Gus Velasquez doesn’t want to be late. He’s a regular skilled worker, not a member of the city’s elite executive team. So he drives to work in the dark.
He sets out on a back road no later than 3:30am, which requires shaking off the cobwebs in the time it takes his wife to pack a lunch. Just west of Modesto he merges on to Highway 132, the first domino of five highways for his 79.5-mile commute to Sunnyvale, where Velasquez works for the city’s water distribution division. It’s still dark by the time he pulls up to the yard, so he shuts off the engine and goes to sleep, waiting to start work for the city he can’t afford to call home.
This has been Velasquez’ routine for the bulk of his dozen years as a full-time city employee, following two years of temp work. Velasquez and his wife and two kids were forced to move away from Sunnyvale in 2005 after his landlord decided to renovate and jack up the rent. He looked into getting below-market-rate (BMR) housing through the city, but the down payment proved to be cost-prohibitive. The rent-to-own terms were also less than ideal. Velasquez turned to the Central Valley, where housing costs are dramatically cheaper than the South Bay. With rush hour traffic in the afternoons making the commute home “two hours on a good day,” he currently logs more than 800 hours on the road each year.
To put that into perspective, Velasquez annually spends an additional 20 workweeks behind the wheel—just so he can avoid rush hour and get home in time to have a conversation with his wife and sons before bed. The commute is wearing thin, especially when he sees himself putting in another 15 years before retirement, but it’s a bargain he accepts.
“I love the job, the heavy work,” says Velasquez, who often clocks overtime and comes in for emergencies. “At the end of the day I feel like I’ve accomplished something.”
What bothers Velasquez, and other Sunnyvale observers, is the staggering imbalance in the way the city has offered housing perks to its top executives. Records obtained by San Jose Inside show that a handful of director-level positions have benefited from loans that are practically impossible to find on the open market and could even be seen as a misuse of taxpayer funds.
Deanna Santana, who became Sunnyvale’s city manager in 2014 after resigning as Oakland’s top administrator, has been the biggest beneficiary of the housing assistance program. Despite missing her one-year window to obtain a loan through the city, which requires her primary residence to be in Sunnyvale, Santana’s contract was amended so she could obtain a loan on Feb. 22, 2016. The city attorney and Mayor Glenn Hendricks signed off on giving Santana a $1.1 million housing loan, with a mortgage set at 45 years and 0.655 percent interest. If that sounds like an impossibly good deal, that’s because it is—for almost anyone else.
“As far as I’m concerned, that loan is practically free,” says Kimie Seaton, a Sunnyvale mortgage consultant with 13 years’ experience for Googain. “I would like that loan. I would be the only person writing mortgages in Sunnyvale if I had this loan available to my borrowers.”
Santana, who received $316,000 in salary in 2015, isn’t alone in receiving such a sweetheart deal. In 2012, public works director Kent Steffens got a 45-year, $697,500 loan with 0 percent interest the first five years before bumping to just 1.14 percent the rest of the way. HR director Teri Silva got a $450,000 loan in 2011 that runs 45 years and gets dinged at just 1.3 percent interest. Kristan Stadelman, who oversees employment development, received an $855,000 loan in 2009 that extends to 2054 and carries an interest rate of just 1.38 percent after accruing no points in the first five years.
In an email, Sunnyvale spokeswoman Jennifer Garnett defended the loans as a recruitment tool while also noting that 22 other city staffers have also participated in the city’s housing loan program. However, none of these people received loans at such low interest rates or over such long windows of time. In the course of reporting this story, San Jose Inside also had trouble finding anyone familiar with 45-year housing loans.
“They are forgoing a higher rate of return they could get from investing that money elsewhere,” says Seaton, who added that Sunnyvale’s costly housing market does require a significant investment. “In their defense, it is so expensive. If they’re trying to lure someone to our area, $1.1 million doesn’t get you a very nice house. It might get you a really nice condo. It might get you a 1,100-square-foot starter home—and a significant mortgage payment.”
Seaton’s point is well taken, but getting Sunnyvale officials to defend their executive housing loans has been a trickier proposition.
Garnett, the city’s director of communications, refused to answer or return phone calls in the course of reporting this story. Santana has ignored all requests for an interview. Jim Griffith, a Sunnyvale councilman since 2010, declined to comment on the matter in a brief call. “The mayor speaks for the council on something like this,” he says.
After its requests for in-person interviews or phone calls were repeatedly turned down, San Jose Inside was able to reach Mayor Hendricks, who lists his cellphone number on the Sunnyvale website, presumably to make himself available to anyone interested in discussing city business.
In a call that lasted one minute, Hendricks said he has “decided to not have this conversation” and will stick to a prepared statement. “I don’t have time to talk right now, and the city has issued a statement, and I see you’re typing exactly what I’m saying.” Hendricks hung up a few seconds later.
The mayor’s statement noted that Sunnyvale, “like many other cities, offers executive home loan assistance specifically as a benefit to help recruit for these much harder to fill classifications.” Interestingly, the city of Berkeley, which had just 30,000 fewer people than Sunnyvale (147,000) as of 2013, last week gave its city manager, Dee Williams-Ridley, an $800,000 housing loan. The terms were 20 years at 3 percent interest.
Lower-level jobs in Sunnyvale have more applicants, according to Hendricks’ statement, meaning there is no need to offer a better housing incentive. But Hendricks’ statement also notes that “the city would be open to considering this benefit should our employee associations request it as part of labor negotiations.”
For a Sunnyvale employee like Gus Velasquez, who has been commuting across the state for a dozen years, the offer rings hollow.
“It’s upsetting when you’ve been with a company, or city, like myself for so many years, and then you get someone who has been here one or two years and can afford to move here—I think it’s really unfair,” he says. “If I was given that opportunity I wouldn’t miss all that time with my kids. Even if they offered me a loan at 2 percent I would have been happy. It’s pretty upsetting to hear that they help the rich, and the poor people don’t get anything.”
This is Part One of a series of stories on municipal housing loans in the South Bay.