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CC Resolution No. 9899RESOLUTION NO. 98~ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CUPERTINO ESTABLISHING A HOUSING ASSISTANCE PROGRAM FOR DEPARTMENT HEADS WHEREAS, the recruitment and hiring of top quality depamnent heads is essential to the efficient operation of the City of Cupertino; and WHEREAS, the cost of housing, the relative unavailability of new housing, and current housing financing conditions in the San Francisco Bay Area, and particularly the City of Cupertino, tend to act as a disincentive to persons relocating to this area, and therefore, as an obstacle to the recruitment and hiring of such top quality personnel; and WHEREAS, said conditions act not only as an obstacle to the recruitment and hiring of such personnel, but also in the event of the hiring of such personnel tend to dis- courage such persons fi.om residing within the City of Cupertino; and WHEREAS, the City Council believe and appreciates the fact that the interests of the City of Cupertino would best be served by encouraging department heads appointed by the City Manager to live within the Cupertino corporate limits to ensure their ready availability and familiarity with the community; and WHEREAS, the City regularly invests its funds in a variety of financial securities at varying earning rates, some of which are substantially below current mortgage rates; and WHEREAS, a portion ofhhese reserves may be utilized to accomplish the intent of the City Council to promote the recruitment and hiring of the best available personnel to fill department head positions and to encourage such personnel to reside within the boundaries of the City of Cupertino, while the City still produces substantially equivalent investment income; and WHEREAS, in order to promote said objectives the City Council desires to insti- tute a policy under which the City, in appropriate cases, may provide financing assistance to newly appointed department heads for the purpose of assisting such persons to purchase a residence within the City of Cupertino; and NOw, THEREFORE, THE CITY COUNCIL OF THE CITY OF CUPERTINO RESOLVES AS FOLLOWS: SECTION 1. The City Council finds that the recruitment and hiring ofpersounel to fill department head positions is of key importance to the functioning of the City government, that it is in the interest of the City to encourage department heads to live within the corporate boundaries of the City of Cupertino, that the provision of housing assistance may, in certain cases, enhance the ability of the City to accomplish the afore- mentioned purposes, and that such assistance can be provided without significantly affecting the financial status of the City. SECTION 2. The City Council hereby declares that it shall be the policy of the City, in appropriate cases, where necessary to secure the services of such persons, and to assist newly appointed department heads to reside within the City of Cupertino by making available, as an additional benefit of employment, a secured loan of City funds to acquire local housing. The need for such assistance shall be reviewed on an individual basis and shall not be deemed available as a matter of right to such newly appointed employees. In addition, the terms of each such loan shall be negotiated based upon the cimumstances surrounding the appointment of each such employee, provided that the terms of any such loan shall not be inconsistent with the provisions of this resolution. SECTION 3. Said loans, if made, shall be made available only upon the following terms and conditions, and upon such other terms and conditions, not incon- sistent with the following, which may be deemed reasonable by the City: (a) Any such loan shall constitute a benefit of employment in consideration for the employee's services, to be evidenced by a separate written agreement entered into at or near the time of initial appointment. (b) Any such loan shall not exceed an amount which is equal to five times the employee's maximum base salary at the time of the loan. (c) Any such loan shall be available only upon residential property within the City of Cupertino which is, in fact, used as the principal residence of the employee. Any such loan shall be due and payable in full upon sale or transfer of the property by the employee or termination of the use of the property as the principal residence of the employee. If the employee terminates emplOyment with the City of Cupertino with fewer than five years of employment, any such loan shall be due and payable within 12 months of termination. If the employee terminates employment with the City of Cupertino with more than five years of employment, any such loan shall be due and payable within 24 months of termination. (d) Any such loan shall be secured to the satisfaction of the City Manager and evidenced by a promissory note secured by a Deed of Trust. (e) Any such loan shall provide for either a variable interest rate or a fixed interest rate. If the interest rate is fixed, the rate shall be the 1 lth District cost of funds prevailing prior to making of the loan. If the interest rate is variable, the initial interest rate shall be the 1 lth District cost of funds prevailing prior to making of the loan. The interest rate on variable interest rate loans shall be adjusted annually based upon changes in the 1 lth District cost of funds existing on the anniversary date of said loan; provided, however, that no adjusted rate shall vary from the initial interest rate by more than 4%. In no event shall any such loan, whether at fixed or variable interest rate, exceed 90% of the pur- chase price of said property, or be for a term exceeding 40 years. (f) If at any time during the term of the loan commercial or other financing becomes available at or below the interest rate then applicable to the City loan, the employee shall refinance and retire the City loan. (g) Such loans shall only be made from City funds which would be otherwise available and invested in financial securities with varying rates of return. (h) The employee may be permitted a 2% discount from the otherwise applicable interest rate for one period not exceeding five years. If such discount is permitted, the valueof the discount will be an addition to the loan's principle on an annual basis. When the loan is due and payable or when the employee elects to pay the loan through refinan- cing or otherwise, the value of the reduction shall be added to the loan's principle for each month since the last annual addition to'the loan's principle. Upon expiration of the five year interest discount period, the interest rate shall revert to that originally set forth in the note or the interest rate then prevailing under the program for fixed rate loans, which- ever is lower. (I) Whenever such loan is made the City shall pay or reimburse the employee for 50% of his or her closing costs as the purchaser of the residence as to which the loan is granted. NOW, THEREFORE, BE IT RESOLVED that the City Council hereby adopts the Housing Assistance Program described herein. PASSED AND ADOPTED at a regular City Council meeting of the City of Cupertino this 7th day of July, 1997, by the following vote: VOTE MEMBERS OF THE CITY COUNCIL AYES: Burnett, Chang, Dean, Sorensen, Mayor Bautista NOES: None ABSENT: None _ ABSTAIN: None APPROVED: ATTEST