CITY COUNCIL AGENDA ITEM NO. 21
Meeting Date: April 26, 2005
Subject/Title: Authorize staff to release permits to the Deer Ridge Home
Builders because of real progress toward completion of subdivision
Prepared By: Randy Kidwell, Chief Building Official
Submitted By: Howard Sword, Director, Community Development Department
Direct Staff to:
• Resume issuing new home permits to the Deer Ridge Home Builders by
authorizing 106 permits to be issued immediately.
• Authorize staff to enter into a letter agreement with the remaining Home
Builders, KB Homes and DR Horton Home Builders, guaranteeing completion of
the remaining infrastructure improvements, secured by withholding the final
100 permits, 50 from each developer.
• Return to Council on a monthly basis with a progress report and possibly
authorizing additional permit releases.
On April 12, 2004, in closed session to consider possible legal action,
Council took no action.
The Deer Ridge Subdivision began construction in 1998 and over the past 7
years has had many obstacles to overcome. Most of the problems were of their
own making, but until recently progress was slow but did occur. At some
point in November 2004, a decision was made by CalSun to stop construction
progress by withholding payment to all their contractors and material
suppliers. Some of the contractors continued to work, but after months of
nonpayment all of the contractors stopped work in late January, 2005. Staff
met with Cal-Sun representatives on multiple occasions to try to encourage
them to develop a plan to complete all the outstanding work, but no progress
was seen. Staff met with the majority outstanding lot owners, KB Homes and
D. R. Horton to try to discover possible points of leverage that could be
brought to bear on the developer. With progress toward an acceptable
resolution to this project looking very bleak, staff authorized the City
Attorney to start the preliminary process to call the subdivision
improvement bonds. The City’s intention to call the bonds was relayed to the
developer through their legal council. Their legal council requested two
additional days to try and work something out with their client. Two days
later we received a plan from the developer to pay approximately 75% of
their debts, approximately 3 million dollars, and a commitment to signed
contracts to complete outstanding subdivision improvements. Attached is a
copy of that letter dated March 22, 2004, from Murray McQueen. Since
receiving that letter the following progress has been made:
• CalSun has paid three million dollars in construction debts.
• KB Home has been retained By CalSun to manage the construction of the
Foothill extension/John Muir Parkway extension, the completion of the Oak
Meadow Park punch list, the bridge railings, the Zone 3 Pump Station and
completion of roadway improvements at Spyglass Drive and Ventura Ave.
• Contracts have been signed with Bellecci and Associates to design the
Foothill extension and the John Muir parkway extension.
• PG&E has been contracted to provide power to the Zone 3 Pump Station.
• KB Home acting as construction management is poised to complete work on
the Zone 3 Pump Station by April 25, 2005.
• CalSun has paid the Roadway Fee for the Golf Course.
• The access easement for Spyglass Drive has been acquired from Contra Costa
County Flood Control District.
• The final 9 holes of the Golf Course opened for play on Saturday April 17,
• The contractor who constructed the bridge railings was paid, and rails are
in transit from Pennsylvania for instillation by May 4, 2005.
• CalSun has hired the management services of Don Burton Construction
Management to complete the subdivision improvement punch lists, as well as
the complete the landscaping throughout the subdivision, including Foothill
and Balfour Road. Weed abatement will commence immediately and contracts for
the landscaping will follow over the next few weeks.
New home permits have been on hold pending the full opening of the Golf
Course. The two majority home builders, KB Homes and D. R. Horton, have
agreed to enter into a letter agreement to withhold permits on fifty each of
their final lots until satisfactory progress has been made on the
construction of the Foothill extension/John Muir Parkway extension. Staff
would like to return to council monthly to provide a progress update, and to
get Council authorization to meter out additional permits based on that
Continuing to withhold permits adversely effects facility fee cash flow.