LAGUNA BEACH — A housing assistance program that helped some of the city’s top employees will be cut.
The City Council on Tuesday, July 11, voted unanimously to end a program that provided financial help through equity sharing and loan assistance to encourage high-ranking city staff to live in town. The idea was that if the employees live in town, they can respond quickly in emergencies and also get a better sense of the community.
The equity sharing allowed the city to pay a portion of the home purchase price in exchange for an ownership interest, and the loan assisted employees in the purchase of their equity interest in the home.
The program was put in place in 2000. Since then, six city employees were approved for the programs, including City Manager John Pietig; Fire Chief Jeff LaTendresse, who will retire in August; Fire Division Chief Tom Christopher; Public Works Director Shohreh Dupuis; former Water Quality Supervisor Graham Wright and former Fire Chief Mike Macey.
Since 2008, the employee loans have become a necessary component of the program, because lenders will not offer employees conventional mortgages because of the dual equity ownership.
“I don’t think it’s necessary for us to be involved in this program,” said Mayor pro tem Kelly Boyd. “The chief of police lives out of town and can get here into town in an emergency. With the recent changes made with the division chiefs (in the fire department) with one always being in town, the fire chief can get here, if he’s out of town.”
The council took up the item Tuesday to consider options to the program and to decide whether to keep it going. Among their options: limiting the opportunity to only select high-level employees, continuing the program on a case-by-case basis, setting contribution limits or ending the program.
The discussion was brief, with all five agreeing quickly to suspend it.
“I think it’s a good idea for the city manager to live in town,” said Councilman Rob Zur Schmiede. “That can be handled ad hoc. I don’t think we need the programs. Times are different in 2017 than in 2000.”
With real estate prices rising in Laguna Beach and the median home price at $2 million, well above the county average of $775,000, the program for a new employee for a house that cost $2 million now would require the city to provide 90 percent of funding — up to $1.8 million — compared to $625,000 when the program began, according to a city staff report. The city pays 50 percent for equity sharing and 40 percent of the price as a loan.
Employees in the program also cannot access equity in their homes and are forced to sell their house after retiring from the city.
Several residents spoke opposing the program, most calling it a waste of taxpayer money.
“I look at the salaries for the top employees,” said George Weiss. “They’re all over $200,000. Anybody making over $200,000 can afford to live here and own property like a condominium or otherwise. If there’s an emergency, you can fly them in on a helicopter if necessary.”
Another resident, Jennifer Zeiter, called the report by city staff “skewed” because there was no information listed on whether other cities in Orange County have such a program in place. City staff said other municipalities that have similar programs are Mountain View and Palo Alto in Northern California’s Silicon Valley.
“Newport Beach put this to a vote, and they decided it’s an unnecessary perk,” she said. “Why is city hall having difficulty recruiting people? It has to do with management and the toxic environment. I think we need to look at cleaning up house in our city management.”
Resident Michael Morris gave a PowerPoint presentation with information from Transparent California.
“These folks don’t need public housing paid by the taxpayers,” he said. “If the benefits are open to one, it opens up demand for others.”