CC Resolution No. 99-070RESOLUTION NO. 99-070
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CUPERTINO AMENDING THE HOUSING ASSISTANCE
PROGRAM FOR DEPARTMENT HEADS
WHEREAS, the recruitment and hiring of top quality department 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, hiring, and retention of such top quality personnel; and
WHEREAS, said conditions act not only as an obstacle to the recruitment, hiring, and retention
of such personnel, but also in the event of the hiring of such personnel tend to discourage such
persons from residing within the City of Cupertino; and
WHEREAS, the City Council believe and appreciates the fact that the interest 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 of these reserves may be utilized to accomplish the intent of the
City Council to promote the recruitment, hiring, and retention 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 institute a
policy under which the City, in appropriate cases, may provide financing assistance to
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, hiring, and retention of
personnel 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 aforementioned purposes, and that
such assistance can be provided without significantly affecting the financial status of the City.
Resolution No. 99- Pltge 2
SECTION 2. The City Council hereby declares that it shall be the policy of the City, in
appropriate cases, where necessary to secure or retain the services of such persons, and to assist
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 by the City Manager and shall not be deemed
available as a matter of right to such department head.
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 inconsistent 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.
(b)
Any such loan shall not exceed an amount that 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 City
Attorney 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 11th District cost of funds
prevailing immediately prior to making of the loan. If the interest rate is variable,
the initial interest rate shall be the 11th District cost of funds prevailing
immediately prior to making of the loan. The interest rate on variable interest rate
loans shall be adjusted annually based upon changes in the 11th 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 percent. In no
event shall any such loan, whether at fixed or variable interest rate, exceed 90
percent of the purchase price of said property, or be for a term exceeding 40
years.
(f)
If at any time during the term of the loan commemial 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.
Resolution No. 99- Page 3
(g)
Such loans shall only be made from City funds that would be otherwise available
and invested in financial securities with varying rates of return.
(h)
The employee may be permitted a two percent discount from the otherwise
applicable interest rate for one period not exceeding five years. If such discount
is permitted, the value of 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 refinancing 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, whichever is lower.
(i)
Whenever such loan is made the City shall pay or reimburse the employee for 50
percent of his or her closing costs as the pumhaser of the residence as to which the
loan is granted.
SECTION 4. The City Council may elect to contribute a sum not to exceed 30 percent of
the bona fide purchase price of the residence. Any contribution pursuant to this section
shall entitle City to a proportionate share in the equity of the residence. To facilitate
purchase, the City Manager may modify the terms of the equity sharing agreement
provided that the ultimate City contribution at the close of escrow does not exceed 30
percent of the purchase price.
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 1 st day of March, 1999, by the following vote:
VOTE
MEMBERS OF THE CITY COUNCIL
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST:
Mayor, Cityof~Cuertino