REPORT TO COUNCIL
SUBJECT
Title
Adopt a Resolution and Approve an Amendment to Housing Assistance Agreement for City Manager Kent Steffens Extending the Home Loan Repayment Term
Report
BACKGROUND
The City has a long-standing Executive Mortgage Assistance Program currently available to Council appointed officers, department directors, Assistant City Manager, and Deputy City Manager. The program was established in 1981 by Council Resolution Number 256-81. The program was amended in 1988, 1989, 1996, 2015, and 2019 by Council Resolution Numbers 226-88, 125-89, 160-96, 712-15, and 933-19.
Given the high cost of housing in Sunnyvale, the program was enacted to enhance the City’s ability to recruit and retain top quality executives, as well as encourage executives to live within Sunnyvale City limits.
The Program offers a loan for purchase of residential property within the City of Sunnyvale for the employee’s principal place of residence. The loans are conditioned on future performance of substantial service by the employee and are due and the program requires the employee to repay the loan in full upon sale or transfer of the property, within six months of either the termination for any reason of the employee's employment with the City or termination of the use of the property as the principal residence of the employee, whichever occurs first, or (if applicable) within one year of the date of employee’s death or disability retirement.
This Report to Council has been prepared as previously directed by Council to approve an extension of the repayment terms in the existing home loan purchase agreement for City Manager Kent Steffens.
EXISTING POLICY
Council Policy 7.3.1 Legislative Management - Goals and Policies, Goal 7.3D: Maintain a quality work force, consistent with state and federal laws, City Charter, and adopted policies to assure that City services are provided in an effective, efficient, and high quality manner.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” with the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(4) in that is a fiscal activity that does not involve any commitment to any specific project which may result in a potential significant impact on the environment.
DISCUSSION
City Manager Kent Steffens was hired by the City of Sunnyvale on August 1, 2011. City Manager Steffens purchased a home in 2012 under the current terms of the Executive Mortgage Assistance Program. Consistent with the terms of the Program, Steffens’ housing assistance agreement currently requires him repay his home loan within six months of separation.
The City Council reviewed and approved increases to the City Manager’s compensation in December 2023 following his annual performance evaluation. As part of those negotiations, Steffens requested an extension to the repayment terms for his existing home loan as a potential longevity incentive. At the December 12, 2023, City Council meeting, City Council approved amendments to City Manager Kent Steffens’ Employment Agreement for compensation, including a provision to amend Steffens’ Housing Assistance Agreement. To implement an extension to the repayment provisions in that agreement, the Council needs to approve an exception to the existing Mortgage Assistance Program, which requires a six month repayment term, as well as an amendment to the Housing Assistance Agreement with Steffens, which contains the same six-month repayment requirements.
The proposed extension is that Steffens’ loan repayment would be extended from six (6) months to the number of months equal to the number of his full years of service with the City, based on his original hire date of August 1, 2011. For example:
|
Separation Date Between: |
Repayment Date: |
|
8/1/2023- 7/31/2024 |
12 months from separation |
|
8/1/2024- 7/31/2025 |
13 months from separation |
|
8/1/2025- 7/31/2026 |
14 months from separation |
|
8/1/2026- 7/31/2027 |
15 months from separation |
Consistent with existing policy, repayment within six months will still be required if he ceases to use the home as his primary residence, or within one year in the event of death or disability retirement.
Finance Department staff manually tracks payments and collections for separated employees who had a home loan agreement with the City. Due to the nature of this tracking, for administrative ease Council may wish to consider placing a maximum number of months for repayment to be made.
FISCAL IMPACT
The loan is secured by the purchased home, and interest is paid on the mortgage. Given the mortgage rate is below the market rate that the City can obtain on investments, there is a small fiscal impact from extending the repayment of the agreement. However, the budget does not include an assumption on the timing of repayment, therefore there is no budgetary impact from granting a loan modification.
PUBLIC CONTACT
Public contact was made by posting the Council meeting agenda on the City's official-notice bulletin board at City Hall, at the Sunnyvale Public Library and in the Department of Public Safety Lobby. In addition, the agenda and this report are available at the NOVA Workforce Services reception desk located on the first floor of City Hall at 456 W. Olive Avenue (during normal business hours), and on the City's website.
ALTERNATIVES
1. Adopt a Resolution and approve an Amendment to Housing Assistance Agreement for City Manager Kent Steffens extending the home loan repayment term from six (6) months to the number of months equal to the number of his full years of service.
2. Adopt a Resolution and approve an Amendment to Housing Assistance Agreement for City Manager Kent Steffens extending the home loan repayment term from six (6) months to the number of months equal to the number of his full years of service, not to exceed a maximum number of months determined by Council.
3. Provide alternative direction to staff.
STAFF RECOMMENDATION
Recommendation
Staff makes no recommendation. This report is developed to facilitate conversation for the public hearing and action by the City Council.
staff
Prepared by: Tina Murphy, Director, Human Resources
Reviewed by: Tim Kirby, Director, Department of Finance
Approved by: Sarah Johnson-Rios, Assistant City Manager
ATTACHMENTS
1. Resolution No. 712-15
2. Draft Resolution Approving Extension of Repayment Terms to the Home Loan Purchase Agreement for City Manager Kent Steffens
3. Draft Amendment to Housing Assistance Agreement