The Lake County Redevelopment Agency will purchase the Lucerne Hotel, a decision made Tuesday, September 21, 2010, by the Lake County Board of Supervisors, sitting jointly as the agency. Photo by Elizabeth Larson.
LUCERNE, Calif. – An outpouring of community support that included good ideas and a great deal of enthusiasm led to the Board of Supervisors' unanimous vote to purchase the historic Lucerne Hotel on Tuesday.
The board, sitting as the Lake County Redevelopment Agency, approved the $1.35 million purchase of the 75,000-square-foot building from Castlepoint Ministries, which has used the property for a Christian youth camp and retreat. The building was put up for sale in late 2008, and has sat mostly empty since then.
About 30 Lucerne residents and community members came for the hour-long discussion.
Over the last 81 years “The Castle” has passed through various hands and multiple uses, never quite finding the right fit for its majesty and in recent years falling into increasing disrepair.
A pest inspection, environmental assessment and county staff's review of the building's present maintenance needs pointed to about $367,000 in repairs that should be made as soon as possible, according to County Administrative Officer Kelly Cox, also the redevelopment agency executive director.
That led to a major concern, voiced by District 3 Supervisor Denise Rushing Tuesday, that the grand old edifice was running out of time.
“I believe it's the last best chance for the building and I think it's one of the best chances for Lucerne,” she said of the proposed purchase.
Lucerne, in fact, was designed with the building at its heart. Early photos of the area show the formation of lots after the building's construction.
While not sitting on the water, the building is connected to the lakeside and Highway 20 by the particularly broad 13th Avenue, which the county redevelopment agency has identified as the location for the town's commercial center.
Cox told the board that for the redevelopment agency to achieve its goals for 13th Avenue and for the community at large, the hotel couldn't be allowed to continue in its current use and condition.
Reviewing his lengthy staff report to the board on the hotel, Cox said “pretty minor” termite damage has been identified, which can be addressed for about $10,000.
The more major issue is the roof, which has been half replaced in recent years. To fix the remainder will cost about $225,000, Cox said, which is consistent with Nice-based Ernst Architects' estimate in a building assessment completed last year.
Exterior plaster and painting is estimated at $132,000, which Cox said staff hasn't yet been able to independently verify.
The recently adopted redevelopment agency budget includes $300,000 for renovations for the building, with the additional $67,000 needing to come from a fund for other redevelopment property acquisitions, Cox said.
Some of the costs might be reduced if the county can get help from the Konocti Conservation Crew. The building also might qualify for state and federal grants, especially for energy efficiency programs, for which the building is an ideal fit, Cox said.
He said the county will make every effort to work with local contractors only, even if that requires waiving the normal bidding requirements.
“We'd like for this project to provide as much support as possible for the local economy, from start to finish,” said Cox, adding that they want to see the project become a local economic engine.
Future needs for the building will include heating and cooling, and improving accessibility. Cox said one floor could be renovated at a time, while other floors are closed.
He said it would require a substantial commitment of future redevelopment resources – both money and staff time. “It's important for the board to be aware of this.”
That commitment could be decreased if the agency actively markets the building for sale or partners with another agency or a private developer; in the latter case, one private party already has come forward to express interest, he said.
Cox pointed to the building's ability to create jobs and increase staff revenue. County staff prefers it to be operated privately, and he said it would take at least five years to market it and two to three to see a restaurant or other facility open there.
There also are educational possibilities, an option the board and community have favored. Cox said county staff has met with the local community colleges, which haven't expressed interest in operating the facility year-round, but are interested in utilizing it for hospitality training and internships. He said county staff also will speak to state college representatives about possible partnerships.
He said he believes the property is a key to the future of Lucerne, the Northshore and beyond.
One potential use is a conference center, a redevelopment agency goal, but Cox was clear that the purchase is not as straightforward as purchasing another lakefront property to add to the promenade. He said the county may need to contract with a private firm to operate the building.
Two families currently live on the property. One is the family of the caretaker, who Cox proposes to enter into a contract with because a caretaker will remain necessary. One of two modulars located on the land also is rented, and he suggested continuing the rental agreement and renting out the vacant modular to bring in additional income.
Cox said buying the building would be a major agency undertaking, and one that shouldn't be approved without strong public support.
He clarified for the public's benefit that the redevelopment agency – covering the area from Upper Lake to Clearlake Oaks – would use redevelopment funds for the property. Redevelopment funds can only be used in that area, and the funds can only be used for certain things.
He said the real purpose of redevelopment is to eliminate blight and promote economic development.
The $1.35 million price is significantly lower than the $4 million Castlepoint Ministries was originally seeking, Cox said. An appraisal valued the property at $3.1 million, counting reductions for the needed improvements. Castlepoint Ministries dropped its asking price to $2.78 million and negotiations led to the final $1.35 million price tag.
Community members bring good ideas, enthusiasm
Fourteen community members spoke on the proposal, all of them in support of buying the property.
Buck Bouker, representing the Lake County Heritage Commission, expressed that body's support for buying the Castle and preserving it as a historical monument.
Bouker said Dr. John Parker, the commission's chair, has noted the building has “very heavy historical significance that he'd like to see preserved.”
Lucerne resident Carol Bettencourt also noted the building's great historical significance. Completed in 1929 – probably not a great year to start a hotel, she said – it's one of the era's last grand hotels.
“I think it's worth saving, because it's different,” she said, adding support for educational uses.
Another Lucerne resident, Lenny Matthews, credited Cox's financial management of the county for making the purchase – which she called “a no brainer” – possible.
Besides being a great place for a fun and terrifying Halloween, she said she'd like to see it be used for an apprenticeship program that could teach young people the trades, everything from electrical to painting.
“There's so many possibilities there,” she said.
Maria Giovanni of Nice, who teaches food sciences at the University of California, Davis, said she sees the educational opportunities. Having also taught hospitality management in Colorado, she suggested the buildings could have “a huge ripple effect beyond the Northshore,” as there's no facility like it in the North State.
“I think the risk of not purchasing it is very serious for the Northshore,” she said.
Supervisor Rob Brown asked if she is familiar with other public-private partnerships for operating such facilities. Giovanni said yes, pointing to a Denver school that runs a private hotel.
“So there are models of this that we could easily access?” he asked.
Giovanni said she has contacts that can help, noting, “We have a chance to do something unique.”
Lakeport businesswoman Nancy Ruzicka remembered visiting the county 48 years to see her father, who took her to dinner at the hotel. She said nothing impressed her about the Lucerne community until she saw the building.
She said 25 years ago she had been involved with a county economic development committee that had wanted to start a culinary institute.
“We cannot invite people to Lake County as tourists if we don't give them a good, neat place to say and a decent meal,” she said, pointing out the facility will allow the county's young people to stay and work in the hospitality industry.
Nancy Kaymen, another heritage commission member, paraphrased famed architect Daniel Burnham by stating, “Make no small plans.”
With a background in architectural history and experience in construction and restoration of old buildings, as well as having been a former Mendocino County building inspector, Kaymen offered her experience and research in serving on an ad hoc or steering committee.
Jerry Morehouse, another Lucerne resident with 40 years of experience in the hospitality industry, pointed out that a young man who had worked at the Lucerne Alpine Senior Center had to leave to go to Oklahoma to find a culinary school he could afford. Morehouse supported the purchase.
Another Lucerne resident with experience and ideas who offered to help was Barbara Johnson, who told the board that the building's potential and possibilities – above and beyond a culinary institute – are “stupendous.”
With an experience in microenterprises, Johnson said while statistics show 85 percent of businesses fail, “that doesn't have to be,” and businesses can train for success.
With local agriculture as a support, plus many potential uses, “If it takes two years, five years, 10 years, it's going to be worth it,” not just for the Northshore but for the entire county, Johnson said.
Craig Bach of Lucerne said something needs to be done with the building, and with the county's plans for 13th Avenue, it ties together. He said it would be a waste to let the building go.
New Lake County Superintendent of Schools Wally Holbrook, who had previously spoken in support of the county's plans for the building, told the board, “I'm just really excited about the educational opportunities.”
He said he and the office of education stand ready and willing to participate in any way they can, and offered to help facilitate discussions with colleges and private organizations. “We'd like to bring resources to you,” he said.
Like he did the last time he spoke to the board, Holbrook explained that this is a tipping point for the community, and that the county will look back favorably on this decision, which will help it move forward.
Supervisor Jeff Smith thanked Holbrook. “There's opportunities here above and beyond what we've talked about,” he said.
Smith suggested that young people could learn maintenance and repair, energy efficiency and landscaping on the property, and that it could be geared to education. “It could be a college in itself in all areas,” said Smith, whose comments drew applause.
Victoria Brandon of Lower Lake called the purchase “a fantastic investment,” and suggested the county needed to keep an eye on the unique advantages the community has. She pointed to the Tallman Hotel in Upper Lake as an example of a building acting as a keystone in the process of revitalizing a community.
“The possibilities – we've only begun to scratch the surface,” she said.
Lyndon Ernst, who has done inspections on the building, said if the community purchased it, the community can decide what is done with the building, and he said he's in favor of that option.
Board deliberates on its choice
Board Chair Anthony Farrington asked Cox a series of questions about financing the purchase.
In response, Cox explained that the general fund's building reserves, which currently contains $4.8 million, would loan the redevelopment agency the money at a 4-percent interest rate.
“This is a really good investment for the general fund,” he said.
It will be a higher interest rate that the county's other investments currently are getting, and the redevelopment agency would have to pay a higher interest rate if it borrowed from outside of the county. Cox called it a “win-win” for the county and agency both.
He explained that, by law, the redevelopment agency has to be in debt in order to continue getting funds, the opposite of how the county itself works.
Farrington asked about the other debt obligations the redevelopment agency has. Cox said he's actually paying those off ahead of schedule.
Cox said he also didn't see the purchase limiting the redevelopment agency's ability to do other projects. He said the county's contingency funds are in good shape, and one department head even offered to loan funds for the purchase in order to get a good interest rate.
In response to Farrington's question about the current trend for tax increment – which is the increase in property tax thanks to property improvements, a major funding source for redevelopment – Cox said tax increment is very strong despite the economy at large. Even if there was a large decline in tax increment the agency would be OK; the agency could go into debt another $10 million and not have problems.
Rushing, noting that Farrington asked good questions, thanked Cox and Deputy Redevelopment Director Eric Seely for their work, noting it's a tough job.
“I can't think of a single project in the town of Lucerne that could have more of a transformative effect,” she said.
Noting, “The dream drives the action,” Rushing said she could see the community can, and will, step up.
In decades to come, Rushing said the project “will be something that will allow us to be proud.”
She added, “The process may be just as important as the outcome.”
Brown said there will be other projects to come but none will be like this one.
He acknowledged it was a great opportunity, especially for education, and said it's one of the rare occasions he would support such an acquisition, which he said will benefit Lucerne and Lake County. Brown said he's seen people have to leave the county to pursue education and careers, and it was hard to see it happen.
“I support it if you promise not to build a mud sign in front of it,” he said, referring to a lengthy discussion at last week's meeting about a natural building project in Clearlake Oaks.
Supervisor Jim Comstock said it sounded like the renovation aspect of the building could prove to be an economic recovery act for local contractors.
He said he is a firm believer in any development that has an anchor, and this appears to be such a case. “It's a very, very good opportunity,” he said.
Comstock added that he supported the hotel being run as a private enterprise when the opportunity avails itself. Rushing said she wanted to keep open the option of a public-private partnership.
Rushing offered two motions, to approve the purchase agreement and the loan agreement between the county and redevelopment agency, both of which were approved unanimously by the board, with a round of applause from the audience.
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