CLEARLAKE
– Should the city of Clearlake extend its redevelopment plan for another 10 years or, based on the agency's performance over the past decade, simply let redevelopment become a thing of the past?
That was a question that arose during the Clearlake City Council's meeting April 10.
City Administrator Dale Neiman asked the council to consider amending the city's budget in order to meet some budgetary needs in connection with redevelopment.
Primarily, the city needs to make a payment in connection with a 1999 settlement with Clearlake Housing Now, a group that sued the city because it used redevelopment housing funds to purchase the Austin Resort property.
Neiman said the city is evaluating whether to extend the redevelopment plan another 10 years, which would require meeting certain obligations, which Neiman is concerned the city can't meet.
Clearlake Housing Now members along with some city residents also questioned a plan to have the city sell the redevelopment agency 22 lots for building affordable housing, lots which opponents of the plan question as being unbuildable or needing substantial engineering. The plan was meant to help the city meet state administrative requirements.
Not extending the plan would have serious consequences, said Neiman, including the loss of $21.7 million – $7.3 million for affordable housing programs, $7.6 million for economic development and public infrastructure, and $6.8 million in general fund revenues. Of that $21.7 million, $16.7 million would come from the state.
Those are funds that could be used for the community's many needs, Neiman said.
But to extend the plan the city needs to begin projects such as a housing element update, which will require "a significant commitment of staff time," Neiman said, and a year and a half's worth of work.
There's also the issue of the agency's inability to make the payments for the Clearlake Housing Now suit.
Neiman reported to the council that the suit called for $254,000 plus 5 percent interest annually to be repaid to the housing fund. The city purchased the property from redevelopment for $203,000 but the funds were never deposited in the housing fund, and now the amount required to be repaid amounts to $410,000. A budget amendment Neiman is proposing to the council includes repaying that amount back now.
There's also the need to eliminate a surplus in the housing fund, which Neiman believes can be addressed by transferring the 22 lots to redevelopment by July 1.
If the city fails to meet state requirements, it could face action by the state, said Neiman.
Attorney Andy Rossoff of the Senior Law Project, who was involved in the Clearlake Housing Now suit, said the redevelopment agency used the money for purchases other than housing.
The suit, he said, was to make a point that the agency hadn't acted properly. "The lesson was not learned."
Rossoff said the result is that the city's redevelopment housing fund has no cash. He said he realizes the situation is both difficult and complicated.
"You're in a very tough position," he told the council, adding that extending redevelopment was a good idea.
Rossoff said Clearlake Housing Now has been meeting with the city about ongoing settlement issues, and disagrees with the city's accountants about audit adjustments on the housing funds. "We can't frankly make a whole lot of sense out of them."
The housing fund is still owed a total of $653,000, said Rossoff, although the city's auditor claims the settlement isn't a fund asset. So the fund has no cash, and houses can't be built without money.
Rossoff said Clearlake Housing Now disagrees "very strenuously" with the idea that the housing fund can loan money to other funds for uses outside of housing, and they want to see a realistic and prompt correction.
As to the idea of selling the 22 lots to the city, Rossoff said he looked at them and found nothing buildable.
The city has problems with an excess surplus because it didn't spend money as the state required, said Rossoff. "I think you've got a lot of problems to fix before you get there."
Neiman agreed that the money should have been paid back when the Austin Resort property was sold, and he agreed the past use of the housing funds to buy the land in the first place was inappropriate. "The agency deserved to get sued,” he said.
In recent years, there has been substantial progress in helping low income housing in the city, it just hasn't come through the housing fund, said Neiman.
He suggested that Clearlake was "light years ahead" of both Lakeport and the county when it came to low income housing.
Fifteen percent of all new residential development in the project area must be low- to moderate-income housing, according to state law. "I think we're fairly close," said Neiman. "That's a different way to look at it."
Rossoff said it's a waste of public funds for redevelopment to buy the lots for more than they're worth.
But Neiman maintained that transferring the lots may be the only way to immediately solve the surplus. The city's staff is stretched thin, and the city budget had to be cut by $1 million last year, so resources are at a premium.
Rossoff replied that the city could enlist help from developers who could carry out projects. "I have concerns about putting all of your housing funds into single-family homes. I think it's not cost effective."
To update the redevelopment plan, the city must update its general plan, said Neiman. That will require substantial work in the next two and a half years, and because of resource issues the city might not succeed in pulling it off.
Supervisor Jeff Smith said that some of the issues probably started when he was still on the council. He was green then, he said, and he trusted city staff.
He said he is looking forward to the time when the city can “draw a line in the sand” and move forward into the future.
Smith said the city should extend redevelopment. If they don't, it won't mean there will be a change in property tax – it will just mean that the state gets all of the money.
He credited Neiman with being a redevelopment expert, and said his suggestions could lead the agency to actually building some homes, which it hasn't done before. “We are moving forward.”
Smith added, “I trust Dale more than any other administrator I've known in the city.”
He favored a suggestion made by Rossoff to form a citizens committee to oversee redevelopment. Smith said they can't blame people for not trusting due to what happened in past administrations.”
But he said, “That's behind us, it's time to move forward.”
City resident Alice Reece disagreed with Smith that there was no other way to help the city than through redevelopment.
“We could just simply shut down redevelopment,” she suggested. “Redevelopment hasn't accomplished a thing in this town.”
Redevelopment only serves to continue taxing residents, with bond issuers being the main ones who benefit, said Reece.
The funds are pushed from account to account, said Reece, but someone has to pay it back eventually.
“Just forget it,” said Reece.
Council member Joyce Overton made a motion to continue the discussion to the next meeting, which the council accepted.
Council member Roy Simons said that he believed past mistakes are educational, and hopes that a project area committee will be formed to to monitor redevelopment.
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