PASADENA — The city will invest $377,500 to become majority owner of City Manager Philip Hawkey's new $615,000 home on the East Arroyo.
Hawkey will provide $50,000 of his own money and secure a loan for $187,500 to complete the deal.
The equity participation agreement was approved Tuesday by the Board of Directors as part of the housing assistance specified under the city's contract with the former Toledo, Ohio, city manager, who began work in Pasadena on June 18.
Director Chris Holden voted against the investment and Director Bill Paparian was absent.
"The city investment is considerably high as I see it," Holden said, adding that he had seen ads for comparable houses for $479,000 and $439,000.
But Director Rick Cole, who along with Holden had opposed Hawkey's selection, said the time had passed to oppose the assistance. He said the board had agreed to provide assistance without mention of a specific dollar amount.
Hawkey's selection in April over two black candidates generated a 4-3 split on the board and opposition from many minority residents.
The 2,975-square-foot traditional home on Wotkyns Drive was built in 1931. Hawkey said he picked the house after looking at nearly 70 homes and negotiating the price down from $688,000. Surrounding homes are more expensive, he said.
The Pasadena home is a step down from the 5,400-square-foot home that he owned in Toledo, Hawkey said. But, he added, that residence sold for only $145,000, providing him with $30,000 worth of equity toward a $50,000 down payment in Pasadena.
The remaining $20,000 down payment will come from personal means, he said.
Hawkey said that his monthly payments will amount to about $3,000. City Atty. Victor Kaleta said the arrangement places the city at little risk. In the event Hawkey defaults on his $187,500 loan, ends employment with the city or sells the home, the city would receive its investment back, plus any profits based on its percentage of ownership.
Hawkey is the second top-ranking city employee to receive housing assistance this year. In March, the board approved a $45,000 loan to help City Clerk Marvell Herren buy a $305,000 home in the San Rafael Hills.
By providing the assistance, Pasadena joins a growing number of cities statewide that are pitching in to help their top employees with housing.
Such help includes low-interest loans from the city, aid in obtaining mortgages from outside lenders, housing allowances and contributions toward down payments.
City Director John Crowley said Tuesday that Caltech has been providing equity participation arrangements for its top officials for the past 10 years and thus such arrangements are not unique.