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Resolution 2019-70RESOLUTION NO.2019-70 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF GILROY ADOPTING A POLICY FOR THE PROVISION OF HOUSING LOANS TO NEWLY APPOINTED CITY OFFICERS, DEPUTY CITY ADMINISTRATOR, DEPARTMENT HEADS AND/OR DEPARTMENT DIRECTORS WHEREAS, the recruitment and hiring of qualified high-level management employees is essential to the efficient operation of the government of the City of Gilroy ("City"); and WHEREAS, housing costs, the relative unavailability of new housing, and current housing financing conditions in the San Francisco Bay Area, and particularly in the City and adjacent cities, continue to be a significant disincentive to persons relocating to this area and an obstacle to the recruitment and hiring of qualified high-level management employees; and WHEREAS, these conditions are not only an obstacle to recruiting and hiring qualified high- level employees, but also tend to discourage those employees from living in the City; and WHEREAS, the City Council believes that the interests of the City would be best served by encouraging new City Council appointed officers, deputy city administrator and department heads and/or department directors to live inGilroy to ensure their ready availability and familiarity with the Community; and WHEREAS, the City regularly invests its funds in a variety of financial securities are varying earning rates, some of which may be below current mortgage rates; and WHEREAS, a portion of the City's reserves may be utilized to accomplish the intent of the City Council to promote the recruitment and hiring qualified high-level employees and to encourage those employees to live in the City of Gilroy and still produce equivalent investment income; and WHEREAS, the City Council desires to adopt a policy and guidelines to provide financing assistance in appropriate cases to newly appointed City Council officers, deputy city administrator, department heads and/or department directors to assist those employees in purchasing a residence within the City; and WHEREAS, in order to continue to promote the objectives described in this resolution, the City Council desires to create the Executive Recruitment Housing Program to provide housing assistance to accommodate changing market conditions and hiring needs; and that: NOW, THEREFORE BE IT RESOLVED, that the City Council of the City of Gilroy SECTION 1 The City Council finds that the recruitment and hiring of qualified high-level employees to fill the positions of newly appointed City Council officers, deputy city administrators, department heads and/or department directors (hereinafter "Employee or Employees")is of key importance to the RESOLUTION NO.2019-70 4836-9460-7530v2 JK04706083 0) functioning of the City government, that it is in the interest of the City to encourage such Employees to live within the City, that the provision of housing assistance may, in certain cases, enhance the ability to accomplish these purposes, and that housing assistance can be provided without significantly affecting the financial status of the City. SECTION 2 The City Council hereby declares that it is the policy of the City, in appropriate cases, to assist Employees to reside within the City by making available, as an additional benefit of employment, a secured loan of City funds to acquire local housing when necessary to secure the Employee's service. The need for housing assistance shall be reviewed on an individual basis and shall not be available as a matter of right to any newly appointed Employee. In addition, the terms of any loan offered pursuant to this policy shall be negotiated based upon the individual circumstances surrounding the appointment of each Employee, provided that the loan terms are consistent with the provisions of this resolution. SECTION 3 Loans made pursuant to this policy shall be available only upon the following terms and conditions, and any consistent terms and conditions deemed reasonable by the City: a) Eligible Positions. Only Employees after the adoption of this resolution are eligible for housing loans under this program. b) Employment Agreement Required. Loans shall be a benefit of employment in consideration for an Employee's services, documented in a separate written agreement entered into at or near the time of initial appointment. Employees offered housing loans must purchase housing within the first twelve (12) months of the employment start date or shall be ineligible to receive a housing loan under this program. Such loan agreement shall be reviewed by the City Attorney as to form and approved by the City Council. c) Loan Amount. Loans shall not exceed $800,000 as of October 1, 2019 and may be adjusted annually according to the San Francisco Area Consumer Price Index (CPI-U) as of October 1 of each subsequent year. d) General Loan Requirements. Loans offered pursuant to this program shall be available only under all of the following conditions: (i) The loan is solely for purchase of residential property within the City (ii) The new home shall be used as the principal residence of the Employee; (iii) Loans are conditioned on future performance of substantial service by the Employee and shall be due and payable in full upon sale or transfer of the property by the Employee and within six (6) 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. If the Employee should retire on disability or die during the period of the loan, the RESOLUTION NO. 2019-70 4836-9460-7530u2 JH104706083 3 loan shall be due and payable in full within six (6) months of the date of disability or death; (iv) Loans shall not be assignable or transferrable; and (v) At the time of purchase, the loan to appraised value of the residence should not exceed 80%. e) Tax Treatment of Loans. Employees are strongly encouraged to seek independent advice from their own tax professional regarding the tax implications regarding the loans issued pursuant to this policy. (f) Loan Security. Loans shall be secured to the satisfaction of the City Administrator, City Attorney, and Director of Finance and evidenced by a promissory note secured by a Deed of Trust. (g) Interest Rate. Loans shall have a fixed interest rate and shall be established in accordance with the rate of return of the California Local Agency Investment Fund (LAIF) administered by the California State Treasurer and will be based on the prevailing LAIF rate of return on the last valued date prior to making the loan. In no event shall any loan be for a term exceeding 30 years. (h) Refinance Requirements. If at any time during the term of a loan, commercial or other applicable financing becomes available at or below the interest rate applicable to the City loan, the employee shall refinance and retire the City loan. (i) Source of Loan Funding. Loans shall only be made from City funds which would otherwise be available and invested in financial securities with varying rates of return. SECTION 4. In hiring and appointing the Employee, the City Administrator is authorized to act in accordance with the policy described in this resolution as necessary to fulfill recruitment and hiring needs for those Employees. The City Administrator is authorized to determine in each case whether to offer housing assistance as an additional benefit of employment and the terms of any assistance provided. Any loan shall be consistent with the provisions of Section 3 of this resolution, however, the City Administrator may impose additional and/or more restrictive conditions than those in Sections 3. PASSED AND ADOPTED this 21St day of October, 2019 by the following roll call vote: AYES: COUNCILMEMBERS: TUCKER, and VELASCO NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: BRACCO, LEROE-MUNOZ, TOVAR, BLANKLEY, MARQUES NONE RESOLUTION NO. 2019-70 4836-9460-7530v2 JH104706083 APPROVED: 44-, Roland Velasco, Mayor ATTEST: Freels, RESOLUTION NO. 2019-70 4836-9460-7530v2 JH104706083 I, SHAWNA FREELS, City Clerk of the City of Gilroy, do hereby certify that the attached Resolution No. 2019-70 is an original resolution, or true and correct copy of a city Resolution, duly adopted by the Council of the City of Gilroy at a regular meeting of said held on Council held on the 21 st day of October, 2019, at which meeting a quorum was present. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Official Seal of the City of,Gilroy this 28"' day of October, 2019. SL Free s, City Clerk of the City of Gilroy (Seal)