percent of Vermont businesses damaged or destroyed during the riots returned in one form or another. But the mix of goods and services changed, she said, with fewer home furnishing stores and more fast-food chains.

In addition, certain merchandise like electronics and quality apparel is still unavailable, forcing residents to shop outside the neighborhood.

But there are bright spots among the boarded stores and vacant lots. For example, new development projects and commercial centers are springing up along Vermont at Slauson and Manchester avenues.

"Out of these ashes shall spring forth a new beginning," Terry Steele Jr. said quoting his father.