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Saturday, January 19 , 2019, 11:06 am | Fair 65º


Santa Barbara City Council Takes Stand and Sits on Employee Loan Program

In bow to budget priorities, mortgage assistance plan shelved indefinitely

Although it hasn’t issued a loan for more than two years, the city of Santa Barbara’s Employee Mortgage Loan Assistance Program will be inactive for some time, based on comments from City Council members Tuesday.

The program, better known as EMLAP, allowed municipal employees to borrow money to purchase homes from the city’s General Fund reserves, but it has been halted indefinitely because of budget stress. As of April, 36 city employees were participating in the program and $3.8 million in loans are outstanding. Nine loans have been paid off.

Even though there’s no money to issue new loans, the council made a political stand Tuesday by expressing unanimous support to keep the program dormant.

Finance Director Bob Samario has talked at length with Noozhawk about the program and noted that when it began in 2001, “we were in a much different place from an economic standpoint.” As home prices began to increase, “it was becoming more and more difficult for folks to buy a home,” he said.

To learn more about EMLAP details, click here for a previous Noozhawk story.

Council members Michael Self and Randy Rowse brought the item before the council Tuesday.

Self said she had concerns that the loan program would be expanded in the city’s General Plan. She also said she believed the program was created with the best of intentions.

“Nobody was trying to fly under the radar,” she said, adding that the employees who took advantage of the loans did nothing wrong.

Rowse echoed Self’s comments.

“A continuation of this program is not needed at this time,” he said.

Noozhawk began looking into the Employee Mortgage Loan Assistance Program earlier this year as part of its Santa Barbara Challenge investigation. After other local media caught wind of the program, news of its existence caused a stir on online comment boards.

For all the conversation EMLAP has generated, only one speaker took to the microphone during public comment on the item Tuesday. The flurry of misinformation surrounding the loan program in local publications was also brought up as a source of frustration on the dais.

Mayor Helene Schneider said she welcomed the “sunshine” into the program.

“What was unfortunate was how politicized it got,” she said.

Schneider cited a Tuesday newspaper article that quoted EMLAP interest rates of around a half-percent. While that’s true today, those weren’t the percentages when the program was approved, “and (the article) still gives that impression,” she said.

“I’m no longer talking to that one reporter,” Self said, following up on Schneider’s comments. “It’s one thing to misunderstand, it’s another thing to totally twist, manipulate and turn on its head.”

The city’s three-member finance committee voted last month to recommend that the program be eliminated. Self expressed frustration, then and on Tuesday, that the EMLAP numbers haven’t been part of the city’s budget discussion.

Councilman Bendy White said last month that if those General Fund reserves had been available instead of tied up in the loan program, the library might have averted budget cuts.

White also said that because there’s no floor on the interest rate offered to EMLAP employees, the loss of that money is hurtful to the city. Having the reserves on loan to employees also presents a lack of liquidity to the city, he said.

“I cannot imagine, in the current environment, that the City Council would approve such a program,” said Councilman Dale Francisco.

Noozhawk staff writer Lara Cooper can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk or @NoozhawkNews. Become a fan of Noozhawk on Facebook.

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