Lake County News, CA – Clearlake City Council Approves Proposed Loan Agreement with Developer for 36th Avenue Road Improvements
LAKE COUNTY, Calif. — Clearlake City Council on Thursday approved a proposal in which the city will lend funds to a developer to complete road and storm drainage improvements on 36th Avenue.
In a unanimous vote, council authorized City Manager Alan Flora to develop and execute the works loan agreement. Councilman Russell Perdock backed out of the discussion due to the involvement of a family member.
Flora’s written report to council explained that in 2020 the city negotiated an agreement with Lexington Construction to encourage the development of market-priced housing in the city.
He said the deal provides 18 former redevelopment agency lots in Lexington at a reduced rate of $1,000 each.
In return, Lexington agreed to build new single-family homes and build new road and storm drainage improvements in the area, including paving part of 36th Avenue, between Eureka Avenue and Phillips Avenue.
However, as Flora would explain to the council, things did not go as planned.
“This project wasn’t a very good example of a project, but here we are,” he said.
Flora said Lexington had suffered a number of personal and professional setbacks, including the divorce of the couple who owned the business, and as a result it was difficult to move the project forward.
Ultimately, as the project got underway, developer issues led to it being scrapped, Flora said.
The city has the option under the agreement to “reclaim” the property if the work is not completed. However, Flora said it was a messy scenario that he wanted to avoid if possible.
Flora said the developer’s wife received the properties in the divorce and brought a new development team to the table who were working to try and get this project back on track.
He said they were working to complete two homes that had not been built to the original plans and setbacks, which required lot line adjustments and the relocation of a sewer line on which one of the houses had been built.
Both of these homes are for sale and have active listings, Flora said.
Fearing that the market has changed and the original plan may not be feasible, Flora said the developer may want to build the additional homes and rent them out instead of selling them.
Some roadwork has also been done, but the developer has approached the city several times to see if the city can help complete the larger project, Flora said.
Flora said he feels bad for the neighbors who had to go through this situation for several years.
The proposal is for the city to provide up to $300,000 to the developer for construction of the new roadway, storm drainage improvements, and any remaining service work needed to complete the road.
Flora’s written report explains that the funds would not be transferred directly to the developer but billed and paid directly to the contractors by the city. The loan would be secured by a loan agreement with a 3% interest rate and full payment due within 24 months, with additional security to be provided by immovable liens and/or personal guarantees from the developer.
He said funding for the loan would come from the city’s housing fund and would not impact the general fund. Flora said he thought it was an authorized use of housing funds.
“On the one hand, I really don’t like bringing this to you, but we need housing and this infrastructure really needs to be done,” said Flora, whose written report said it took “two years to almost complete two houses and see a measurable impact on the pavement.
Councilor Joyce Overton said the road in that area needed fixing and had been horrible for years. She said she was fine with the plan as long as the city could secure it as best it could.
Mayor Dirk Slooten asked if the city could put liens on the other 16 houses when they are finally built. Flora said they want to put a lien on as many houses as they can when they are built.
He also said the developer expects the works to be completed within 18 months.
“It’s a complicated situation,” adviser Russ Cremer said, adding that he wanted to secure the loan with the land. “We need to.”
Flora said the matter had come to a head the previous week and he wanted to discuss it in front of the board, but had not yet drafted a proposed settlement. He asked for direction from the council on how they wanted to proceed.
Cremer offered to allow Flora to develop and execute a loan agreement for the project, with Overton second. The board voted in favor of the motion 4-0, with Perdock abstaining.
Board Approves Visitor Center Agreement and Appointment of Treasurer
In other business Thursday, council members approved an agreement between the City of Clearlake, the Lake County Economic Development Corporation and the Clear Lake Chamber of Commerce for the use of facilities at the Visitor Center visitors to Clearlake.
Flora said 10 years ago the city made a deal, which ended in September, for the use of the building at 14295 Lakeshore Drive, and it was time to make a new deal.
He said they had been talking with the Lake County Economic Development Corp., or Lake EDC, for some time about Lake EDC’s increased presence in Clearlake.
Lake EDC has received funding to establish a small business development center in Lake County for the first time in several decades, and Flora said the goal is to provide services in the city. Lake EDC now has an office at Lakeport City Hall.
Flora said her initial hope was for Lake EDC and the chamber to approve the deal first, but it turned out to go to the board first. As such, he requested permission to modify the agreement slightly if necessary.
The board voted 5-0 to approve the deal and allow Flora to make any necessary minor adjustments to the document.
Council also reviewed the long-vacant position of city treasurer and re-appointed Flora to fill the position, with council directing staff to work on putting it on the 2024 ballot to move it from an elected position to a staff position.
The meeting also included a thank you to the volunteers who helped deliver the 13th Annual Hall-Oween, the passing of a resolution authorizing the application and the adoption of the $875,000 Permanent Local Housing Benefit Program plan, and approval of a five-year agreement with Axon Enterprise Inc. for 30 body-worn cameras and digital evidence management.