City housing agreements revised

Revisions to housing assistance agreements with key city personnel — whose duties can be handled more effectively if they live in the city — were approved by the City Council at the Dec. 7 meeting.

The agreements cover the ownership of homes shared by the employees and the city. They differ as the format for the ownership program has evolved during the past 10 years. However, each of agreements has benefitted the city, according to retired City Manager Ken Frank, ensuring the availability of adequate emergency response personnel. Frank also noted that even with the depressed housing market the city has profited as most of the homes have appreciated substantially.

Revisions were made to the agreements with City Manager John Pietig, Deputy Fire Chief Jeff LaTendresse and Sewer Services Supervisor Graham Wright.

With Pietig’s promotion to city manager, the most important revision to his contract is assigning the administration of the agreement to the city attorney, rather that the city manager, according to Frank.

Other changes include allowing Pietig to deduct maintenance expenses from income for the purpose of the housing assistance payment; providing an incentive for Pietig to buy out the city’s interest when he leaves city employment in order to reduce the city’s cost and providing that a loan to ratio value of 70% or less does not impact the city’s security interests, which may help in refinancing.

Pietig’s wife, Peggy, was added as a party to the agreement.

Modifications to the LaTendresse agreement include removing the potential for a significant reduction in city equity if LaTendresse makes major capital improvements, which will require city manager approval.

Changes also reduce the annual payments to LaTendresse by reducing income tax liability and the city’s share of insurance and property tax payments; ensuring the city will receive the full amount of its share of proceeds from the sale of the property, and clarifying that LaTendresse must pay any encumbrance from his share of the proceeds.

The interest rate of the city loan was reduced, changing the maximum from 8% to 5% and the minimum from 5% to 2%, with the actual rate remaining at .5% above the city’s investment returns.

LaTendresse’s ownership interest was increased to reflect extensive capital improvements made to the property in the last 10 years.

He also will be allowed to buy a different property and transfer the city loans and ownership interest to the new property.

Similar changes were approved for the Wright contract:

•A reduction in his annual payments by reducing income tax liability and the city’s share of insurance and property tax payments;

•An increase in ownership interest to reflect capital improvements made to date; and

•The interest rate of the city loan was reduced, changing the maximum from 8% to 5% and the minimum from 5% to 2%, with the actual rate remaining at .5% above the city’s investment returns.

No revisions were made to the contracts with retired Fire Chief Mike Macey and Battalion Chief Tom Christopher.

All of the contracts include buy-out clauses for the city and the employees and terms for the sale of the property if employees leave city employment for any reason, cease living there as their primary residence, retire or die.

Macey, who retired in March, has 10 years to decide to buy out the city or sell the house.

Owners who leave city employment have 24 months to make their decision.

Houses will be put on the market three months after employees no longer make the jointly owned homes their principal residence.

The revised contacts are available for review on the city website https://www.lagunabeachcity.net. Click on Dec. 7 agenda, item 21.