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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 improvements.

Prepared By: Randy Kidwell, Chief Building Official

Submitted By: Howard Sword, Director, Community Development Department

RECOMMENDATION
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.

PREVIOUS ACTION
On April 12, 2004, in closed session to consider possible legal action, Council took no action.

BACKGROUND
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, 2005.

• 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 progress.

FISCAL IMPACT
Continuing to withhold permits adversely effects facility fee cash flow.

Attachments:
Letter 

 

City Administration
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