Gilroy execs to get home loans

City to give 30-year loans to attract candidates

The City of Gilroy, in an attempt to attract candidates for vacant top administrator positions, will finance home purchases for a select few.

The Gilroy City Council approved the program Oct. 21 in a 5-2 vote, but not without some strong objections from councilmembers Marie Blankley and Carol Marques, who cast dissenting votes.

Gilroy is currently recruiting for a fire chief and a newly created deputy city administrator position. It recently hired Karen Garner from Sacramento County as the new community development director after a months-long search.

But with Santa Clara County’s average median home price estimated at more than $1.1 million, trying to recruit candidates who may live in less expensive areas is a hard sell, according to Finance Director Jimmy Forbis.

“We had some good candidates that the city was really excited about,” he said. “But when they considered changing employment, they just came to the point where they couldn’t afford to move here.”

According to Forbis, Bay Area cities such as Morgan Hill, Hayward, Stockton, Sunnyvale and Santa Clara have created programs to assist with recruiting executive-level positions by offering housing down payments or mortgage assistance. 

Morgan Hill, for instance, provided a $1.3 million housing loan to encourage its new city manager to relocate within city limits.

“This is becoming more and more a common approach as a benefit to recruit candidates,” Forbis said.

The original proposal for the council included a 30-year loan, capped at $800,000, for down payment assistance or purchase of a home in Gilroy city limits, with a 2.56 percent interest rate. Each individual loan would go to the city council for its approval.

Should an employee sell their home, they are required to pay the remainder of the loan upon the sale.

The funds would be taken from the city’s reserves that are invested in a Local Agency Investment Fund.

“Not only would we loan the money out, we will show it as an asset coming back in,” Forbis said. “It would be net neutral to the city’s balance sheet.”

Council reacts

While the housing loan program was listed on the council’s consent agenda, where all items are approved in one vote with no discussion, Blankley pulled it off for discussion, saying she was not aware of such a proposal until it showed up on Oct. 21.

“I was surprised to find it in the consent calendar,” she said. “To my knowledge, we have not discussed these terms at all.”

With councilmembers Cat Tucker, Dion Bracco, Peter Leroe-Muñoz and Fred Tovar speaking in favor of the proposal, Blankley said she was disappointed in their responses.

“I hear people talking like it is OK because we are going to review it when it comes back,” she said. “But what you have before you is a resolution. That means the terms that are in that resolution have to be adhered to. You may look at individual loans when they come back, but when they meet the criteria in the resolution, then you are not going to be able to deny it. You are putting the taxpayers’ money at risk.”

Blankley suggested modifying the terms to limit the loan at up to 50 percent the value of the home. Employees who are terminated by the city would have 12 months to repay the loan, which Blankley recommended changing to six months.

Mayor Roland Velasco made a motion to cap the loan limit at 80 percent of the value of a home, with a six-month repayment term should the employee leave the position.

He disputed the notion that the item was never brought to the council prior to Oct. 21, saying it was discussed in a previous closed session.

“Maybe some of you during closed session had checked out or were Facebooking or doing something else,” Velasco said, which prompted jeers from the audience and Blankley to exclaim, “Not cool.”

Velasco then turned to Blankley and said, “But it was OK for you to say what you did regarding the council to impugn our judgment?”

City administrator Gabriel Gonzalez said having high-level job vacancies makes it difficult to implement programs approved by the council in a timely manner.

“You need experienced staff; you need someone who can hit the ground running,” he said.

Ron Kirkish of Gilroy said he has spoken to other residents about the proposal.

“This is not something they want,” he said. “This is not a good use of the taxpayers’ funds. You are not doing the job you were elected to do.”

Tovar said the program has safeguards in place to not put the city in a “vulnerable position.”

“My concern is the inability to attract quality people,” he said. “I don’t want to attract somebody who is third, fourth or fifth down in the line. I think it’s going to help us attract people that we want.”

If candidates truly want to work in Gilroy, they will find a way to make it work without the loan program, Marques said.

“The City of Gilroy is not a bank,” she said. “Having this money come out of our reserves when we have so many projects that need to be done really bothers me because that money is tied up for 30 years.”

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