CLEARLAKE – The Clearlake City Council at its Thursday meeting agreed to extend escrow by one year for a redevelopment property sale, with provisions added requiring the buyer to pay the city interest on funds it was supposed to have received this spring.

The city's redevelopment agency entered into a contract in May of 2005 to sell Clearlake Redev 29 LLC a 29-acre parcel in Burns Valley, City Administrator Dale Neiman told the council, which sits jointly as the redevelopment agency's board of directors.

The sales prices for the land is $210,000, as Lake County News has reported.

Clearlake Redev 29 LLC, led by developer Robert Adelman, has completed the most costly tasks assigned to them in the disposition and development agreement, Neiman reported. Those tasks include preparing and submitting construction plans and recording the subdivision map, which calls for 22 residential parcels.

 

A Dec. 13 letter to Neiman from Iris P. Yang of the law firm McDonough, Holland and Allen – which represents Clearlake Redev 29 LLC – requested the escrow extension, from July 2008 to July 2009, citing “current market conditions.”

Neiman told the council that the firm had been having difficulty getting financing for the project thanks to the struggling housing market.

He urged the council to extend the escrow, otherwise the city would have to start the sales process over, which he said could take as long as five years.

“The most difficult thing is finding a buyer, I think,” said Neiman.

The agreement's schedule of performance calls for the developer to deposit $40,000 with the agency prior to the close of escrow.

Councilmember Judy Thein pointed out that, by delaying escrow, the agency would lose interest on that money, which Neiman agreed was a good point.

He said it was reasonable to ask the developing firm for that lost interest in exchange for the escrow extension.

Wally Geer, a Ventura-based architect who came to speak on Adelman's behalf, agreed that the interest request was “extremely reasonable,” adding that the development firm considers itself in partnership with the city and redevelopment agency.

Thein suggested amending the agreement to reflect adding the interest clause. Neiman said they next needed to settle on an interest rate.

“How about 20 percent?” Councilman Chuck Leonard joked.

City Finance Director Michael Vivrette said the city should not accept less than 5 percent, adding that 6 percent might better reflect where the market will be in a year, when the extended escrow will close.

“We're low because of federal rate drops,” said Vivrette.

Geer said he was willing to offer the city an 8-percent interest rate.

“Anything but 20,” he quipped.

The council liked Geer's offer and accepted it unanimously.

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