Laguna Beach : Housing-Loan Program for City Workers OKd

The City Council voted to approve a housing-loan program for municipal employees, making Laguna Beach the first city in California to adopt such a plan.

Under the proposal, passed by a 3-1 vote Tuesday night, any permanent city employee may borrow up to $25,000 in secondary financing for affordable housing units in south Orange County. City Manager Ken Frank said that such loans are necessary because the city needs to have a number of personnel--police, fire and maintenance workers--nearby in case of an emergency, and the high cost of housing in the area has forced many workers to live far away.

Other cities, including Santa Ana and San Juan Capistrano, make housing loans to attract top-level managers. No city in California, however, has a home-loan program for employees at any level.

The loans will not be used to buy houses in Laguna Beach, where there are no affordable housing projects. Instead, employees will use the loans to bridge the gap between their down payments and low-interest, assumable, first-mortgage loans on about 500 affordable housing units in San Clemente, Dana Point, Laguna Hills and Laguna Niguel.

Interest rates on the loans will be pegged to the city’s $10-million investment fund--which currently earns between 9 and 10%. The loan program will start with a $150,000 allocation, but it could be increased later, according to Rob Clark, assistant to the city manager.