First Interstate takes novel road to lending for affordable homes.

In a first-of-its-kind program, First Interstate Bank of California has hired a nationally recognized architect to oversee a design-build contest to create an aesthetically pleasing, $10 million to $14 million low-income housing development in South Central Los Angeles.

First Interstate has secured a 75,000-square-foot site at the corner of 80th Street and Vermont Avenue to build the development, which is to include about 130 units of affordable housing, said Charles Cline, manager of the real estate development division for the Los Angeles-based bank. The project may also include retail shops, such as a market, and a community center, he said.

This week the bank will be sending out information about the contest to 15,000 architects around the state inviting them to participate, Cline said. The competition is open to design architects who team with construction contractors and either for-profit or not-for-profit affordable housing development corporations.

A jury of South Central L.A. community leaders and building experts will pick a winning team and First Interstate will provide a $10 million to $14 million construction loan for the project, as well as long-term financing for the team to buy the property, Cline said.

Construction on the project is expected to begin in late 1994. First Interstate has hired Portland, Ore.-based architect Donald Stastny, who has gained national recognition for supervising competitions to build the Walt Disney Concert Hall in downtown L.A. and the Beverly Hills Civic Center, to supervise the project.

"It is an honor for me to work on this project -- not only to be selected by First Interstate, but to work on a project for South Central Los Angeles," Stastny said. "I believe that the project that comes out of this will become a national model, both from a process and a product point of view."

"I think it is absolutely amazing that a private institution has both the civic foresight and commitment to try to deliver housing to South Central," Stastny said. "For some reason, First Interstate executives up to the highest level want to create a process by which the delivery of housing can be made quicker and with less red tape."

Cline said First Interstate officials have already been in contact with officials from the City of Los Angeles, including representatives from Mayor Richard Riordan's office to work towards "streamlining" the permitting process for the project.

The jury which will pick the winning design for the project includes Councilman Mark Ridley-Thomas, who represents the district where the project is located. Ridley-Thomas, a critic of the lack of investment by banks in South Central L.A., said of the project, "South Central certainly does need this (project) and more of the same."

He said he has talked to residents in the area and many are excited about it. "I think what is being done here is commendable," he said. "The competition being statewide will give us a high-quality development and the community deserves no less."

Ultimately, a developer, and not First Interstate, will own the project, Cline said. He added that he does not expect problems in finding building teams willing to invest in the project. The jury will ultimately pick the developer, Cline noted.

"We wanted to do something more than our typical role of just lending money for affordable housing," Cline said. The design contest and the hiring of architect Stastny to run the project will create interest from "artists and designers" across the state.

"Aesthetically pleasing housing shouldn't cost more than any other affordable housing project," Cline said. Unfortunately, in other affordable housing projects, developers have cut costs by using cheap materials and not paying attention to design, Cline said.

Cline said the development is part of a commitment the bank announced last March to make $2 billion in low-income home, business and community loans in the next 10 years. That commitment was made after the bank negotiated with the San Francisco-based Greenlining Coalition, a politically powerful group which has received commitments from several major California banks to lend in minority and low-income communities in the last few years.

Robert Gnaizda, general counsel of the Greenlining Coalition, applauded the project. "It's a tremendously wise investment. It will create a kind of community pride that will result in reduced security costs and reduced maintenance costs and will give intangible value to people who need pride and want to be proud of where they live," he said.