The decision comes as a result of a California Supreme Court ruling that allows the governor to shut down the nearly 400 redevelopment agencies (RDAs) in the state and transfer the assets to local counties, costing Menlo Park almost $3.1 million. Councilman Rich Cline called the ruling "a death sentence for the housing program."
Menlo Park's below-market-rate housing program, with a budget of about $25,000 for the rest of the fiscal year, would become the responsibility of another department, or a contractor. The option to close the housing department included dissolving the Housing Commission, but the council stated a desire to see the panel continue.
Other steps the city would need to take include figuring out how to dispose of the parcels it owns on Hamilton and Terminal avenues. Beechwood School is negotiating to buy the Terminal Avenue property, but Menlo Park would need to dispose of the Hamilton Avenue land sooner rather than later, according to staff, since it counts as an RDA asset.
The closure would cut the city's housing program expenses to an estimated $103,978 for the next fiscal year. The other two options presented by staff, which kept some portions of the department open, cost between $441,553 and $1.1 million.
Senate Bill 654, currently moving toward the state Legislature for a vote, could change the council's mind if it passes. The bill would leave existing housing funds in the hands of local communities for affordable housing programs, rather than transferring the money to the county. According to city staff, the bill has support in the Legislature, but not enough to override a likely veto by Governor Jerry Brown.
"Tough times call for tough decisions," noted Councilman Andy Cohen, who suggested seeing whether the housing department's employees could find work in one of the city's other departments.
The council did not vote on the issue that night, but took their direction to close the department to a study session on Monday, Jan. 30.