http://almanacnews.com/print/story/print/2013/06/19/menlo-park-decides-to-sell-below-market-rate-house


Almanac

News - June 19, 2013

Menlo Park decides to sell below-market-rate house

by Sandy Brundage

In March, when the Menlo Park council last discussed the below-market-rate house at 25 Riordan Place, members worried about what condition the property would be in once the city finished buying it back from the two owners, who had illegally taken out more than $1 million in loans against the property before defaulting on payments. Reclaiming the house cost Menlo Park an estimated $527,500 after a four-year legal battle.

Those worries eased, however, after city representatives toured the property once the owners vacated.

"I was pleasantly surprised," Councilwoman Kirsten Keith announced during the June 11 council meeting.

The carpet and paint need freshening, but Ms. Keith estimated that about $40,000 should get the property ready for sale at market value, an option she preferred over staff's recommendation of keeping the house in Menlo Park's affordable housing inventory. She said she felt "like we got burned on this," and so found it hard to recommend retaining the home.

Realtors consulted by city staff estimated that selling the property "as is" would net Menlo Park approximately $400,000 to $500,000, in light of the home's lot size, shared wall and condition. Staff noted that with 87 families on the wait list for below-market-rate housing, many for up to five years, and the minimum $1 million expense of purchasing another property on the west side of Menlo Park, keeping the house might be a better idea.

Councilwoman Catherine Carlton also favored selling it after renovation, and proposed using the estimated $651,000 proceeds from a sale to help fund an amnesty program for owners of existing secondary units, aka in-law or granny units, in Menlo Park.

Earlier in the meeting the council had finalized approval for construction of new secondary units to boost the city's affordable housing supply, but had yet to address how to ensure existing units would be incorporated into the program. Citing concerns about safety arising from non-compliance with building codes, Ms. Carlton suggested that $651,000 could create a program to help owners bring their units up to code and possibly have enough left to build 10 to 11 more units.

While intrigued, the rest of the council along with City Attorney Bill McClure noted that the devil could be in the details.

Councilman Rich Cline noted that 25 Riordan Place lies to the west of Menlo Park, saying the city needed to keep its promise to spread affordable housing across all neighborhoods.

Ms. Keith agreed, but said she reluctantly favored the sale. The council voted 4-1, with Mr. Cline dissenting, to sell the house at market rate after spending up to $40,000 on minor renovations. The house should go on sale in September, according to staff.

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