News

Menlo Park council buys home

City expands below-market-rate housing

As part of its program to expand below-market-rate housing in Menlo Park, the City Council agreed last night (Sept. 14) to purchase a home at 1441 Almanor Ave. in the Belle Haven neighborhood for $349,000 plus closing costs.

The purchase is funded by the $2 million fund established by the council in 2009 as part of a neighborhood stabilization program to buy and rehabilitate foreclosed, blighted properties for resale to residents qualifying for below market rates (BMR).

The vote passed 4-1, with Councilman John Boyle dissenting. Describing the house as a "fixer-upper" rather than a blighted property, he said he wasn't convinced it was a good fit for the program.

"This is not a dump," he said. "This was not foreclosure prevention. It's really crossing the line and bringing us into the wrong mindset."

According to the staff report, the property is not in foreclosure, but the owners owe more on the mortgage than the house is worth. The five-bedroom, two-bath house has been on the market for nearly two years. Staff estimated the cost of rehabilitating the home with new wiring, heating, kitchen appliances, and other improvements at $140,000.

BMR housing scarce

The rest of the council backed the purchase. Mayor Rich Cline pointed out the growing need for large homes, and the difficulty of finding a five-bedroom house at below-market rates.

Councilman Heyward Robinson thought the house met the criteria for the program by virtue of having been on the market so long. "We've really struggled to find homes to buy. Habitat (for Humanity) is also struggling," he said.

Once the house is refurbished, city staff said it will be resold for approximately $409,000 to a buyer selected from the waiting list for BMR housing. The proceeds feed back into the neighborhood stabilization program.

Housing Manager Douglas Frederick said the city has purchased one other home through the program.

Menlo Park currently has 57 BMR units, he said.

Beltramo's townhomes

The issue of where to find new units in a largely developed city remains challenging.

Menlo Park requires developers proposing projects larger than 10,000 square feet to set aside BMR housing, or pay in-lieu fees.

However, the city's policy states, "It should be noted that the City's primary objective is to obtain actual BMR housing units, either for rent or for sale, rather than equivalent cash from in-lieu fees."

This objective sparked debate when the Menlo Park Housing Commission unanimously agreed on Sept. 1 to the Beltramo's Investment Co. request to pay the fees instead of including three BMR units as originally proposed in the 16 townhomes planned for 1460 El Camino Real.

The current proposal sets aside one BMR unit. The commissioners, who asked for a higher percentage of sales revenue in return as well as the fees, are hoping the city will spend the money to buy affordable housing somewhere else in Menlo Park.

If the Beltramos accept those terms, the Planning Commission and City Council will need to approve the agreement.

Comments

Like this comment
Posted by REALITY CHECK
a resident of Menlo Park: other
on Sep 15, 2010 at 12:40 pm

Let's check the math. 4 of our City Concil members voted to spend $349,000 (plus closing costs) for the opportunity to invest $140,000 for property improvements, in order to sell the home for $409,000.

That is an instant, $80,000 out the door. Couldn't we simply subsidize someone's rent by that much? Sorry Heyward, Kelly, Rich & Andy, I just don't get the math on this one. The article makes it sound justified...because there aren't any BMR houses available? And this house didn't sell for two years (how much do we over-pay?!!!).

Nuts.


Like this comment
Posted by econ 101
a resident of Menlo Park: Downtown
on Sep 15, 2010 at 12:56 pm

The house was on the market for two years, ergo, it was overpriced. Whatever you may think about the city's program, by overpaying for this house, the city is contributing to keeping housing prices in Belle Haven artificially high. By so doing, they are ensuring that fewer people will be able to afford a house -- without, of course, more government intervention.

It's a small house on a small lot. Why on earth would anyone pay over $400k when there are larger non-BMR houses in Belle Haven that are selling (or rather, not selling) for less?

A bad decision in so many ways.


Like this comment
Posted by Jack
a resident of Menlo Park: other
on Sep 15, 2010 at 12:56 pm

Menlo Park should get out of the real estate game. They can't even control their own finances!


Like this comment
Posted by Hank Lawrence
a resident of Menlo Park: Sharon Heights
on Sep 15, 2010 at 2:05 pm

If you want this type of financial insanity to continue just vote for Heyward Robinson and Richard Cline. If you want to restore fiscal discipline and accountability to the residents I urgently implore you to vote for: Peter Ohtaki, Chuck Bernstein, and Russ Peterson.


Like this comment
Posted by Goody2shoes
a resident of another community
on Sep 15, 2010 at 2:17 pm

Why not just think of it as a way of raising your property value and getting the market moving? AND the realtors are running out of ways to pay for Prozac.


Like this comment
Posted by Bob
a resident of Menlo Park: Central Menlo Park
on Sep 15, 2010 at 2:53 pm

As usual the city has no financial savvy - who pays the list price in Belle Haven these days?
Also as a 5bdrm 2 bath house of 1,460 sq. ft. what do you want to bet that the one car garage has been converted to a bedroom. Will the city make the buyers bring it up to code, will they fine them for the misuse of the garage? Will the city bring it back to code?
Also $140,000 is a heck of lot of money to make the place spiffy. Who are they planning hiring, an Atherton estate contractor?
And why does the city need to make a $500,000 home in an area where the price range is $275K to $400K.
I guess they just want to make some more places unaffordable.


Like this comment
Posted by WhoRUpeople
a resident of another community
on Sep 15, 2010 at 2:55 pm

OR....how about requiring people like the Beltramos to stick to their original deal and build 3 BMR units in the project rather than accepting in lieu of fees that can then be spent to buy houses in Belle Haven and sell them at a loss.


Like this comment
Posted by Joseph E. Davis
a resident of Woodside: Emerald Hills
on Sep 15, 2010 at 6:15 pm

It is excellent that Menlo Park is so well managed, and its finances so secure, that the City Council has the attention and energy to broaden its portfolio to include real estate investment and management.

Congratulations, Menlo Park! You are one of a kind.


Like this comment
Posted by doo doo diligence?
a resident of Menlo Park: Downtown
on Sep 15, 2010 at 8:12 pm

Greater Fool Theory, Law of Unintended Consequences,
"OPM" Other People's Money, MBA not required to see this deal smells,
You choose your label on this scam.
A little homework never hurts.
Here's what public records show, pay attention, it's your tax dollars at work to serve certain political agendas.

So, Gomez pays $10K over $699K list in '05, gets 80% 1st with no name (don't ask, don't tell) underregulated, now insolvent, minor lending institution, a 10% 2nd from Countrywide (now BofA).
$10K in "non recurring closing costs" (maximum allowed by lenders) gets kicked back to ??? Appraisal comes in at $710K because appraiser doesn't care.

Gomez defaults in '09 because he's underwater, cures default in fall '09.
Listing agent reduces price to $349K few months back, subject to short sale lender approval, may or may not happen.
Hears that city's got a pot full of BMR money and "staff housing specialist?" with authority to "find some deals no matter what they cost the city".
MLS in '05 says additions, upgrades with city permits expanded from 2 br. to 5 br.
City staff estimates $140K fixups to resell at loss.
In other words, $70K fixups, $70K administrative overhead and contingencies.
Gomez is current on loan payments, no current Notice of Defaults, but he gets out of a bad deal because sucker city council buys into staff urgency.
Instead of City helping Gomez with an Obama loan rework, Gomez gets evicted by City, City overspends on fixups, sells to another Gomez at a loss to city.
It's an election year, and the inmates are running the asylum.
So let's re elect the senseless incumbents, just like 2 years ago. Remember Kelly's Park Theatre Duncan Dance Studio scheme.
Makes you want to laugh and cry at the same time.


Like this comment
Posted by Bob
a resident of Menlo Park: Central Menlo Park
on Sep 16, 2010 at 1:11 am

A further check of records showed that possibly the same individual (same name) sold a home on the 1200 block of Carlton (Bell Haven) in Aug 2009 for $300K, a loss of $137K on the price that person paid in 2004.

Wouldn't it be fascinating if it turned out that the Almanor owner has a city gov't connection? Nah, even Menlo Park isn't that foolish.


Like this comment
Posted by Bob
a resident of Menlo Park: Central Menlo Park
on Sep 16, 2010 at 1:14 am

Just a thought. Isn't the Almanac supposed to be finding this stuff out for us - the reporters do have access to the same records we do.


Like this comment
Posted by Bob
a resident of Menlo Park: Downtown
on Sep 16, 2010 at 7:15 am

Actually, this was a good decision to make just prior to the election. It's a shame that all 5 seats aren't up for a vote.

And you wonder why our city council has the reputation it does -- bad decisions; lots of energy exerted and not a lot of good results......


Like this comment
Posted by Sandy Brundage, Almanac Staff
a resident of Menlo Park: Central Menlo Park
on Sep 16, 2010 at 1:03 pm

Not the same person.


Like this comment
Posted by Bob
a resident of Menlo Park: Park Forest
on Sep 16, 2010 at 2:55 pm

Not


Like this comment
Posted by Hank Lawrence
a resident of Menlo Park: Sharon Heights
on Sep 16, 2010 at 4:25 pm

This deal once more demonstrates the reckless and irresponsible actions of the City COuncil. People should not reward incompetence by giving the same dunderheads another 4 years. Do not vote for Robinson and Cline. Learn from your mistakes. Do vote for Ohtaki & Bernstein. They are fiscally responsible people.


Like this comment
Posted by who launched this?
a resident of Menlo Park: other
on Sep 17, 2010 at 11:07 am

Who started this program, proposed it and took all the credit for it?

Hank has lauded him as a fiscally responsible guy over and over.

Can you guess?

Andy Cohen, hero of those poor folks put upon by the Menlo Park Man.

Hank, are you able to see the facts for what they are? This program was approved more than a year ago and set in motion the decision last week.

Does it matter?

Or are you just another high school kid playing personality games?


Like this comment
Posted by Ol' Homeboy
a resident of Menlo Park: Allied Arts/Stanford Park
on Sep 17, 2010 at 1:01 pm

I suggest each Council Member and his/her families take turns (for weeks at a time)living in their new investment property, until the home is sold. That'll cure their real estate savy!


Like this comment
Posted by REALITY CHECK
a resident of Menlo Park: other
on Sep 17, 2010 at 2:52 pm

...except councilmember Boyle for his lone vote against. Sad, and entirely understandable why he is not running again. A voice of responsibility and reason. May the elections bring more of these.


Like this comment
Posted by Hank Lawence
a resident of Menlo Park: Sharon Heights
on Sep 19, 2010 at 7:43 am

Andy Cohen is a work in progess; but he is slowly getting there. When compared to Heyward Robinson & Rich Cline he is the postrer boy for fiscal responsibility. Could be worse. We could have had Gail Slocum running for City COuncil.


Sorry, but further commenting on this topic has been closed.

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