Rancho P.V. to Sell New City Manager Old One’s House

The Rancho Palos Verdes City Council Tuesday agreed to sell to City Manager Paul Bussey for $510,000 the home it bought this year from the former city manager for $509,250.

Under the agreement, Bussey will put $260,000 down, and although the city will defer payments on the $250,000 balance, it will share in any appreciation when the property is sold.

The city bought the 2,400-square-foot house from former City Manager Dennis McDuffie as part of a settlement package when he left his post Jan. 31.

The council members said the city sought the deal because they wanted their new city manager to be a resident of Rancho Palos Verdes. Bussey moved to Rancho Palos Verdes from La Palma when he assumed the post of city manager in June.

After the Council meeting, Mayor Mel Hughes explained the decision by asking, “How do you entice a high-quality person to come into the community when housing costs are so high?”

A RE/MAX Realty broker said the sale price was “about right, maybe a touch low” for the area but within the range, in light of a soft real estate market.

An appraisal done in March, 1990, for the city found the 27-year-old house worth $665,000, said Mark Rohloff, assistant city manager and finance officer. But Rohloff criticized the appraisal.

Councilman Robert Ryan praised Bussey for agreeing to purchase the house, which Ryan said was in poor condition. “I think buying that house (from McDuffie) was a disaster for the city, but I think Mr. Bussey is doing the city a big favor by buying it. He’s buying the city out of a financial mess,” he said.

Ryan said in a phone interview that he thought the house was worth from the low to mid $400,000s.

“It’s a 27-year-old house that needs to be modernized,” said Councilwoman Jacki Bacharach.

McDuffie chose not to extend his contract with the city. His departure was preceded by months of friction between himself and Ryan and Councilman John McTaggart.

According to the agreement, the city will hold a $250,000 deed of trust, which Bussey will have to repay in 10 years or when he sells the house. The interest rate will be keyed to the appreciation of the property. Interest and principal payments will be deferred for 10 years or until the house is sold.

Bussey is seeking a loan to finance a portion of the down payment due the city. A new appraisal probably will be done for the bank issuing a second deed of trust.

Under the terms of the agreement with the city, Bussey can put up to $75,000 in improvements into the house. The city capped the amount to protect its investment from being improved beyond what the market will bear. “We didn’t want him gold-leafing the walls,” Hughes said.

“Even though the market is slow here, it won’t be forever,” Rohloff said.

“It’s a good deal for the city.”