LAKE COUNTY, Calif. — The Clearlake City Council on Thursday approved a proposal in which the city will loan funds to a developer to complete road and storm drainage improvements on 36th Avenue.
In an unanimous vote, the council authorized City Manager Alan Flora to develop and execute the loan agreement for the work. Councilman Russell Perdock recused himself from the discussion due to the involvement of a family member.
Flora’s written report to the council explained that in 2020 the city negotiated a deal with Lexington Construction in order to incentivize the development of market rate housing in the city.
He said the deal provided 18 former redevelopment agency lots to Lexington at a reduced rate of $1,000 each.
In return, Lexington agreed to build new single-family homes and construct a new road and storm drainage improvements in the area, including paving a portion of 36th Avenue, between Eureka Avenue and Phillips Avenue.
However, as Flora would explain to the council, things didn’t go as planned.
“This project has not been a very good example of a project but we are where we are,” he said.
Flora said Lexington suffered from a number of personal and professional setbacks, including the divorce of the couple that owned the company, and as a result it’s been a struggle to keep the project moving.
Ultimately, while the project was started, the developer’s problems led to it being abandoned, Flora said.
The city has the opportunity under the agreement to “claw back” the property if the work isn’t complete. However, Flora said that’s a messy scenario he wants to avoid if possible.
Flora said the developer’s wife received the properties in the divorce and she’s brought to the table a new development team that has been working to try to get this project back on track.
He said they’re working to complete two houses which hadn’t been built to the original plans and setbacks, which required lot line adjustments and relocating a sewer line over which one of the houses had been built.
Those two houses are for sale and have active offers, Flora said.
With concerns that the market has changed and the original plan may not be feasible, Flora said the developer may want to build the additional houses and rent them instead of selling them.
Some road work also has been done, but the developer has approached the city on multiple occasions to see if the city can help complete the larger project, Flora said.
Flora said he feels bad for neighbors who have had to navigate 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 utility work necessary to complete the road.
Flora’s written report explains that the funds would not be transferred directly to the developer but invoiced by 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 further security to be provided by property liens and/or personal guarantees from the developer.
He said the funding for the loan will be provided from the city’s housing fund and would not impact the general fund. Flora said he believed that was an allowable use of the housing funds.
“On one hand I really don’t like bringing this to you but we need housing and that infrastructure really needs to be done,” said Flora, whose written report said that it had taken “two years to nearly complete two homes and see a measurable impact on the roadway.”
Councilwoman Joyce Overton said the road in that area needs to be fixed and has been horrible for years. She said she was OK with the plan as long as the city could secure it as best they could.
Mayor Dirk Slooten asked if the city could put liens on the other 16 homes when they’re finally built. Flora said they want to put a lien on as many of the houses when they’re built as they can.
He also said the developer expects the work to be completed within 18 months.
“It’s a messy situation,” said Councilman Russ Cremer, adding he wanted to secure the loan with the land. “We have to get it done.”
Flora said the matter had culminated the previous week and he wanted to get the discussion before council, but that he hadn’t yet written up a proposed agreement. He asked for direction from the council on how they wanted to proceed.
Cremer moved to authorize Flora to develop and execute a loan agreement for the project, with Overton seconding. The council voted in support of the motion 4-0, with Perdock abstaining.
Council approves agreement for visitor center, treasurer appointment
In other business on Thursday, council members approved an agreement between the city of Clearlake, Lake County Economic Development Corp. and Clear Lake Chamber of Commerce for use of the Clearlake Visitor Center facility.
Flora said 10 years ago the city entered into an agreement, which ended in September, for the use of the building at 14295 Lakeshore Drive, and it’s time to do a new agreement.
He said they have been talking for some time with the Lake County Economic Development Corp., or Lake EDC, about Lake EDC having more of a 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 have services provided in the city. Lake EDC has an office in Lakeport City Hall now.
Flora said his original hope was to have Lake EDC and chamber approve the agreement first, but that it turned out it was going to the council first. As such, he asked for clearance to snake small changes to the agreement if needed.
The council voted 5-0 to approve the agreement and allow Flora to make any necessary minor adjustments to the document.
The council also considered the long-vacant city treasurer’s post and once again appointed Flora to fill the position, with the council directing staff to work on putting it on the 2024 ballot to change it from an elected to a staff position.
The meeting also included thanks to the volunteers who helped present the 13th annual Hall-Oween, adoption of a resolution authorizing the application and adopting the plan for $875,000 from the Permanent Local Housing Allocation Program, and approval of a five-year agreement with Axon Enterprise Inc. for 30 body worn cameras and digital evidence management.
Email Elizabeth Larson at This email address is being protected from spambots. You need JavaScript enabled to view it.. Follow her on Twitter, @ERLarson, or Lake County News, @LakeCoNews.
Clearlake City Council approves proposal for loan agreement with developer for 36th Avenue road improvements
- Elizabeth Larson