Not doing so, said City Administrator Dale Neiman, could have resulted in the city shutting down the redevelopment agency, the plan for which city leaders are looking at extending for another 10 years.
It also could have cost the city at least $15 million in redevelopment funds that could be used for affordable housing, infrastructure and economic development, Neiman said.
However, even the council's actions Thursday may not guarantee redevelopment can continue, said Neiman. "We have a number of serious problems that may not allow us to extend the life of the plan."
Most of those have to do with the surplus redevelopment funds in the city's redevelopment housing fund – $330,000 this year – which requires the city spend money on affordable housing projects. If the plan ultimately can't be amended, the agency would have to transition to shutdown, said Neiman.
Getting rid of the excess surplus in the housing fund through the property transfer, said Neiman, was necessary to complete by June 30, the end of the fiscal year, in order to have a chance of moving forward with amending and extending the redevelopment plan's life. In turn, the agency will pay the city for the lots, which will address the surplus.
At the council's April 10 meeting, the issue had its first public hearing, where the plan to transfer the lots elicited considerable criticism from community members who held that the lots – 19 of which are on 36th street – aren't buildable.
Attorney Andy Rossoff was among those questioning the plan. Rossoff was involved with the Clearlake Housing Now lawsuit against the city in the late 1990s, which resulted from the city using housing funds inappropriately when it purchased the Austin Resort property.
Rossoff told the council April 10 that he was concerned that the city hadn't learned a lesson when it came to its responsibility for properly using the funds for housing. He questioned the suitability of the lots and spending funds only for single-family housing.
Addressing Rossoff's comments about the single-family housing, Neiman said that the city has, since 2004, seen the construction of 263 multifamily units, with no money spent on affordable of single-family housing.
Councilman Roy Simons said the city needed a 10-person committee to be in charge of overseeing redevelopment projects, because it would give the city better insight into what projects it should do. “I believe had we done this earlier we wouldn't be in the mess we're in today.”
Simons said redevelopment in Clearlake “has been thoroughly and absolutely misunderstood and abused,” and suggested the city begin selling off properties it owns in order to have them developed and placed back on the tax rolls.
He also questioned the price set on the lots – $25,100 each, and said he couldn't see having the agency get into a “boondoggle.”
During the public hearing, community member and businessman Gene Schwartz, who also had spoken against the plan April 10, again criticized the proposal.
“I'm really appalled at this last attempt to peddle off those lots to the housing fund at this price tag or even to consider developing those 19 lots in housing or any other purpose,” said Schwartz.
The lots are in a creek area that isn't suitable for homes, he said. Schwartz said he showed the lots to two Realtors, who said they were essentially worthless.
Neiman insisted the lots could be built upon, and the area has water and there could be septic tanks.
The lot transfer was the only option to avoid shutting down the agency, said Neiman.
“What's your solution?” Neiman asked Schwartz. “This is the best I can come up with.”
Schwartz agreed that it was a difficult solution, but he suggested the city follow a number of ideas Rossoff had offered to pursue housing.
If the city had $4 million or $5 million in reserve, which it should have had, they could solve the problem without any issue, said Neiman.
“We're broke, almost,” said Neiman, pointing out that the city had to cut $1 million in expenses from its budget for this fiscal year, “and we're still out of balance.”
He added, “The only asset that we have are those lots.”
The problem had to be solved by June 30 and the city had no money to do it other than to transfer the lots. “I've been up nights figuring out how to do this," he aid. "If anybody's got a better idea, I'd like to hear it.”
The problem, as far as Neiman can figure, started as far back as 1996. He said he didn't think past councils knew the money was being moved out of the housing fund.
Those actions on the part of the city weren't right, and the city deserved to get sued over it, said Neiman, adding that it has taken the city more than a decade to arrive at its current situation.
In a series of motions required to move the 44 properties from the city to the redevelopment agency, each received a 3-1 vote, with Simons voting no, saying the city was “still heading in the wrong direction.” Council member Joyce Overton was absent from the meeting.
E-mail Elizabeth Larson at
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