Sunnyvale City Manager, Execs Receive Sweetheart Housing Loans that Are ‘Practically Free’

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

Deanna Santana

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.

Josh Koehn is a former managing editor for San Jose Inside and Metro Silicon Valley.


    • > Good ‘ol Mayor Reed and Councilman Liccardo…

      I’m wondering . . . . What is it about San Jose mayors?

      Has San Jose ever had a mayor in recent memory who WASN’T a reptile?

      Janet Gray Hayes
      Tom McInery
      Susan Hammer
      Ron Gonzales
      Chuck Reed
      Sam Liccardo

        • > whats your beef with:

          A fair question. A can’t say that much specifically about Janet Gray Hayes. I will defer to the opinions of others regarding her civic virtues or lack thereof.

          I know that McEnery had a reputation for playing political “hardball”, and that McEnery owned properties in San Jose appeared to benefit from McEnery administration policies.

          Susan Hammer: “Her critics say she has been little more than a caretaker, feeding off the momentum created by her predecessor, Tom McEnery, who is widely credited with transforming San Jose into a modern big city and with reviving the downtown neighborhood. Hammer, they say, has lacked any larger vision.” (SF Gate)

    • Deanna Santana worked as a deputy City Manager in San Jose for years. She was a total underachiever and proved that under Gene Quang in Oakland. She never bought a home in the area? And you trust her with your managing your money/tax dollars. How smart is she? Vote current Sunnyvale Council members out of office.

  1. It is not surprising, given current real estate prices, that Gus Velasquez cannot afford a Sunnyvale residence that meets his standards. What is surprising is that, with four years of full-time work under his belt, he wasn’t (back in 2009) able to take advantage of the bargains in the local market produced by the mortgage meltdown. Could it be that other factors contributed to his current residential situation, such as his spending and saving habits, family planning decisions, housing and neighborhood standards, financial risk-taking, etc.?

    Timing has been a major factor in the local real estate market since the 1970’s and only a lucky few have found a lucrative market awaiting them upon their entry to it. Many if not most home buyers had to wait for the market to come down to them, using the years to save for their purchase (effectively coming up toward the market) by budgeting and sacrificing (which sometimes meant putting parenthood on wait, taking a second job, and years in crummy neighborhoods). The real estate market is a tough read on its own; add personal choice to the equation and explaining outcomes becomes all but impossible.

    That said, it’s much easier to just attribute every undesirable outcome to privilege.

    • Maybe it’s the fact that the city of Sunnyvale hasn’t given Gus or any of there employees a cost of living raise or any raise for that matter in over five years. Ya housing went down in many areas but in and around the Sunnyvale area the prices didn’t see much of a change at its low average houses in sunnyvale were around 600k and wait on having a family sometimes isn’t an option. Just because you get a decent job dosen’t mean you make good money right away you work you way up it’s hard to save for a down payment and raise a family.

      • Your reply affirms my point: there are many factors that affect home-buying decisions, thus making it inappropriate and misleading to use this regularly-salaried employee’s situation as the basis to censure the special treatment given others. You admit that parenthood is not always planned, but one’s obligation to a spouse and/or children is always a factor in financial decisions. You point out how hard it is to save for a downpayment, but in truth, the difficulty is dependent on circumstances, thus making it another factor. Lastly, your assessment of the post-meltdown cost of housing is a reflection on your knowledge and perspective (and, perhaps, one shared by Mr. Velasquez), but one that did not account for the great many Sunnyvale area homes that were available in the mid four-hundred thousands.

        The intent of my comment was not to condemn or criticize Mr. Velasquez but to instead point out the very real possibility that someone else in his situation, say a fellow employee who back in ’09 was childless, frugal, and willing to bet the market had bottomed out, might be today living within minutes of his job and sitting on a half-million in equity.

    • Yes, it’s true that timing has been paramount in real estate. Yes, Gus may be making poor choices; who knows? I think, though, that you have completely missed the point of the article. Certain individuals have unreasonable perks, above and beyond anything average people are even aware of. That is the privilege that is being discussed, not budgeting, sacrifice, or personal planning decisions.

      • Hedley,

        In your eagerness to clarify the author’s point you completely ignored his decision to include the story of Mr. Velasquez’s awful commute, which has nothing to do with what you refer to as Sunnyvale’s unreasonable perks and everything to do with fomenting class warfare, an endeavor near and dear to the heart of the American media, and one it should be called out on at every chance.

        As for those unreasonable perks, as much as I agree with the outrage expressed by others, I do not view it as a matter of privilege or generosity but instead see it as the one tried and true strategy that allows the political body of a city to gain absolute control of its managers (who might otherwise muck things up by citing policy conflicts or taking a principled stand). By compensating management personnel at dream-come-true levels local politicians have effectively bought the loyalty and silence of everyone in the know and everyone who aspires to join the club. Over the past half-century, California cities have been transformed into honeypots for management types (city, police, fire, etc,), where visions of double-dipping, triple-dipping, and fat consulting contracts keep mouths shut and obedience blind. I wouldn’t give you a nickel for the lot of them.

        • Yeah, to hell with those greedy public employee fat cats. Affordable housing is for the homeless, not for people who go to work, pay their taxes, use a toilet, wash their clothes and drive to work instead of pushing a shopping cart from one public handout location to the next as if competing in a supermarket shopping spree.

    • I always love how conservatives say the gov’t should be run more like a business, and then when they do, they turn around and say – Government corruption!!

  2. > a $1.1 million housing loan, with a mortgage set at 45 years and 0.655 percent interest.

    A smart MBA (and most certainly the IRS) would know how to put a cash value on this benefit.

    Question: what IS the cash value of this benefit and is she paying taxes on it?

  3. One other such California City comes to mind when I hear of such atrocities on the taxpayer’s pocket book with inside self dealing:

    Vernon, California

  4. What a non-story this is. Sunnyvale has been giving these housing loans for decades. It helps them attract top talent to local government and costs them nothing. So what? Don’t mistake me – I wish I could get a loan like that, but if it makes our local governments better run, that’s a cost saving move I can get behind.

    • Hey Ted.

      Are you okay?
      Top talent? You mean city managers who clock overtime when they do no work in order to grab money with their dirty little hands? While you have employees who belong to the SEA who are now working 2 jobs to pay for their homes. Employees who have been working in the city for years and probably do the labor you don’t even recognize day to day. Those same employees are making less than half of their counterparts in other cities.
      Maybe you should actually talk to the SEA about this issue.

    • That is based on the naive assumption that the governments are being run better. Check out their decisions and track records, and then decide.

  5. Cut our taxes and fees. This practice is outrageous when all mandatory fees, like water service and garbage collection, increase every chance the city gets to raise them.
    It is a misuse of public funds. Pay down the bonds.
    Meanwhile, the quality of life has tanked. It is no answer to say property values have risen and that should justify the traffic and other congestion.
    Top talent…no way.

  6. I don’t t quite understand why they wouldn’t offer there lower level employees the same benefits as these are the people who are doing all of the heavy work and lifting, what baffles me even more is that these are the same people who need and deserve it more than the executives, I can guarantee that the executives have no problem as it is putting a down payment with a 6 figure income. This upsets me very much as this is the problem with americas corporate world (private and public) we constantly reward the rich when it’s the hard workers under them who really need the benefits more than anyone! Also the mayor is ridiculous when saying they offered it as an incentive because they didn’t have enough applicants I’m pretty sure they had plenty of qualified applicants for the city manager position, geez you really think people wouldn’t want the role of city manager which probably clears an easy 300k. Come on mayor let’s start being honest here and let’s start rewarding the people in the positions who are doing all the great work that makes you elected officials and executives looks. Remember at the end of the day you guys only are as good as all those amazing people like Gus who work there butts of for there city and for you guys to receive a Kings ransom when they do twice the work that you guys do

    • You are exactly right I can not believe the way sunnyvale is treating thier public works employees and why ? And its been that way for a long time . Finally after years and years its all come to a head : IT’S STRIKE TIME ON 5/1/2017 , meanwhile the high paid sloppy city manager from oakland (ousted) and the ‘mayor’, by the way is a high executive at apple remain in thier positions i say tyey should be petioned bye the sunnyvale resident and removed from office .

  7. ROBYN has it exactly right: the electeds need to cut our taxes and fees, because they have done a truly crappy job.

    There is only one (1) qualification required to run a city, and it doesn’t require a high school degree, or even a GED. It doesn’t require being literate, for that matter. The only requirement to be an elected is that they have to be able to get one more vote than the next guy. That’s it.

    That’s all there is to being in a position to lord it over the taxpaying public—and that position apparently includes handing out big favors to cronies of the electeds, like 0% home loans (or 0.655% loans, which might as well be zero). But as usual, the hard-bitten chumps who have to work for a living are forced to subsidize the cronies.

    City Manager Deanna Santana gets a big favor: $439,549 a year in pay and benefits. But she can’t afford to pay the going rate that the rest of us pay for a mortgage? Does any rational person believe she would have turned down that very lucrative job, if her elected pals didn’t throw in a below market rate home loan (which the taxpayers are forced to subsidize?)

    Sunnyvale has at least 33 other lucky folks getting paid more than $300,000 a year. Some of those jobs might be necessary—but where is the competitve bidding?? Could the city maybe get by with just two public safety Captains, instead of three? And how many Lieutenants does the city really need? Does Sunnyvale need a Librarian, at a cost of a few hundred thou a year? And in addition to a City Manager, the city also has two additional Assistant City Managers (and each one is paid well over $300,000 a year!) What, they never heard of apprentices?
    [source: ] <–(interesting reading)

    Ms. Sanchez is her own special interest. Her job is to cover for the electeds when something goes wrong, allowing the electeds to bask in the glory of their office without having to expend the effort to actually manage the city.

    This whole city employee racket has gotten out of control, and it is disgusting to everyone forced to pay the exorbitant cost. Why should we have elected officials, when they just turn around and hire someone else to do their job—managing the city—at our expense? Doesn’t that mean we’re paying twice for the same thing?

    TED AOL commented that if this racket…

    “…makes our local governments better run, that’s a cost saving move I can get behind.”

    “Cost saving”?? The problem is, Ted, that the city is currently being run… into the ground! Haven’t you seen the crumbling school buildings? Haven’t you noticed the streets full of pot holes? The infrastructure is no longer being maintained, Ted. Do you know why not?

    It’s because the money we already paid for maintenance has been diverted into an ultra-high cost and bloated city payroll, and into other priorities like LBGTQ special interests, and posturing on national issues like Trump-bashing, and in general, on all the politically correct, self-serving money sinks that now take priority over what used to be the local electeds’ top priority: managing an efficient, well run city for the benefit of its residents.

    And when things get out of hand, who is forced to pay—twice—to fix them? Yeah, the taxpayers are always the chumps. Because God forbid that the City Manager and her assistants, or anyone else on the bloated municipal payroll, should ever have to take a pay cut.

    Government at all levels; federal, state, and local, has now morphed into a ravenous, out of control, self-serving tyrant. The government no longer serves the people; instead, the people are now forced to serve the government.

    And to think that our ancestors revolted against the King of England over a 3% tax…

  8. How this isn’t a misuse of public funds is beyond me. When cities venture into the banking business allowing public employees to benefit by use of city funds for their own personal enhancement with no benefit to resident taxpayers is a crime. To those who ignorantly post that no costs are incurred by taxpayers by providing city funds to city employees for personal enhancement, well then, we should all be eligible for these “free no cost loans” as you describe.
    What a short time ago that our entire banking system failed thanks to those same “experts” who ignorantly believed our money was theirs, lacked any formal business education, and which created a government bailout that taxpayers for generations will be burdened with. The City of Sunnyvale is gambling with public funds that,in the final outcome, will cost all current and future tax paying residents with a financial burden that could have been avoided. What a pity!

  9. I challenge the sheeple of Sunnyvale to do something about this. Yeah, that’s not going to happen.
    Move along monkeys. Deanna Santana, who honed her “skills” in San Jose government before Oakland, will fleece you fools indefinitely.

  10. My husband and I are both professionals and we couldn’t afford to buy in Sunnyvale, either. We don’t have kids. We don’t have any expensive habits, we don’t drink or smoke and at the time we were looking, drove older used cars we kept until they died. Those of you blaming lifestyle choices for other employees not being able to buy a home in Sunnyvale are off-base. The only place we could have afforded was a rickety old house, more than 100 years old with illegal modifications. Uh, no thanks. The people who bought it tore it down and built a new house instead. That took money we didn’t have.

    No, something stinks in the City of Sunnyvale and it isn’t the lower level employees.

  11. Why on earth someone making over $300K a year should get an interest-free housing loan is simply beyond comprehension. Generous, benevolent government benefactors inappropriately handing out favors with money not their own.

  12. Deanna Santana was was an absolute failure when she was with San Jose during the Reed Deb Figone (aka DeMattei yes the same Construction company that is awarded many lucrative bids) The rich get richer and keep screwing the people. Would love to see her workload and what she has “accomplished” since leaving Sj and Oaktown.

  13. In the Sunday Home section, front page, right column, of this Sunday’s Mercury News, the going rate for a mortgage was 4.22%. The differential comes to approximately 3.56% for our gift to the City Manager.
    That is approximately $38,500.00 per year that the City will never recoup. It is approximately a 12% raise for the City Manager.
    How many school or senior lunches would that buy? How many crossing guards could be hired? Yet, we are bombarded with pleas for money and food donations to local charities.
    Meanwhile residents and property owners are facing annual fee and rate increases. People on fixed incomes feel the pain with every increase by skipping meals or medications.
    Hopefully, a numbers cruncher can come up with a figure so we can know exactly how much money the residents are giving away to our employees. My figures are estimations which invite correction.
    Sunnyvale has grown too top heavy to the detriment of the City workers who actually do things that benefits residents and property owners.

  14. Robyn,
    Over how many years? Are you using the number of years under current employment contract or the life of the loan at 45 years?

    A 1.1 million dollar loan at approx zero interest over 45 years is basically a 1.1 million dollar gift. So if employment is for five years this would be a $220,000.00 addition to the almost $400,000.00 annual salary. So what is it in Sunnyvale she needs to buy for let’s say $33,333.00 per month in wages?

    Let’s see, that would be about $208.33 per hour of actual work. If Sunnyvale paid everyone like this I imagine the Sunnyvale resident would have a substantial tax bill increase.

    One word I look towards as a good executive is SUSTAINABILITY. How will this affect my bottom line? Is this sustainable for the long term? Will this increase or diminish the cost of City services? How am I helping in providing solutions and answers to these questions?

    How old is this chick? Will she even live another 45 years? How will the city recoup it’s investment?

      • Sarah,
        I don’t see anything in the contract, amendments to, or resolution that stipulates the employee must pay off the loan if no longer with the City of Sunnyvale. All I could find is that while the loan is outstanding it was a requirement to live or stay in the home in Sunnyvale that was purchased using the loan assistance program.

  15. Here you go.

    See section 7. There are also amendments to the contract. I am not sure how to actually find council resolution 712-15 to see the details.

    Might we add these additional benefits: Annual $17,500 contribution to 457 plan. $500 auto allowance. 34 ‘PTO’ days per year. (over a month). 8 Days administrative leave. 2% Raise in 2015. 2% Raise in 2016. 2% of a big number is an even bigger number.

    Well at least they don’t give her a starbucks stipend (I hope) for the daily AM and PM coffee breaks to discuss over with her fellow management how giving a reasonable cost of living adjustment to the working staff of the city will bankrupt the budget…

  16. Here’s her contract and amendments:

    You will find these other ‘benefits’ that are apparently needed to attract top notch talent:

    -$17,500 contribution to 457 Plan
    -$500 auto allowance
    -34 PTO days a year (6.8 weeks). With a freebie of 25 days when she first started.
    -60 Hours Administrative Leave (7.5 Days).
    -2% Raise 2015. 2% Raise 2016.

  17. Regarding the loan terms: in the article, click on the link in green that says “sweetheart deal” – Then look at item H on page 5. The loan is due within 6 months of employment termination. Best the taxpayers can hope is that when economy tanks, they fire her (because when in a good economy everyone’s a good manager, but in a bad economy, the lack of true management skills becomes apparent), and because of the bad economy the house is underwater.

    BTW, if she came from City of San Jose, then to Oakland – Google it and you will see Oakland paid $10,000 for relocation expenses (apparently to move from San Jose to Oakland?)

    Now, Sunnyvale is paying her to move from Oakland (or wherever she lived) back to the south bay in a million dollar house? Definitely gaming the system. Too bad that the City does not feel the public service that poor Gus provides is as “essential to the efficient operation of the government of the City of Sunnyvale” (1st line of the Resolution) as the City Manager.

  18. Why did the City Council approve this? This is public money from the taxpayers.
    And, say the housing market collapses again and the house is then worth less than the loan, will additional collateral be required or can she just walk away leaving us holding the property?
    No doubt the City Attorney drew up and negotiated the terms. Does he/she get a similar loan? Is this self-interest?
    Who is looking out for the taxpayers here?
    Hopefully someone will publish the identities of public employees who receive these loans and how much the City is foregoing in interest payments.
    If a Sunnyvale rate payer is late, there is a 5% charge. The City is good at gouging its residents and gorging City executive staff.
    This is very disappointing to residents and taxpayers.
    Thank you for bringing this to our attention.

  19. What does this chick do for tha Mayor?

    The mayor is complicit in awarding by far the greatest incentive plan in city history in order to obstain someone with a dubious background and dumped by Oakland?

    Doesn’t make sense to me. Is there something going on behind the scenes that we just don’t see? Can anyone enlighten us here?

  20. “This is Part One of a series of stories on municipal housing loans in the South Bay.” Whatever happened to your series?

  21. What is happening with our City Managers? The Sunnyvale Manager gets a million dollar home loan, then moves to Santa Clara recently to a City Manager Job earning $367,000.00 per year.

    Then this week San Jose City Manager Norberto Dueñas announced his retirement at Tuesday’s City Council meeting. After his last day on Oct. 13, he said, his first order of business will be to visit his mother in El Salvador. After El Salvador my thinking is he is contemplating a million dollar subsidy of his own over in Sunnyvale as San Jose only paid him $250,000.00 per year.

    San Jose is over five times the population of Santa Clara and Sunnyvale put together. They need to pay a minimum of $500,000.00 per year to stay competitive. Um…..Where is that application?

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