Archive | Santa Barbara employee home loans RSS for this section

Santa Barbara loans $4.4 million to employees to buy homes

In an ultimate case of government gone wild, the city of Santa Barbara has given “teacher’s pet” employees money to purchase homes in the expensive seaside community.

The down-payment for home program began in 2001 when the city gave Santa Barbara Police Chief Cam Sanchez a $500,000 loan. Over the years and multiple employees later the city has given city employees approximately $4.4 million to purchase homes.

The city of Santa Barbara, like most California cities, is broke and needs to fill budget shortfalls. As a result the city has cut back on numerous resident services.

The scandalous program caught the eye of council members and watchdog groups who are outraged the city has not made a better attempt to recoup taxpayer money, according to the Daily Sound.

The severe budget crisis has already forced community leaders to close city pools and libraries while the 37 employees enjoy their homes on the taxpayer dime.

“The whole thing is nuts,” says Ernie Salomon a Santa Barbara City Hall watchdog. The money used for the loan program was taken from the city’s reserve general fund, according to Solomon. “It’s unforgivable.”

Responding to the criticism surrounding the city loans was Bob Samario, Santa Barbara finance director. “At the time we weren’t having the financial problems that we are having today.”

He explained that city employees needed to come up with 85 percent of the financing on their own before the city gave them the remaining 15 percent to purchase homes. Samario also noted the loan recipients did not have to pay any principle for the first five years, just the interest which ranged from .46 to .56 percent of the loan.

The lucky employees were also treated to the city buying down the interest rate of their second mortgage by two percentage points saving employees even more money.

According to the city finance director, claims the $4.4 million of taxpayer money is gone are not true, it’s just tied up in employee loans. However, over the past eight years the city has only been reimbursed $188,000.

Oversight for the employee loans has been limited. The 37 loans were given out without the approval of the city council something that outraged current City Councilmember Michael Self.

“We do not have the due diligence or the fiduciary understanding to implement a loan program. That is out of our purview. These people are getting benefits no private company could pay for,” she said.

For now Self says she will work to get the city’s money back and make sure this program is suspended moving forward.

For those not familiar with Santa Barbara, the seaside neighborhood is home to many Hollywood movie stars and home prices are some of the highest in the country, however, nearby towns do offer affordable housing options.

For more stories;

© Copyright 2011 Kimberly Dvorak All Rights Reserved.

%d bloggers like this: