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LAKEPORT – Following a lengthy debate, the Lakeport City Council – sitting jointly as the Lakeport Redevelopment Agency – gave approval to having city staff begin the process of selling certain city properties to the redevelopment agency in order to fund a loan program meant to keep local businesses afloat during the credit crunch.

City Redevelopment Manager Richard Knoll took the proposal to the council and agency leadership, suggesting the city sell several “nonperforming” properties to the agency, which could in turn help improve those parcels or market them if necessary.

The proposed lands include a city-owned parcel on Bevins Court, Dutch Harbor and Lakeport Fire Protection District on N. Main Street, and the Lakeport Police Department on S. Forbes, said Knoll.

It was explained later during the meeting that the police and fire stations would stay put for now, but are looking at the possibility of developing a joint facility in the future.

The proceeds from those properties then could go into the city's general fund and be used to capitalize an expansion of the city's Business Stabilization Loan Program.

Knoll said several businesses have closed – among them Carlos and Vinny's – with several other “teetering.” Expanding the existing loan program, with small loans between $15,000 and $75,000, could help give businesses much-needed operating capital in the struggling business climate, he suggested.

Councilman Jim Irwin asked why the redevelopment agency didn't cover the business loan program, but Knoll said the city's redevelopment attorney had advised against that.

Irwin said he had serious concerns about using general fund money for loan programs, and he said it came down to making choices.

“I certainly appreciate how tight it is out there but I need more convincing,” said Irwin.

Knoll said he wanted to know if the council wanted to move forward with the concept or not. He said he could back away on the business loan component if the council was against it.

Mayor Ron Bertsch asked how much money the redevelopment agency has for purchasing property. Knoll said the available funds amounted to roughly $3 million in bond proceeds.

City Attorney Steve Brookes said the program is “a response to the credit crisis – let's be blunt about it.” He said it could help keep businesses going.

Bertsch suggested the program could “take the city down.” Brookes agreed that there could be some risky loans.

Knoll emphasized his concern about the situation facing local businesses. “We're heading into the darkest time in the traditional Lakeport business cycle, that period between Christmas and the period where the weather begins to warm up.”

Bertsch said it's always been tough that this time of year.

Parmentier said local businesses have supported the city for years, and he would hate to see empty blocks of storefronts if there is a way the city can help.

Bertsch objected to the way the proposal was written. “Well, then, write it the way you want it,” said Parmentier.

Knoll emphasized it was a suggestion. “I did not propose this to be black and white,” he said, asking the council to modify it any way they wanted.

“You tell me what you want to do,” he said, appearing frustrated. “If you don't want to do it, let's not spend any more time on it.”

Councilman Bob Rumfelt said it would be foolish for the city not to help businesses if it can do so.

Knoll said he wasn't suggesting using all of redevelopment's $3 million in funding for the business loan program. He actually proposed a much smaller number – between $150,000 and $200,000.

Council member Suzanne Lyons asked him about naming the specific properties the agency would buy. Knoll said the properties he named were examples of what the city has available to sell.

Brookes said the entire proposal is negotiable, and some land will be easier to sell than other parcels. He said staff's role is to bring them all the properties they have.

“Start thinking beyond the norm here,” Knoll suggested. “We've got some situations occurring where I think some businesses need some help.”

If no businesses come to request the funds, it will revert back to the general fund, said Knoll.

The city is getting no mortgage relief funds or federal bailout assistance, said Knoll. “I think we need to step up and provide some local bailout money, if you will.”

Irwin asked about an economic revolving loan fund, which has $172,000 allocated for business loans which hasn't been tapped yet. Bertsch said those funds have strings attached for job creation.

Knoll said there actually are applications for that money in the pipeline from a daycare operator and from another small business. Irwin asked if they can change the job creation requirements for those grants, and Knoll said no.

Returning to the core proposal, Knoll told the council, “What I'm looking for is some direction.”

Rumfelt moved to direct staff to move forward with selling nonperforming or underperforming city properties to the Lakeport Redevelopment Agency, adopt the Business Stabilization Loan Program guidelines and capitalize the program proceeds from the properties at a level to be decided by the city. Parmentier seconded the motion.

Irwin repeated his concerns about the city facing a shortfall, with his priority being core city services.

“We're looking at just trying to maintain basic services here,” he said.

The council voted 3-2 – with Lyons and Irwin voting no – to support the property sale idea. Bertsch said he supported it because a dollar limit would be added.

Community members point out pros, cons

Lyons asked if there was public comment; the discussion so far hadn't been opened up to public comment until after the vote, which has been a pattern in recent meetings. Brookes said the council could take the input and make a motion to reconsider if they wanted.

Lakeport resident Pete MacRae suggested some of the council members may be missing the point of the proposal.

“What is important here to recognize is this really could be a win-win situation from a number of points of view,” MacRae said.

The property sales would generate new money for the business loan program, he explained. “It isn't dipping into existing general funds.”

“I certainly understood that,” Irwin replied.

MacRae replied back, “You've got to support your local businesses to an extent.”

He said if he was a business owner looking to locate in Lakeport, and he saw a lot of empty shops, he would make the move. With no new business owners willing to come into downtown, the property owners themselves may face trouble.

“You could wind up with one heck of a snowball effect, and I think that's something you really have to consider,” said MacRae, explaining the loan program can help the city's entire business climate.

The alternative, he said, was “you could see downtown go down the toilet, quite frankly.”

Hillside Honda owner Paul Breunig said he received a similar loan from the city 12 years ago, which was very important to his business.

“Everybody knows everyone is hurting right now,” he said.

However, Breunig pointed out that, while the country is focused on business, it's the small businesses that keep the national and local economies going.

“Without small business this city is going to cease to exist,” Breunig said.

Jo Gossett spoke out against the property sales because of her concern that it will impact open space on the lakeshore, specifically Dutch Harbor and Natural High School. Bertsch explained that the city doesn't own the school property.

Gossett emphasized the need to keep open space to draw tourists.

Barbara Breunig of the Lakeport Main Street Association said the group is very concerned about its small businesses, and is doing everything they can to encourage residents to buy locally.

She said anything the city can do to help local business will be greatly appreciated.

George Spurr said he saw pluses and minuses on all sides. Without collateral, the city could lose out on the business loans. “If you're going to sell the property, sell the ones you don't want.”

Knoll said redevelopment has power to improve property that the city doesn't have.

E-mail Elizabeth Larson at This email address is being protected from spambots. You need JavaScript enabled to view it..

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