The Lake County Board of Supervisors voted unanimously to approve a purchase option for the Lucerne Hotel, located in Lucerne, Calif., on Tuesday, August 10, 2010. Photo by Elizabeth Larson.

LAKEPORT, Calif. – In a unanimous Tuesday morning vote, the Board of Supervisors – sitting as the Lake County Redevelopment Agency – approved a purchase option agreement for the historic Lucerne Hotel.

“The Castle,” as it's known locally, was built in the late 1920s before the Great Depression caused the economy to crash. It was put up for sale by its current owners, Castlepoint Ministries, in late 2008, as Lake County News has reported.

On Tuesday, County Administrative Officer Kelly Cox, the redevelopment agency's executive director, and his Deputy Redevelopment Director Eric Seely took to the board a proposed option to purchase the 75,000-square-foot building for $1.35 million, far below its original $4 million asking price.

Cox and Seely reported that they began conversations with Castlepoint Ministries in the spring, following 18 months of the property being listed with no buyers coming forward to purchase the building.

The talks resulted in the low asking price, Cox said. “The response from Castlepoint Ministries was very encouraging,” he said.

The seven-acre property also would include two manufactured homes, which the ministry could remove within 120 days, Cox said.

Purchasing the Castle would save one of the county's most historic and valued buildings, said Cox, and meet redevelopment's goals of economic development and removal of blight.

He then laid out a menu of creative use options for the property; chief among them was working with local community colleges to locate a hospitality and culinary program there. After talking to college representatives recently, “So far so good on that option,” he said.

There are other options that also can be explored once the redevelopment agency owns the building, Cox said.

“This provides a huge opportunity to further economic development and create new jobs in Lake County,” he said. “It has the potential to achieve multiple goals of the redevelopment agency.”

If the agreement with the community colleges to locate a vocational education program there comes to fruition, Cox said they could create opportunities for young people to work locally in the hospitality industry.

“We don't know at this point whether that's really going to happen,” he said, adding, “I think it has tremendous potential.”

Even if that vocational education training option doesn't work out, Cox and Seely had other proposals.

One is a conference center, which is included in the Northshore redevelopment plan. Purchasing the building and renovating it is a less expensive way of achieving that goal, Cox said.

Board Chair Anthony Farrington said he was “intrigued” by the concept of a culinary education program, as well as the chance to partner with the wine industry.

He said he had received e-mails from community members who were concerned about the use of tax dollars in such a purchase. Some community members had suggested to him that the county purchase Konocti Harbor Resort & Spa, but he said that's an apple and orange comparison.

“That project is so large and we do not have the money available to even consider such an option,” said Farrington.

Farrington asked Cox to explain how redevelopment funds are separate from other county revenue sources.

Cox explained that redevelopment in Lake County covers a project area extending from Upper Lake to Clearlake Oaks. The tax increment funds the area generates – which results from increased property tax due to property improvements – can only be used within the plan boundaries, and couldn't be used to purchase Konocti Harbor.

Part of the tax increment goes to the county's redevelopment agency, rather than the state. “The more you keep reinvesting it, the more it grows,” Cox said of the funds.

Farrington asked him to explain why the purchase would make sense to the county.

Cox said the building “happens to be a conference center,” and it's one of the existing properties in the project area that has potential for generating a significant number of new jobs.

The building is historic, and Cox said it's important to preserve it and not allow it to have a detrimental use. Someone else could buy that property and do something to it “that I think all of us would regret.”

In what Cox felt was the worst case scenario, the agency could purchase the building and turn around and sell it with restrictions on future use.

He believed there is an opportunity through potential partnerships with the college and other groups for long-term benefit to the community.

The reality, said Cox, is that small governments like Lake County's can't do a lot to impact the economy, but this was one way that it could, by buying the building at an “incredible” price.

He said he can't think of anything else they could invest in that would have as big a potential return. Cox said it also impacts the development of a Lucerne town center. Not knowing what might happen with the hotel has impacted the redevelopment agency's efforts along 13^th Avenue, and he called it a “chicken and egg” situation.

Farrington said he thought the conference center is an opportunity to market the county and draw people, and it was an amenity he felt the county was lacking.

He asked what other redevelopment projects would be put on hold if the board approved the option agreement.

Cox said the redevelopment agency still has the capacity to sell more than $10 million in bonds to support redevelopment projects, so it has a lot of financial resources on which to draw. “We've been very cautious,” he explained, noting that the redevelopment agency has borrowed money from the general fund and repaid it with interest, which is a good investment.

“It's going to require a lot of staff effort if we buy this,” he said, which might preempt pursuing other projects, like the Lucerne Promenade, which has involved purchasing lakeside properties. Cox said he believed the Lucerne Hotel had greater job creation possibilities, and continuing with the promenade without lodging facilities isn't going to result in much of a change for the town.

Upper Lake's Main Street project is done, as are several projects in Clearlake Oaks, and staff is continuing to work on the final grant needed to build the new Clearlake Oaks senior center, Cox said.

Supervisor Denise Rushing, whose Northshore district encompasses Lucerne, commended staff's dedication and thoroughness in exploring the opportunities.

“I'm looking at this as a very low risk option,” she said, especially considering the relationship between the purchase price and appraised value.

She added, “The partnership with education is very exciting.”

Rushing said she's talked to a number of people about the proposal. In Lucerne there is skepticism, with the community “truly struggling” due to the economy, and hoping for positive things to happen.

Even so, comments at a town hall were mostly positive. The only negative comments suggested the could should purchase the town's water system, which she said isn't for sale. “There just isn't a way to help with that.”

But if the redevelopment agency can generate economic activity to get more residents and businesses, Rushing suggested the water system would be paid for more easily. “It's a long-term connection.”

She added, “I'm just really jazzed about the potential.”

Community members encourage board to save the building

During public comment, Taira St. John encouraged the board to purchase the hotel.

With Lake County's arts community growing “so magnificently,” she hoped that the building would have a cultural arts component. The Lake County Theatre Co. is seeking a home, she added.

Cox said that one of the many proposed uses for the building includes using it as a theater venue.

Lourdes Thuesen of Lucerne, a retired teacher, thanked the board for what they've done in Lucerne, and also urged them to buy the property.

“It's a very humble community,” she said, explaining that there is a high number of retired people on fixed incomes and poor families.

An infusion of money and work would be greatly appreciated, and Thuesen said she was totally in favor of the educational possibilities. She said she also could see opportunities for training young people in the building trades during the renovation.

“It's terrific to keep our wonderful history alive,” she said, adding that to her the Lucerne Hotel is like such historic buildings as the Ahwahnee Hotel near Yosemite National Park.

Wally Holbrook, who in June was elected Lake County's new superintendent of schools, encouraged everyone to look at the building as an opportunity for potential partnerships.

One of the primary things needed to help local residents is to convert education to jobs, he said.

He suggested the Castle purchase could be a major tipping point for the county.

It's easy, Holbrook said, to look back and identify where those tipping points are, but the challenge is to look forward and create them.

From an educational perspective Holbrook said he was very excited about the opportunities, and said he wanted to be involved on behalf of K-12 education in helping to develop options.

Architect Lyndon Ernst, who completed a report on the building for the county, said he was representing the building itself.

“This is a grand old building,” he said. “This is a building that is so well preserved that it's unbelievable.”

It's so well preserved, in fact, that he said there was only spot in the building where they found rot, and that was a matter of bad maintenance.

The building has excellent construction, and he saw opportunities for an award-winning green building project. Ernst said the building has a passive heating and cooling system that doesn't meet current code but could be updated.

The building was designed by John R. Kibbey, a fairly famous architect during the 1920s, who Ernst said was a tier down from Frank Lloyd Wright.

Ernst told the board that, for him, the real issue was that if the county takes the building over they can control its future.

Lucerne resident Donna Christopher told the board she has given them “a lot of guff” over the years about redevelopment, but she's not as critical as her husband.

However, after they read the Lake County News story about the proposal earlier this week, Christopher said her husband said the purchase makes sense.

“I think this is a wonderful opportunity for Lucerne,” with Christopher noting the great potential in Lucerne.

She thanked the board for what already has been happening in Lucerne, where she's seeing new businesses open.

“It's starting to work,” she said. “It kills me to say this and I'm going to need a good recipe for crow if anyone has one, because I need to be eating it.”

She added, “That is one heck of a deal.”

Board unified in support

Supervisor Jeff Smith said he agreed with Holbrook about the concept of the tipping point.

“This is something that could be made into a grand deal for all of Lake County,” becoming a centerpiece that would boost hotels once it's done, Smith said.

Supervisor Rob Brown said when they first started discussing purchasing the building a few years ago he thought it was a “crazy scheme,” adding he didn't want to change the board's name to the “board of Realtors.”

However, when they started talking about education, Brown said he changed his mind.

“Vocational ed has declined, and it's been to the detriment of education,” he said.

Brown added, “I think this is an opportunity to go in the other direction.”

He said he thought it would be a “great thing,” and noted that having Holbrook on board would be very helpful.

Brown said he wasn't as sold on the conference center idea, because he wasn't sure government should be involved in such a plan.

But when it came to the possibilities for the building, “I don't think private industry has the ability to do this on such a grand scale.”

Noting there's still a lot of discussion ahead, Brown said, “I think it's worth pursuing and I support it.”

Supervisor Jim Comstock said he is not generally in favor of the government purchasing property, but there are exceptions, “and I feel that this is one of them.”

Konocti Unified School District has a very successful culinary program, he pointed out.

When local children graduate from high school, Comstock said they get handed a diploma with one hand and a bus ticket with the other. He said he hopes to see jobs created to keep them here.

Farrington said he shared some of the same sentiments as Comstock and Brown when it came to the government purchasing property.

He said he didn't see the building being a standalone conference center or lodging facility. “I think the vision that we should have is mixed use.”

Farrington said he wanted to see them bring many stakeholders to the table – vocational education, tourism, wineries and hospitality. Mixed use, he suggested, “will be the key to success for this building.”

Another part of the vision is elimination of blight, he said.

Rushing said there were three themes emerging – mixed use, a public-private partnership and vocational education.

“I think this community has the capacity to do something very special here,” she said, adding, “The community of Lucerne is ready for something like this.”

Rushing then offered the motion to approve the purchase option agreement, which received multiple seconds and the 5-0 vote.

Cox said a public hearing on the actual purchase itself will be scheduled for next month.

Later in the meeting, Cox informed the board that the California Community Colleges has arranged for him to go to Pomona on Aug. 18 to see their culinary program.

He said he wants to be able to have a local community college representative travel with him, and asked for the redevelopment agency to cover that person's travel in the case that the college doesn't have the money.

“I think it's important to have someone there from the college involved in this,” he said before receiving the board's unanimous approval of the request.

In other board action Tuesday, supervisors approved Sheriff Rod Mitchell's application for a $227,000 Department of Homeland Security grant to fund local first responder training and improve information technology systems.

Specifically, Mitchell said the goal was to use the money to address fire department needs. “This is going to fill some gaps” and may actually help save lives, he said.

A 1:30 p.m. hearing on Veronica Fisher's appeal regarding a notice of violation for her El Dorado Motel in Lakeport was postponed at Fisher's request until 1:30 p.m. Sept. 14.

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