Del Mar Wants Its Money Now : New Terms Set for Departing City Manager’s Home Loan

Council members have asked City Manager Bob Nelson to immediately repay $50,000 of a loan the city made to help the departing official purchase a house in Del Mar.

Nelson, 46, who is leaving his city post March 1, had asked the City Council to extend repayment of his house loan to five years. Under a 1981 agreement signed by Nelson and city officials, Nelson has 120 days from leaving office to repay the loan and interest--a total of $101,0000.

Nelson had little comment when council members approved what they termed “an amicable solution” late Monday night, saying he wanted to consult with his wife, Oceanside City Manager Suzanne Foucault. He could not be reached for comment Tuesday.

The city’s new offer would “protect the city’s investment” by reducing Nelson’s total housing debt--to the city and to a Redlands savings and loan--to slightly more than $200,000, an amount less than the $205,000 a local real estate agent estimated Nelson’s three-bedroom home is worth, said Councilwoman Ronnie Delaney, who helped draft the proposed agreement.

Mayor Arlene Carsten said that a $50,000 payment from Nelson would ensure that remaining funds owed the city would be secured by the value of the Nelson home. The city holds a second mortgage on Nelson’s home, but the Redlands firm holds a $150,000 first mortgage. If the city were to foreclose on the property, they could face a loss of up to $50,000 if the home sold for less than the $251,000 first- and second-mortgage indebtedness.

Nelson was hired in 1978 by a council considered much more liberal than the current one. The earlier council, which included former Del Mar Mayor Nancy Hoover, gave Nelson a $68,600 housing loan to help him fulfill the city’s requirement that he live in Del Mar. The loan was granted after council conceded that the city manager could not qualify to purchase even the least-expensive homes in the city on his annual salary of about $40,000.

Terms of the 1981 agreement required Nelson to pay back the loan at the end of 30 years or within 120 days of leaving his city post, set interest at 13.8%, but required no payments on loan’s interest or principal until the final repayment deadline. Nelson, however, has made sporadic payments of about $12,500 on the city loan.

Carsten said the city did not learn until last fall that the city’s loan to Nelson had never been recorded as a first- or second-trust deed secured by the property, as required in the 1981 agreement. Nelson recorded the lien in October and blamed city officials for failing to secure the property loan at the time it was made.

Under council’s new offer, Nelson would be required to repay $50,000 before he left office March 1, and to make monthly payments on the remaining amount for the next five years. On March 1, 1991, the remaining debt to the city would come due, Carsten said.

Carsten said requiring Nelson to immediately repay $50,000 was “not unrealistic” because he has about $32,000 in accrued sick leave, vacation pay and salary, “which leaves only a reasonable figure for him to come up with.”

Nelson had asked council two weeks ago to reduce the interest on the loan to 10%--in keeping with city earnings on other investments averaging about 9.5%. He also asked that the deadline for repaying the entire $101,000 debt--principal and accrued interest--be delayed for five years.

Councilman Scott Barnett said the city’s offer was in response to Nelson’s request and might lead to further negotiations.

Nelson and his family plan to move to Oceanside and rent a house there, he said.