Summit County governments incorporate home loan programs for employees
October 31, 2016
For years, Summit County and its towns have navigated the ongoing housing crisis, with each municipality providing various down-payment assistance programs to help employees buy homes locally.
According to officials, this benefit in the form of a loan provides an incentive for employees to stay in county or town positions longer. It also helps to draw higher-quality applicants who might accept a post knowing the governmental aid will possibly lead to an easier entry into a tight housing market.
"With its growing popularity as both a home for full-time residents and vacation spot for second-home owners, the local housing market has become unaffordable for many town employees," reads the policy for Frisco, signed by town manager Bill Efting and last revised in March 2013. "The … program is established to assist town employees in purchasing a home."
To be eligible for a loan of as much as $30,000 for a home in Frisco town limits, or up to $20,000 for a property anywhere else in the county, Frisco staff must be employed for at least a year, be able to meet monthly mortgage requirements and not own another residence in the county. These loans come with an interest rate of 3 percent and must be repaid within a decade. And if the employee leaves town employment, the loan is typically due in full within a single year from departure.
The county government keeps about $200,000 each year in the general fund for employees to also buy a primary residence within the county. Adjustments are made when necessary to provide for requests above and beyond that reserve, though that's only happened once since the program began in May 1998. Just two employees have ever defaulted on such a loan, and that was early into the program's introduction, with both loans valued at $3,000 or less each.
All full-time workers of Summit County government are eligible for the lower valued loan — $30,000 or 10 percent of the purchase price of the home — after maintaining employment in good standing for nine months. The program has dispensed just over $1 million to 82 employees since it launched, and about $600,000 of that balance remains outstanding across 31 current members of staff.
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Retaining Key Staff
In addition, county finance director Marty Ferris confirmed the county has advanced about $1.115 million for homes to four high-level executives since 2008 as a strategy for maintaining specific personnel within the county's manager and attorney offices. Those loans have been granted to then-county manager Gary Martinez ($400,000), current county attorney Jeff Huntley ($215,000), present county manager Scott Vargo ($250,000) and assistant county manager Thad Noll ($250,000).
Because salaries within Summit County government are somewhere between average and below-average in the state for the positions, elected officials say offering this benefit helps with retention of highly skilled, veteran employees.
"We're definitely not at the top," said Commissioner Karn Stiegelmeier of county compensation rates. "I'd say we're middle of the road. And this is something that is not uncommon, and done especially in resort areas where we have the high cost of housing and want to recruit people of high talent, and for managers in particular."
Managers, she said, tend to move from jurisdiction to jurisdiction when accepting promotions, and such was the case with extending this incentive to both Vargo and Noll separately in 2012 and 2015, respectively, to keep them in Summit despite not providing major pay increases. Vargo, at that time an assistant manager, was being actively recruited to Aspen to become Pitkin's County's manager, while Noll considered a leap to Eagle County for the same lead role. The stimulus was used in 2009 as well with Huntley to keep him from potentially moving into private practice.
"That was also a matter of retaining a really competent person who we trust and has a strong institutional knowledge," said Stiegelmeier. "The loans are set up with an incentive, where if you leave in the next year, then you owe more money, but if you stay long enough, you just owe the county that amount of the loan."
The decision to offer such a home loan, which also comes out of general fund dollars, is discussed outside the presence of the individual being enticed to stay, and on a case-by-case basis, according to the county commissioners. Based on accrued interest from the benefit, recipients pay the federal taxes on these loans each paycheck. All loans must also be repaid within a year of having finished employment with the county. Martinez, for instance, finished his tenure with the county on June 30 when he retired and repaid his $400,000 loan in full on Oct. 10. Huntley has also paid $22,000 toward his outstanding debt, though he remains on the county roster.
The matter of high-dollar executive loans given by the county was recently raised at a candidate election forum hosted by the Keystone Citizens League in mid-October. The county stands by the tactic being a valuable tool to prevent high turnover rates.
"It's far more effective than just paying a very high salary, allowing these individuals to acquire housing," said Commissioner Thomas Davidson. "In order to not lose talent, I'll defend that all day long."
Across the County
As for the more general employee assistance, Breckenridge, Dillon and Silverthorne each utilize similar programs for better ensuring town employees are able to find and finance reasonable accommodations. Silverthorne is in the process of adapting its limited program of about 12 years after town council recently directed staff to implement a new framework for 2017, and those details are still being finalized.
"We are looking to revamp them," Ryan Hyland, Silverthorne's town manager, said by email. "One program has not been used in years because it's structured in a way that's problematic, and the other option is a loan against an employee's retirement account, which a number of employees have used, but we think there are better programs."
Similarly, since 2002, Dillon has offered a loan program to employees who are first-time homebuyers that provides up to $10,000 with a 5-percent interest rate and a 20-year repayment period. Just six employees have taken advantage of it in the last decade and a half and it's still available to those who request it, but a spokeswoman said discussions are also underway to tweak the program to get it in better alignment with terms more compatible with today's market environment.
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