UCLA officials predict houses will sell
University project hopes to avoid fate of Westchester Bluffs
By Lia Ramsey
Daily Bruin Contributor
With sales prospects buoyed by a favorable court ruling and an
improving real estate market, UCLA officials are confident about
the financial future of their newest housing endeavor.
The student family housing project,which is scheduled for
completion in 1997, is located near the campus, at Mar Vista. The
goal of the reconstruction is to replace 647 units built in the
1940s and 1950s with 912 new apartments. The Sawtelle/ Sepulveda
site, as it is known, will also include a new administrative and
community center and an expanded child care center.
But based on new, optimistic economic reports, UCLA officials
predicted that this university housing project would fare better
than earlier projects.
Westchester Bluffs, for example, attempted to lure professors
and senior faculty members who could otherwise be turned off by the
high cost of living in the Los Angeles area. The houses at
Westchester Bluffs are luxurious, three- to five-bedroom homes that
range between $400,000 and $600,000 – prices that were estimated to
be 30 percent below market value.
In 1987, a housing survey suggested that 60 percent of faculty
recruits would buy the houses, and that the prices of the houses
would be within reach of 129 new professors over 10 years.
However, this ambitious plan was conceived during the 1980s real
estate boom, and the estimates fell through when the recession
hit.
By the time the development was completed in the fall of 1993,
housing prices had already taken a 30 percent nosedive. When the
houses went up for sale there very few buyers making bids.
When the university became desperate to sell the homes, they
lowered the original prices $35,000 and added landscaping and
flooring upgrades. But even after the upgrades, only seven houses
were sold, said Brad Erickson, UCLA’s associate director of real
estate.
The situation was further complicated when the loan UCLA used to
build the Bluffs became due in June 1994.
Erickson said that the low buying rate in the Bluffs was, "not
high enough for UCLA to repay the First Interstate Bank
construction loan and recover all project costs."
Chancellor Charles Young was forced to open up sales of the
remaining homes to the public to avoid debt.
According to the UCLA department of business education in real
estate, all of the houses have been sold now, except for one which
has been leased, and all of the university’s debts have been payed
off.
In the end, only 20 percent of the houses actually ended up
being sold to UCLA staff or faculty members. But university
officials believe their latest project will be much more
successful.
The most recent quarterly report by UCLA’s Business Forecasting
Project predicted an upturn in real estate during 1996.
"We think the potential for the real estate sector is strong,"
said Tom Lieser, associate director of the project.
He said both construction and prices are likely to surge, which
should have a positive effect on UCLA’s housing projects.
Lieser explained that the increases are, "not big compared with
past history, but it looks good compared to where we’ve just
been."
Also encouraging to UCLA officials is a recent state Supreme
Court ruling, which approved UCLA’s practice of paying construction
employees nonunion wages on certain building contracts.
Justice Reuben Ortega agreed with the university that such a
requirement was against the "core educational function" of the
university because it could make it impossible for some students to
attend UCLA.
"Ensuring access to qualified students who otherwise could not
attend, and securing the services of outstanding faculty and staff
… is at the heart of UCLA’s educational function," Ortega
said.
If UCLA had not been ruled exempt from the prevailing-wage law,
the wages could have driven up the cost of both the family housing
units and the Bluffs 15 to 30 percent, according the UCLA
department of real estate.
Such high prices would defeat the purpose of affordable
university housing.
… UCLA officials predicted that this … housing project would
fare better than earlier projects.
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