Sutter County Taxpayers Foot Bill for Old Rehab Loans
Dec 16, 2025 01:46PM ● By Susan Meeker
Logo courtesy of Sutter County
YUBA CITY, CA (MPG) - Taxpayers will absorb nearly $235,000 in losses after the Sutter County Board of Supervisors voted unanimously Dec. 9 to write off 13 delinquent housing rehabilitation loans.
Development Services Director Neal Hay told the board his department had exhausted efforts to recover the loans, which were issued between 1993 and 2009 through the Community Development Block Grant program. Many were never secured with deeds of trust, leaving the county without legal authority to collect when borrowers defaulted, died or properties were foreclosed.
“These loans existed since 1993, and it wasn't until 2021 that they were discovered in the external audit,” Hay said. Auditors flagged the accounts as a material weakness, and the California Department of Housing and Community Development (HCD) notified the county it would remain ineligible for new housing grants until the loans were resolved. Without the write‑off, millions in new funding were blocked, Hay said.
Sutter County Supervisors expressed frustration at the failure to keep the loans from slipping through the cracks and said the lapse leaves residents footing the bill.
“This is taxpayers’ money right here,” Supervisor Mike Ziegenmeyer said.
All 13 properties remain in existence and, according to Zillow and Redfin data, carry a combined current market value of about $4.8 million, fueling the Board’s frustration that writing off the loans will only bolster the credit scores of the current owners.
Still, county officials said there was no legal way to go after the money and that the county had “exercised every legal option.” They added that while current procedures now require deeds of trust and stricter oversight, preventing similar losses in the future, writing off the uncollected loans was the only way to restore eligibility for future state housing grants.
Consultant Paul Ashby said resolving the audit finding could open access to as much as $3.6 million in Community Development Block Grant funding for infrastructure and facility projects.
