Upside Down On His Mortgage, Former City Manager Asks City for Help

Former City Manager Scott Ochoa took out a $275,000 loan from the city to purchase a home in Monrovia in 2004 and is asking the city to restructure the terms so he can sell it without taking a loss, a city councilman said.

Former Monrovia City Manager Scott Ochoa is asking the city to restructure a $275,000 home loan he obtained from the city in 2004 so he can sell his house without losing money, according to a city councilman.

Ochoa, who became the city manager of Glendale in January, was given the loan when he was appointed in 2004 as part of his compensation package. He has to repay it within 18 months of leaving the city, according to the loan agreement.

But Ochoa's home on Madeline Drive is worth less than what he owes on it, so he is asking the city to restructure the loan so he doesn't have to sell the house now for a loss, City Councilman Tom Adams said.

"He doesn't want to wait for prices to recover, he wants to leave and go to Glendale," Adams said. "Glendale is apparently not offering him any assistance so he wants Monrovians to assist him."

Ochoa did not return a message left with his secretary or email messages sent to him and Glendale's public information officer.

Adams said he didn't know if the council would be inclined to aid Ochoa, saying it would set a bad precedent since many other Monrovia homeowners are upside down on their mortgages.

"I suspect though that this would be a change that most people in Monrovia would not be in favor of," Adams said. "I suspect that many of them might step forward and say, 'Well, are you willing to help me too?'"

"If we offer any relief to Mr. Ochoa, are we willing to offer relief to anyone else? I don't know that," he added.

A sign posted in front of Ochoa's home says the house is currently in escrow. Adams said he does not know what the sale price of the home is.

"We do know that the sale price is not sufficient to cover the debt," Adams said.

Ochoa currently and brought in about $182,000 as city manager of Monrovia.

Adams said Ochoa has not made a "concrete proposal" to the city detailing exactly what kind of assistance he is requesting, so the council will address the issue at its regular meeting Tuesday.

City Attorney Craig Steele wrote in a 2004 agenda report that loans like the one made to Ochoa were not unusual for cities to make.

"Housing assistance loans for new city managers are becoming somewhat more common, especially in areas with high real estate prices," Steele wrote.

The city of Beverly Hills extended a $1.5 million loan to its city manager back then, according to Steele.

Barb ZIegler July 03, 2012 at 05:50 PM
So the city let Ochoa borrow approximately 35% of the value of the house in a subordinated loan in 2004. Tom, do you have information on the size of the first loan? Did Ochoa have absolutely ZERO equity in the house after this loan was given? I'm trying to understand if Ochoa is looking to get cash out of this sale (by putting the city at risk with ANOTHER loan) so that he can buy in Glendale. Why not rent? Why not have Glendale give him a loan backed by the deferred comp they intend to pay him? What other assets does he have? A loan backed by "other real property" sure sounds like he's got something. Lutz supports this as it helps resolve the debt quickly??? The only acceptable resolution is payment in full.
Steve Buckner July 03, 2012 at 07:11 PM
Date Event Price Source 05/21/2004 Sold close details $785,000 Public records Public records Recording Date 05/21/2004 Contract Date 04/23/2004 Sale Price $785,000 Price Type Full amount computed from Transfer Tax or Excise Tax. County Transfer Tax $864 Transaction Type Purchase/Resale Arm's Length Residential Transaction Document Type Grant Deed 02/07/2000 Sold view details $130,000 Public records Public records Recording Date 02/07/2000 Contract Date 01/26/2000 Sale Price $130,000 Price Type Full amount computed from Transfer Tax or Excise Tax. County Transfer Tax $143 Transaction Type Purchase/Resale Arm's Length Residential Transaction Document Type Grant Deed . What is an Arms Length Transaction? An arms length transaction is one where both the seller and purchaser act independently of each other and have no relationship to each other. It would be a transaction which is freely arrived at in the open market and unaffected by abnormal pressure or by the absence of normal competitive negotiation. Sales that could possibly not qualify as arms length transactions would be sales between family members or business partners, foreclosure sales, or an expansion sale where an adjoining property is purchased based solely on location regardless of price.
Craig Covell July 03, 2012 at 08:44 PM
I give Tom Adams credit for appearing here. I have not seen any other council members here as of late. I do not always agree with Tom, but he will speak out and put it all out there for us to see. My contention is that we have a city council that is not concerned about the residents. They only need us every couple of years to get elected. We are a pest to them and most are concerned with the business in the city and not how our neighborhoods look. There are some disturbing trends that are developing in the city. Let me list a few. People living in motorhomes on the streets, push cart vendors in the south side of the city, yard sale signs everywhere, furniture on the streets, unattended trailers and unkept front yards, just to name a few. If the council was more concerned with us and what is the right thing to do for the residents, then this Scott Ochoa thing would not have happened.
Gayle M. Montgomery July 03, 2012 at 09:00 PM
Craig, while I don't discount the issues you have identified, we sure have it a heck of a lot better than a number of cities in our area. I am chagrined at just what is coming out in the media about other Council persons. Something is sorely wrong.
Erin Thorn July 03, 2012 at 09:29 PM
How is it that the market value on that house is only $200K? That cannot be correct. I don't believe it.
Barb ZIegler July 03, 2012 at 10:32 PM
Thanks for posting the sales details, Steve Buckner. I still can't tell what the loan history is here. What was the amount of the first loan? If the city loaned him up to 100% of the value of that home in 2004 I will be appalled! I hope Mr. Adams asks for details at tonight's meeting. I also hope that we taxpayers, since we are now issuing a new debt to Mr. Ochoa, are made fully aware of Mr. Ochoa's credit history and current credit scores, so that we can understand the risks here and demand an appropriate interest rate. And let's stop calling this "a restructuring". He no longer will be holding the asset that's backing the previous loan. I can understand (barely) the city issuing a loan to a current city manager. But issuing a loan to an ex-employee is crazy. The city needs these funds back NOW...not in a few years. Ochoa knew this loan would be due if he quit, and if he can't afford to pay off this loan immediately, he should not have accepted the new position.
Linda Moca July 03, 2012 at 10:39 PM
Thank you Mr. Adams for informing us about this issue. Mr. Ochoa is well-liked by most & was an asset to the city. He is extremely fortunate to be able to move up economically in these hard times & I don't fault him for doing so. I truly wish him well in the future. I am personally not against giving incentive packages to attract good talent to help run our city. That being said, I don't believe that we should be extending those incentives to OUTGOING employees. We expect those in charge of making financial decisions on our behalf to make those decisions based on sound business practices....not based on one's personal likability or because they can do it legality...etc.. Come on, the state just raided all of our extra money, other revenues are down, services have been cut back, people have been let go because there is no more money...more will be let go in the future! There is no way, in good conscious, that the city can afford to be 'generous' with things like this anymore. As far as moving the lien from the Monrovia home to another piece of real estate owned by Mr. Scott, I am AGAINST that for this reason: Monrovia wouldn't get the money until the property is sold or refinanced. If neither occurs, we're out of that money for many many years. We can't afford that. It would make more sense for Mr. Scott to refinance or get a line of credit on the other real property he owns now, then use that money to pay off the loan to the city...that is, if Mr. Scott wants to move now.
Dan Crandell July 03, 2012 at 11:35 PM
Let me understand this, Our former City Manager has mismanaged this personnel finances for the eight years he was employed here. And now he expects us to do what for him? Scott, how dare you. Go away now.
Joe Black July 03, 2012 at 11:57 PM
The actual Loan Documents and the payment history were posted by Robert Parry here on Patch: http://monrovia.patch.com/blog_posts/the-ochoa-loan-relevant-documents-in-the-raw
Anonymous July 04, 2012 at 01:13 AM
Since when is the city in the banking business. Why should we keep paying for someone that isn't even here. Taxpayer gifts should be illegal, which this was in my eyes. Public works is working on a skeleton crew, people are working for nothing pretty much and having benefits and pay taken away, yet we pay this man who made how much? Plus all the perks. Where is the equity!! Monrovia has created another Bell. What else is the city hiding? There should be an audit with a fine tooth comb. We need a thorough investigation.
Steve Buckner July 04, 2012 at 05:55 AM
The property in crestline that he was asking to use as collateral to secure the new loan was not even his, it was his mommy and daddys. Dude, what did you do with all that money you made, sent it to mexico. $500.00 month house payments and you make $182,000.00 a year. You also got $600.00 a month extra for gas and use of your car. Great Manager, More like a leech.
Gayle M. Montgomery July 04, 2012 at 06:03 AM
I came within a hairsbreadth of attending the meeting tonight but am fighting a cold and did not want to be the bear of bad germs. So I watched the whole proceeding from start to credits. Here's where I am confused. It sounded to me that Ochoa paid minimal interest on this loan over the term of the loan (2%) and only brought the loan whole (to the tune of $60K according to his explanation) recently. His justification was that other loans of some type were significantly less in percentage, and his 2% was better than that. My question is the cost of money. Thought the total amount reconciled was 60K, did that also include the compounded interest that would have been paid over the course of the loan or just the balance due to date on the principal? If the latter, the City is already down in money.
Gayle M. Montgomery July 04, 2012 at 06:08 AM
I also want to address transparency in government. If my civics are incorrect, let me know. Sometime back, there were complaints that some members of the Council were getting texts during the Council meeting. Seemingly, that practice may have stopped because there was nothing obvious in that regard. Comments by the public, as I understand it, are supposed to be made during the public comment period, by submitting a card, or, if open call is issued, by coming forward. To my knowledge, friends of Council persons are not supposed to be sitting in their seats directing Council members how to vote. That blew my mind. I used the DVR and reran a segment during the Ochoa commentary where a member of the audience seemingly whispered to the mayor, in response to the Ochoa issue, as Ochoa was at the podium, "Do it." Now that may be well and good, and a citizen may be within their rights to make comments soto voce. But they are not supposed to be doing that according to my understanding in such a way that it has a direct impact on the Council's income. I am not 100% positive, but I THINK I saw it happen again during the issue on whether to fund the website. The person making such commentary is a good person who has done good things for the community. But lobbying in session should not be participated in or allowed, unless my civics are wrong. Please advise.
Gayle M. Montgomery July 04, 2012 at 06:10 AM
Make my comment read "direct impact on the Council's outcome." 2/5th of the Council indicated they are averse to these blogs (inferring the Patch). I found that being out of touch with some large segment of the populace they were elected to serve.
Carmen Martinez July 04, 2012 at 06:18 AM
Gayle, I was at the first part of the meeting (until 9pm). My understanding is not that the Council is against blogs (Patch), news (Monrovia Weekly), they are against Council using these media outlets to voice their opinion outside the Council meetings. It seems that Council members are the ones starting the reporting, and that is where 2/5th are averse.
Gayle M. Montgomery July 04, 2012 at 06:40 AM
Carmen, I watched it from start to finish in my bed trying to get over either a very bad allergy attack or a stinking summer cold I did not want to share. There has been talk over the last several days about why the rest of the Council is not as approachable and does not speak to the general populace. Ms. Shevlin addressed her concern about having devices but indicating she did not like blogs and Facebook because they can propagate negativity that cannot be taken back. Later, Mayor Lutz also chimed in that she did not like them as well.
Steve Buckner July 04, 2012 at 01:53 PM
Gayle, I was there the whole time, 3 hrs worth of it. Did you see the part where the council took a 10min break. It was because of Cyrus Kemp pointing out that Ms. Shevlin should not be able to vote on the Ochoa issue because of her involvement with Podley, something to do with making a commission on the sale of his house. Well, after we returned from the 10min break Ms Shevlin was not at her seat. If Cyrus Kemp was not there to state the facts, the vote would have passed to give Mr Ochoa his way. It was a dead lock, Tom and Joe said no, Mary and Larry said yes. Why did it take Mr Kemp too point this out. Do you think City Attorney Craig Steele new this before the meeting, and said not one word about it. Thank God for Mr Kemp and his babysitting of the city.
Linda Moca July 04, 2012 at 06:57 PM
Forgive my editing errors in my previous reply. I watched the council meeting last night. First, this was a lesson on how NOT to conduct city business. Private 'nods' or 'green light' approvals are not in fact real approvals. It was not fair to give Mr. Ochoa assurances that he could get a loan modification if he needed one, when that was based on assumption, not a formal vote. This vote should have happened back in December, (or whenever it was), when the request was first made, so Mr. Ochoa would be clear what is options were prior to selling his house. OK, whether Mr. Ochoa should have asked in the first place is a different matter. Who in their right mind would go to all the hassle of putting their home on the market with a Realtor, find a buyer, open escrow, goes through all of the work & expense needed to close a sale, then find a new home in Glendale, do the same thing over there, start a loan, etc., if they didn't think they had the 'green light'...no one! Now the public is in an uproar & mad at everyone & rightfully so! An appearance of impropriety was created due to sloppy procedural practices on the part of the council. Second point, how can a promissory note owed by Mr. Ochoa be recorded against a property if he is not on title, (the parents' home)? If Mr. Ochoa isn't on title, the refinancing of it would not affect his loan in Glendale. I was confused by this point, maybe I didn't hear the facts right.
Lynn Fischer July 05, 2012 at 01:16 PM
So, Mr. Morford, what is the objective of having these debates? So that your 'more knowledgable talking heads' can continue with your 'divide and conquer' tactics?
SgtJackWagon July 05, 2012 at 07:52 PM
Kudos ro Mr. Kemp. He may of saved Monrovia from being another, City of Bell.................
Dr. Jules S. Bagneris, III. July 05, 2012 at 10:43 PM
I am so proud of those who have commented on this very important issue. Apparently, there are incestuous relationships running rampant at City Hall and it is time to clean house. Be vigilant in your pursuit of the truth because in doing so, "you shall know the truth and the truth shall make you free." :)
Gayle M. Montgomery July 05, 2012 at 11:37 PM
I wish the Patch had a "Like" button. There are some very good comments issued (vis a vis Dr. Bagneris as a place to start), but I'm reticent to post "me too" answers.
punkster July 06, 2012 at 04:43 PM
Since Scott's family has a home that they are willing to have him use as collateral......Let Scott have his family take a second out on that home and lend their son the money he needs short term...........Why is the City of Monrovia considering acting like his family? It feels extremely inappropriate. Scott knew he was short funds when he signed to sell his Monrovia home for a sum less that his mortgage debt. Let us all grow up!
Kate K. July 08, 2012 at 09:08 PM
The City of Monrovia (or certain people in the city) have a vested interest in keeping the status quo. And in keeping their current and former cronies happy. They just assume that's how its done. Mr. Adams keeps saying that Monrovia is very transaparent: No, Mr. Adams, it isn't. When taxpayers ask at City Hall and at the public library to see the City codes and are met with a counter-inquiry, "Why do you want them?", that is not transparency. That posture actively discourages public inquiry into public matters. Perhaps its time for a very public and independent audit of ALL city funds and transactions, including the former Redevelopment Agency, as well as City Hall's hand in the Chamber of Commerce, transit, MOTAB, etc.
Kate K. July 08, 2012 at 09:11 PM
Of course he's trying to get cash... Scott presumed that his real estate deal would make him a profit, with not risk on cost to himself. it didn't work out that way, so now he's trying (along with his buddied) to make this still work out profitably. And still at OUR expense. Can anyone explain rationally why Scott was even considered for a 2nd mortgage? Is that a right now?
Kate K. July 08, 2012 at 09:18 PM
Let's face it: Most of our City Council gets their income from real estate transactions and development in Monrovia. Some are real estate agents, others are employees of realtors and spouses of title company employees. Until we make sure that Adams, Garcia, Shevlin, and any others with a direct financial tie to real estate transactions do NOT vote or act on matters involving real estate of any kind in Monrovia, we will not have a fair or transparent government.
Kate K. July 08, 2012 at 09:25 PM
We owe our NEW City Manager a huge, heartfelt THANK YOU! for putting this issue on the City Council agenda and thereby bringing this horrible croneyism and abuse of power to attention of the citizens. Thank you, thank you, thank you! Alraedy, so new to the job, you're WAY ahead of Ochoa for integrity!
punkster July 08, 2012 at 09:31 PM
Lutz needs to included in those on the Council who are now investing in Real Estate that tracks the CIty's Redevelopment moves, ie Condo to sell to Gold Line, etc. These are opportunities not commonly known to the Citizen's in Monrovia......... THIS SHOULD BE OUTLAWED!
Kate K. July 08, 2012 at 09:51 PM
Self-dealing by public/elected officials is outlawed, I think... Can anyone confirm that?... Problem is, the people who know about it would have to care and be willing to publicly "out" them at the time these acts are committed. Instead they were often silent bystanders, perhaps hoping some of this financial "good will" would spread their way. Also, these things need to be made known to the small minority of Monrovians who actually vote in LOCAL elections, and these voters need to be informed and discouraged from continually re-electing the same people with the same vested interests. But if only the friends of the "old boys/girls" show up to vote, this is what we'll get... again.
Richard Christy July 09, 2012 at 02:12 AM
Let's include the Mills Act program in this audit! Probably the most corrupt entity of them all.


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