Laguna Beach council to decide fate of city’s employee housing program

Cost concerns of an employee housing assistance program in Laguna Beach have city leaders on alert and seeking guidance from the City Council on the program’s future.

The council on Tuesday will consider four options from city staff related to the program, which the city established in 2000 to encourage high-ranking employees to live in the city and respond quickly to emergencies.

The program provides financial assistance through a combination of equity sharing and loans so that the city pays a portion of the purchase price in exchange for a corresponding ownership interest in the property, according to a city staff report.

Loans assisted employees in the purchase of their equity interest in the residence.

Since 2000, the council approved six agreements: former Fire Chief Mike Macey, Fire Chief Jeff LaTendresse, who will retire in August, Fire Division Chief Tom Christopher, former Water Quality Supervisor Graham Wright, Public Works Director Shohreh Dupuis, and City Manager John Pietig.

The city said there is a “significant benefit” of having certain employees living in Laguna, but the financial burden of the program has become “challenging,” the report said.

The median price for a house in Laguna Beach is $2 million, which eclipses the county average of $775,000, according to the report. Therefore, to encourage a candidate to participate in the program, the city would likely need to pay $1.8 million upfront as opposed to $625,000 in 2000, the report said.

Ongoing costs for each property, such as insurance, taxes and repairs, would likely be about $8,000, according to the report.

Disadvantages of the program, according to the city, are that employees cannot access their equity in the home, and must sell the house after retirement or leaving the city, the report said.

If the council decides to continue the current program, city staff recommends a host of rules such as: limiting the program to the city manager, assistant city manager, director of public works, police chief and fire chief; setting contribution limits — for example, the lesser of 50% of the purchase price of the property or the current median home price for residential properties in Laguna; and equity-sharing arrangements in which employees could purchase the city’s ownership interest in the property, according to the report.

The employee could also sell the property and purchase another home in Laguna and continue to participate in the program.

The council also could decide to reduce the number of employees allowed to participate, discontinue the program or direct staff to pursue other alternatives such as rental assistance toward a property, the city paying the entire purchase price, or decreased funding limits, the report said.

Tuesday’s meeting begins at 6 p.m. at City Hall, 505 Forest Ave.

To read the staff report, visit lagunabeachcity.net.

bryce.alderton@latimes.com

Twitter: @AldertonBryce