LAKE COUNTY, Calif. — The Clearlake City Council gave its approval to a plan on Thursday that calls for the city to lend money to a developer in order to finish 36th Avenue’s road and storm drainage improvements.
The council decided to give City Manager Alan Flora the go-ahead to create and carry out the financing arrangement for the project in a unanimous vote. Due to the participation of a relative, councilman Russell Perdock withdrew from the discussion.
According to Flora’s written report to the council, the city struck a partnership with Lexington Construction in 2020 to encourage the construction of market-rate homes in the city. He claimed that as part of the agreement, Lexington received 18 ex-redevelopment agency lots for a discounted price of $1,000 apiece.
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In exchange, Lexington promised to construct brand-new single-family houses, a new road, and storm drainage improvements in the neighborhood, including paving a section of 36th Avenue between Eureka Avenue and Phillips Avenue. Flora would later inform the council that things did not turn out as expected.
Although this project has not been a particularly good example of a project, he observed, “We are where we are.”The divorce of the company’s owners was only one of several personal and professional difficulties Lexington experienced, according to Flora, and as a result, it has been difficult to keep the project on track. The developer’s issues ultimately forced the developer to leave the project, according to Flora.
In accordance with the agreement, the city has the right to “claw back” the property if the work isn’t finished. Flora, on the other hand, indicated that would be a complicated situation and he would prefer to avoid it. According to Flora, the developer’s wife inherited the properties in the divorce, and she has brought a new development team to the table to try to restart the project.
He explained that they were trying to finish two houses that weren’t built according to the original plans and setbacks, which included changing the lot lines and moving a sewer line that one of the houses had been built over. There are active offers on those two homes, according to Flora.
Flora suggested that the developer would prefer to build the extra homes for rent rather than sale due to worries that the market has shifted and the original plan may not be feasible. There has also been some road construction, but according to Flora, the developer has repeatedly contacted the city to ask for assistance with the bigger project.
Flora stated that he feels horrible for the neighbors who have struggled with this predicament for a number of years. The developer is asking for the city to give them up to $300,000 for the development of the new road, storm drainage upgrades, and any final utility work required to finish the road.
According to Flora’s written report, the money would be invoiced by and paid directly to the contractors by the city rather than being transferred to the developer. The loan would be backed by a loan agreement with a 3% interest rate and a 24-month full payment term, as well as additional security from developer personal guarantees or property liens.
According to him, the loan money will come from the city’s housing budget, so it won’t affect the general fund. Flora stated that he thought using the funds for housing was acceptable. In her written report, Flora stated that it had taken “two years to nearly build two homes and see a measurable impact on the roadway.”
“On the one hand, I really don’t like presenting this to you because we need housing and that infrastructure really needs to be done,” she said. The road in that region, according to councilwoman Joyce Overton, needs to be fixed and has been terrible for years. As long as the city could adequately secure it, she indicated she was fine with the concept.
Upon completion of the remaining 16 residences, Mayor Dirk Slooten questioned whether the city could place liens on them. When the houses are constructed, Flora said they want to lien as many of them as they can. Additionally, he stated that the developer anticipates finishing the project in 18 months.
Russ Cremer, a councilman, stated, “It’s a complex issue,” and he said that he wanted to use the land as collateral for the loan. “We have to finish it,” Flora stated that although the issue had reached a conclusion the previous week and he wanted to bring it up in council, a suggested agreement hadn’t yet been drafted. He asked the council for instructions on how they wished to continue.
With Overton’s support, Cremer made a motion to allow Flora to create and carry out a loan agreement for the project. The proposal passed with a 4-0 vote in favor, with Perdock abstaining. Agreement for the visitor center and treasurer appointment approved by the council
Thursday’s agenda also included the council’s approval of a lease for the Clearlake Visitor Center facility between the city of Clearlake, Lake County Economic Development Corp., and the Clear Lake Chamber of Commerce. Flora stated that a previous arrangement for the city’s use of the structure at 14295 Lakeshore Drive expired in September and that a new deal is now necessary.
He claimed that they have been in discussions with Lake EDC, also known as the Lake County Economic Development Corp., for some time regarding Lake EDC having a stronger presence in Clearlake. The goal, according to Flora, is to have services offered in the city. Lake EDC has won funds to open a small business development center in Lake County for the first time in many years. The Lake EDC headquarters is now located at Lakeport City Hall.
Flora stated that his initial expectation was for Lake EDC and the chamber to accept the agreement first, but it turned out that the council would be the one to do so. As a result, he requested permission to, if necessary, slither modest revisions into the contract. The agreement was approved by the council by a vote of 5-0 and Flora was given permission to make any minor changes that were required.
The council also took into consideration the long-unfilled position of municipal treasurer, and once again chose Flora to fill it. The council also instructed staff to work on getting the position changed from an elected to a staff position by placing it on the ballot in 2024.
The 13th annual Hall-Owen was also acknowledged, a resolution authorizing the application and adopting the plan for $875,000 from the Permanent Local Housing Allocation Program was adopted, and a five-year contract for 30 body-worn cameras and digital evidence management with Axon Enterprise Inc. was approved.