COUNTY OF SAN MATEO

Inter-Departmental Correspondence

County Manager/County Counsel

DATE:

February 20, 2007

BOARD MEETING DATE:

February 27, 2007

SPECIAL NOTICE/HEARING:

None

VOTE REQUIRED:

Majority

TO:

Honorable Board of Supervisors

FROM:

John L. Maltbie, County Manager
Tom Casey, County Counsel

SUBJECT:

Resolution Approving Housing Assistance Loan for Assistant County Manager David Boesch

RECOMMENDATION:

A)

Adopt a resolution:

1)

Approving a housing assistance loan to David S. Boesch as consideration for his employment as Assistant County Manager,

2)

Authorizing the County Manager to execute such documents as are necessary to consummate the loan, including, but not limited to a promissory note or notes and one or more deeds of trust

B)

Approve an Appropriation Transfer Request transferring $1,489,844 from Non-Department Reserves to Loan to Other Funds/Agencies for the purpose of paying off the home loans provided by the City of Menlo Park.

VISION ALIGNMENT:

Commitment: Responsive, effective and collaborative government.

Goal 20: Government decisions are based on careful consideration of future impact rather than temporary relief or immediate gain.

BACKGROUND:

After an extensive search, the County Manager has selected David Boesch, the current City Manager of Menlo Park, to fill the position of Assistant County Manager. Mr. Boesch is highly qualified to assume this position, and stood out from all other applicants. Mr. Boesch’s anticipated start date is February 26, 2007.

DISCUSSION:

A major consideration of Mr. Boesch in deciding whether to accept the position was the County’s agreement to assume certain loans that Mr. Boesch and his wife received from the City of Menlo Park when it hired Mr. Boesch seven years ago. In order to assist Mr. Boesch in relocating, the City agreed to finance the purchase of a house by the Boeschs. The terms of his employment with the City require the Boeschs to repay the City within twelve months of terminating employment with the City.

There are currently three loans with slightly different provisions, but all of which require repayment of the loans at 5% interest. There is no specified term; payment is required upon sale of the house or, as noted above, within twelve months of termination of employment. The repayment provisions require that the Boeschs pay only a portion of the 5% interest each month, with the unpaid interest accruing, to be paid along with the principal when the loan is paid off. The 5% interest rate exceeds the pooled funds interest rate currently received by the County on its investments.

We have contacted Menlo Park, which has advised us that the payoff of the loans as of March 31, 2007, would be $1,489,843.74. The estimated value of the home is approximately $1.7 Million, so there is about $200,000 of equity available in the house. The proposal is to pay off the outstanding amounts on these loans to the City, and enter into a new promissory note, secured by a first deed of trust, for the loan with interest and repayment terms the same as for the Menlo Park loans.

FISCAL IMPACT:

The fiscal impact to the County will depend on whether there is any significant change to the average pooled fund rate, which is the return the County receives on its pooled investments. Over the last ten years, that rate has varied from a yearly high of 5.92% to a yearly low of 2.82%, and the rate at the end of the second quarter of this year stood at 4.21%. Assuming that there are no significant changes in the pooled funds interest rate, the County should realize approximately the same return that the County would receive from its pooled earnings.