Low-interest 30-year loans through the Small Business Administration are now available for residents and merchants affected by the December 2010 flood, which caused an estimated $12 million in damages to Laguna Beach homes and businesses.
“Wow, if there’s some silver lining to losing everything, my home and my studio, this would be it,” said sculptor Louis Longi, who incurred $95,000-worth of estimated structural damage to his home-studio in Laguna Canyon.
Longi, who has plans to build a $6-million artists’ live-work complex, hopes to qualify for the highest amount the SBA will lend to damaged businesses, $2 million at a 4-percent annual interest rate.
“There’s also an opportunity to get additional funding for businesses that have been wiped out as long as you’re mitigating any issues of flooding,” he said. “I’ve lost my entire business.” Longi’s plans put his artists’ live-work complex on stilts, out of flood-waters’ way. “I never have to worry about this again,” he said, “even if they don’t do their job upstream. It could be 15 years before they’re held to a higher standard.”
An SBA official will discuss disaster assistance at 10 a.m. Saturday, Feb. 12, in City Council Chambers. The SBA set up an office this past Thursday at the Laguna Beach Chamber of Commerce, 357 Glenneyre St., and will be available from 9 a.m. to 5:30 p.m. Thursdays and Fridays every week as needed to answer questions and take loan applications.
According to Mark Randle, SBA public information officer, the loans can only be used for in-kind reconstruction and not for new development or expansion. Loans, he said, will not be approved for bigger and better digs that would increase property value.
“These are federal loans that come directly from the U.S. Treasury,” Randle explained. “We have a stewardship to the disaster victim as well as the taxpayer because it’s taxpayers’ funds.”
The money can, however, be used to rebuild away from the floodplain, he said, or make improvements to prevent damage from a similar future natural disaster.
Because storm damage was not deemed extensive enough to warrant a Presidential Disaster Declaration, denied on Jan. 27, the SBA was able to declare the destructive deluge a second-level federal disaster and offer low-interest loans. The loans will be available to homeowners, renters and businesses big and small as well as private, nonprofit organizations.
So far, 104 businesses and residences in the canyon have incurred damages from the winter storm, according to Ann Quilter, disaster relief coordinator for the Laguna Relief and Resource Center, which has accepted $150,000 to date in flood relief donations from benefits as well as private benefactors.
“This is Laguna Beach at its finest,” commented her brother-in-law Chris Quilter, who co-wrote the musical spoof “Maimed,” produced by No Square Theatre, which will add another $15,000 to relief efforts raised from two benefit shows last weekend.
Disaster loans up to $200,000 are available to homeowners to repair or replace damaged or destroyed real estate with another $40,000 maximum for both homeowners and renters to repair or replace damaged or destroyed personal property, including vehicles. Annual interest rates for residential loans can be as low as 2.25 percent for 30 years.
Businesses of any size and private, nonprofit organizations may be able to borrow up to $2 million to repair or replace damaged or destroyed property, machinery and equipment, inventory and other business assets with interest rates as low as 3 percent for nonprofits and 4 to 8 percent for businesses. The SBA also offers Economic Injury Disaster Loans to replenish working capital diminished by the disaster regardless of property damage. The SBA loans are based on each applicant’s financial condition.
“I’m retired but I’m certainly not poor, but I’ve been hit horribly,” said Carol Urie, a retired printing broker who owns three rental houses damaged by the December cloudburst in the canyon. “The flood came down and just hit us at 40 miles an hour going through the houses. The water hit above my tenants’ kitchen counters.”
Urie’s tenants climbed onto the roof and up a tree to avoid rushing waters and were rescued by a neighbor. She faces an estimated $150,000 in uninsured damages, but sees some light at the bottom of the debris with the SBA loans.
“For me, being old, I’ll take anything I can get,” she said. “There is an advantage if they would give me something a bank wouldn’t give me because I’m on retirement income.” Urie would like to refinance the 5-percent mortgage she already has on the property, which is costing her $5,000 a month in lost rental income, for a lower-interest SBA loan. She’s also hopeful about an SBA loan to mitigate future flood damage. “I can possibly put up a storm wall,” she said.
“It’s really a case-by-case situation,” said Randle, who said loans cannot be used for expansion or upgrades. “It has to be repaired to the same standards prior to the disaster.”
The filing deadline to return applications for property damage is April 4. The deadline to return economic injury applications is Nov. 2.