Housing fund frozen

– In a city where home prices continue to soar, officials have a
plan that could help police, teachers and other public employees
afford to live where they work. The only thing holding back the
plan – pinning down whether or not it’s legal.
Gilroy – In a city where home prices continue to soar, officials have a plan that could help police, teachers and other public employees afford to live where they work. The only thing holding back the plan – pinning down whether or not it’s legal.

For nearly a year, the city has kept the lid on a five-year $1.47-million fund to provide direct home loans to public employees and teachers, as city attorneys sort out if such loans constitute preferential treatment under affordable housing laws.

“We’re getting a legal interpretation from city attorneys whether offering a program specifically for city employees or teachers is too exclusive,” said Marilyn Roaf, the city’s housing coordinator. “It’s one of the ways to research whether it’s representative enough. We’re just taking it slower than we could because we want to make sure it’s fair.”

The program represents one portion of the city’s Housing Trust Fund, a $3-million pool of money earmarked for constructing affordable housing, providing home-purchase loans for low- and middle-income people, conducting surveys of the homeless and other housing-related projects.

The Housing Trust Fund, created by City Council in 1997 upon the recommendation of a task force, is financed solely by revenues from its various loans.

While the other components of the program continue to operate, city attorneys put the brakes on the public-employee assistance portion last year.

The decision came after the city loaned $30,000 apiece to three teachers and one city employee in spring 2004, according to Roaf. She said the city hedged its bets by only giving assistance to people who would have qualified for low-income assistance regardless of their status as public employees.

The Housing Trust Fund has been in place for about eight years, but City Administrator Jay Baksa said the program has not idled for that long.

“We had to guarantee loans on a lot of affordable housing projects,” Baksa said of the initial uses of the Housing Trust Fund. “As those sold over the years, we got money back to use on more affordable housing. … We didn’t have this fund until we got [those] loans paid back to us.”

Firefighter Jim Buessing had not heard of the program, but immediately acknowledged the potential benefits.

He said that from a safety perspective, firefighters who live where they work develop a better understanding of the city’s layout – vital knowledge in emergency situations – and are able to respond to bigger incidents.

“This city and its public safety is heavily reliant on call-back in emergency situations,” Buessing said. “That would allow more fire personnel to be available. If we have a big fire and you need people to get back and help out, you’re only going to get those that live in the city.”

Currently, nearly half of the 34-man department live outside the city, according to Buessing. High home prices have forced a number of those to stretch the department’s 90-minute drive restriction to the limit, with a few firefighters living as far as Pleasanton and San Francisco.

The practical benefits of living and working in the same city also apply in the case of teachers, according to Suzanne Tobin, who manages South County Housing’s home-buyer program. She helped arrange home purchases for the three teachers and one city employee who received the home loans from the city last spring.

The program had 27 applicants, she said, but only those four public employees qualified for one of the 12 homes, Tobin said. All had to pay between $475,000 and $500,000 for the houses, located at the north endpoint of Church Street.

“We would have liked to have seen a lot more teachers or city employees to have gotten into the program,” Tobin said. “It would be nice to have teachers still in the community so kids can see them at church, at the grocery store, at the park – so that they become part of the fabric of the community.”

Few people question the benefits of having Gilroy’s employees live in the city they serve, but the prospect of lawsuits over discriminatory housing practices is a specter the city does not want to face twice.

In November, the city emerged victorious from a lawsuit accusing officials of failing to craft long-term growth plans that include affordable housing options for low-income people.

A “very-low income” family of four in Gilroy is one with an annual income of $53,050, while a “low-income” family is one that earns up to $84,900, according to the complaint against the city. It stated that 32 percent of Gilroy residents fall into the lowest income category, and three-quarters of those pay more than they can afford for rent.

Officials have repeatedly acknowledged the shortage of affordable housing and have discussed a number of ways to motivate such development, including the creation of zoning regulations that force developers to make some percentage of the units in their projects affordable.

For the moment, it appears one of the city’s newest tools to bridge the housing shortage will remain on the shelf.

“Before we do anything else in this area,” Baksa said, “we want to make sure we’re doing everything by the book.”

Officials expect to have a final determination on the legality of home loans for public employees within a month.

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