By Cassandra Reinhart, Special to the Independent
The Laguna Beach City Council eliminated a housing assistance program that helped the city’s top brass establish residences in the city.
Tuesday, elected officials voted unanimously to end the 17-year Essential Employee Housing Assistance Program, which opponents called a waste of taxpayer dollars and fiscally irresponsible.
“This is too long a commitment, it binds the city, and it puts too many dollars at risk,” resident Michael Morris told the council.
Established in 2000, the program helped the city’s top essential response staff secure housing in town through loan assistance and equity sharing. Those who have taken advantage of the program include the City Manager John Pietig, retiring Fire Chief Jeff LaTendresse, and most recently Public Works Director Shohreh Dupuis.
With average home prices in Laguna Beach now costing $2 million, the program’s goal was to make it possible for crisis employees and essential first responders to live in town to be ready to deploy should an emergency occur.
“Anyone making over $200,000 can afford to live here,” said Bluebird Canyon resident George Weiss, a reference to the pay levels of the city’s top administrators. “They don’t necessarily need a house on Mystic Hills or anywhere else, but they can afford to live here.”
Here is how the program worked: the city paid for a portion (up to half) of a home’s purchase price and an employee made a 10% to 20% down payment. The city would then loan the employee the balance of the purchase price at an interest rate a half percent above the city’s portfolio: no less than .02% and no more than .05%.
The staff report outlined the city’s escalating financial commitment to the program, now requiring the city to front up to 90% of a home’s asking price or up to $1.8 million. That compared to the city’s contribution of $625,000 towards the asking price of a home in 2000 when the program started. If all property appreciates, as it has thus far, most city costs are offset. Typically the program costs the city $8,200 per participant per year, the staff report says.
Options weighed by the council Tuesday included limiting the program further by only offering it to the highest tier employees, continuing it on an ad-hoc basis, or ending the program altogether.
“I think the economic circumstances in terms of housing costs and compensation have changed dramatically from when this was passed in 2000,” said council member Bob Whalen. “It is used sparingly and we have demonstrated in the last few years that we can hire excellent staff; I think at this time we could probably do without it.”
Laguna Beach City Manager John Pietig, who has participated in the program since his 2001 hiring, spoke briefly on its merits.
“In 2001, I was 35, I had two kids going into preschool and my wife was staying home to take care of the kids,” Pietig said. “That’s a little different than my situation now and my salary wasn’t that at the time. There are benefits to having people in town.”
Several residents voiced opposition to the assistance program, calling it an unnecessary perk and a waste of taxpayer dollars.
“Those folks do not need public assisted housing; they simply don’t need to have housing provided by taxpayers,” said Morris, who also presented the council salary statistics from Transparent California on the wages of the city’s top employees in the program. “Essential employees can be accommodated by other means.”
“I see the program does maybe pay for itself in the long-term, but it is a lot of money out for the city in the meantime. It’s another perk I don’t think is necessary that it has been proven to recruit folks,” echoed George Weiss.
Weiss cited a recent change in the fire department’s scheduling, adding command staff to the 24/7 rotation on duty at fire stations, as a good reason to eliminate the program since now supervisors are always in town to respond to emergencies.
“I would argue the fire department is probably the most critical essential employee,” Weiss said.
Mayor Pro Tem Kelly Boyd agreed, pointing out that Police Chief Laura Farinella does not live in Laguna.
“I really don’t think it is necessary to be involved in this program any longer. Our police department chief is able to live outside the community, and get here in a short period of time, plus she has a staff on duty if she is not here,” Boyd said.
With a unanimous vote, the program was discontinued. The terms of deals with three current employees will continue for as long as they live in the home and work for the city, but no longer than two years following separation or up to 10 years following retirement. The agreement struck with the public works director differs and requires the home be sold after 10 years.
“The compensation levels really are generally high enough that if you want to afford to live in Laguna you can if you want to,” said council member Steve Dicterow.