Request to Modify Former Monrovia City Manager’s Home Loan Creates Debate

By Jim E. Winburn

Former Monrovia City Manager Scott Ochoa does not expect the City Council to spend any more time on the issue of restructuring his home mortgage loan.

Since the city took no action at its Jul. 3 meeting, Ochoa, who became Glendale’s new city manager in January, will need to look at other options to pay off the remainder of his debt to Monrovia.

To speed up his move to Glendale, Ochoa asked the city to restructure a $275,000 home loan that Monrovia officials granted him in 2004. Ochoa’s proposal was to pay off $200,000 at the close of escrow and to continue to owe the city $75,000 on which he would pay 2 percent interest, according to Councilman Thomas Adams. Now Ochoa must acquire a $75,000 loan from a private lender to sell the house on Madeline Drive.

Although the situation has left town along with Ochoa, the issue continues to be contested within the local community in terms of the Monrovia council making a politically correct decision versus a financially sound one. And the local debate reflects no less the council’s split vote at the last meeting: two-for and two-against, with one abstention.

Some believe that by amending Ochoa’s terms the city would be able to recover the loan immediately, while fully securing the $75,000 balance owed the city. Monrovia Mayor Mary Ann Lutz, who voted to approve Ochoa’s request, agrees that the city would have benefited financially if Ochoa paid $200,000 as soon as escrow closed and a higher interest rate of 6.25 percent on the $75,000 balance.

However, Councilman Adams voted against Ochoa’s request despite what some consider better terms for Monrovia to receive more money – and to receive it more quickly. And though Adams is concerned about the political message behind this sort of deal, he does not believe the math adds up to better terms for the city.

Adams said the current loan is paying the city 5 percent interest on $275,000. Ochoa’s proposal was to pay off $200,000 at the close of escrow and to continue owe the city $75,000, on which he would pay 2 percent interest. But, 2 percent interest on $75,000 versus 5 percent on $275,000 does not equate to more money. According to Adams, the mayor then proposed to raise the interest rate to 6.25 percent on $75,000, which would still generate less revenue than 5 percent on $275,000.

“This does not get us more money,” said Adams, who believes the much larger issue is the political message of favoritism.

“It was one thing to offer a loan to an employee you are trying to attract,” he said. “It’s a whole different thing to offer a loan to someone who’s leaving you. And it just didn’t sit well with me.”

Adams told this reporter that he believes this is a personal finance issue that can be solved on a personal level without the City of Monrovia being involved. And, it apparently seems to be shaping up that way for Ochoa.

Since the discussion on this issue began in the community, Adams said that many people have asked him if the city would be willing to loan them some money because of finding themselves in a “financial jam.”

Such questions from one’s constituents have the potential to opening a type of Pandora’s box of politics if not discussed openly and honestly.

Knowing this, Adams simply explains that the city doesn’t normally handle this kind of a loan. “As a matter of fact, I don’t know if we’ve ever done it before, and we very well may never do it again.”

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