Merced to rehab home; councilman seeks audit of Housing Department

The rehabilitation of a house delayed by the Merced City Council earlier this month will proceed after a vote taken earlier this week, but the project has also triggered a request for an audit of the city’s Housing Department.

The plans to upgrade the home at 2652 10th Ave. with Neighborhood Stabilization Project and other Department of Housing and Urban Development dollars were postponed after residents in the audience expressed concerns with the cost to fix the home.

On a 3-2 vote, the council approved a plan Monday to put $93,000 into the home – less than proposed earlier this month – which would bring the number of federal funds spent for its purchase and upgrade to $160,866. City staff has estimated the home could go for $130,000 to $150,000 on the market.

Councilman Noah Lor was absent from the meeting, and Mayor Stan Thurston recused himself because he owns property near the home. Councilmen Kevin Blake and Mike Murphy cast the dissenting votes.

City employees have defended the project by saying the stabilization program is meant to improve housing – not make money. The home needs extensive work on its roof, foundation, plumbing, electrical system and insulation, among other repairs.

The council looked at a number of options, including selling the house as it is – without upgrades.

Mark Hamilton, Merced’s housing program supervisor, recommended the city move forward with the rehabilitation. He said real estate agents have told the city the property would likely sell for less than the purchase price without upgrades.

The difference between the purchase price and the sale would have to be repaid to HUD. “There could be an impact to the general fund,” he said.

Councilman Tony Dossetti said he expected the city would take a loss if the house was sold as it is, and that’s a risk he wouldn’t take. “I am not willing to take general fund (money) to make up the difference,” he said.

The questions swirling around whether city staff is making good decisions on housing purchases apparently didn’t sit well with Murphy, who voted against the upgrade. He asked city staff for an audit of the Housing Department and its practices related to the purchase of homes, remodeling and decisions on hiring contractors.

“It’s never really been a focus of our policy discussions,” he said. “It’s been sort of these routine things that come up, and I think it’s time we looked at them with a fresh eye.”

The city has 35 properties, according to city staff. The bulk of them were purchased in 2010 and 2011.

The Neighborhood Stabilization Program allows a city to list a house for sale at the total cost for its purchase and rehabilitation or for the appraised value, whichever is lower.

This story was originally published December 18, 2014 at 9:17 AM with the headline "Merced to rehab home; councilman seeks audit of Housing Department."