Lake County commissioners direct staff to contact alternative builders after financing concerns shrink scale of planned homes

At a Dec. 20 special meeting, the Lake County Board of Commissioners directed staff to contact Oakwood Homes and Solution Builders to explore building homes on county-prepared sites after staff and a proposed builder said current construction-financing terms would force the project to shrink.

The action followed staff reports that 20 households applied for a planned affordable-for-sale development on county-readied lots and that lender concerns about interest-rate risk would require an oversized pool of qualified buyers. Michael Yurman, a staff member working on the project, told commissioners the county received 20 applicants and that staff is continuing to process qualifications.

Why it matters: county-prepared sites are engineered and cleared for vertical development, and the project as proposed could deliver up to two dozen homes. Lenders’ requirements, however, could reduce the first phase to about 10 units or fewer, raising per-unit prices and jeopardizing the project's intended affordability and future phases.

Staff summary and lender concerns Michael Yurman said the application period closed with 20 submissions and that staff is still following up with several applicants to complete qualifications. He apologized to the commissioners for shortcomings in outreach that he said likely reduced the applicant pool: “We didn't advertise the way we needed to. ... That falls on my shoulders,” Yurman said.

Builder Adam Lisonbee, who had been a candidate to finance and build the first phase, described lenders' worries about interest-rate movements between initial qualification and final sale. Lisonbee said lenders including CHFA and First Western Trust are asking for an applicant-to-unit buffer because rising mortgage rates could leave prequalified buyers unable to close. “So the long and the short of it is we could build 10 units in phase 1 if we had 20 applicants because that's essentially a 2-to-1 ratio of applicants to the number of units we build,” Lisonbee said.

Lisonbee and staff said if fewer than roughly 20 qualified applicants hold through to closing, pricing and the project's economics would change, potentially forcing a reduction to as few as six units under the construction-financing option discussed.

Options considered Staff presented two primary options: (A) continue with the current preferred proposer (Adam Lisonbee's team) and the construction financing approach — which staff recommended against because of the attrition and interest-rate risk — or (B) pursue the county’s second-ranked proposer, Oakwood Homes (also referred to in the meeting as Solution Builders/Oakwood), whose model does not require the same construction loan structure and therefore may avoid the attrition-driven constraints.

Yurman recommended proceeding with applicant income qualifications and prequalification work now so the county could present a ready pool of buyers to an alternative builder should outreach be successful. He said that because the sites are fully engineered and remediated, an alternative builder could potentially move quickly if willing.

Formal action and immediate next steps A commissioner motion directing staff to reach out to Oakwood Homes and Solution Builders and to report back at the Dec. 30 or Jan. 7 meeting passed with commissioners responding "Aye" and the chair adjourning the meeting shortly after the vote. The motion authorized staff to (1) contact the county's second-ranked proposers to ask whether they will honor their original bids or otherwise engage quickly and (2) prepare a new RFP if both decline to proceed under acceptable terms.

Staff said it will continue the applicant prequalification work and pause the formal lottery procedures pending the outcome of outreach. If an alternative builder agrees to proceed, staff proposes to honor the applicant list and use prequalification results to match buyers to available unit types rather than repeating a full RFP immediately.

Context and remaining uncertainties County staff said the county achieved key site-preparation milestones (subdivision, sewer work, remediation) and that engineering and site elevations are complete, which staff said reduces uncertainty for a production builder. However, staff and the builders noted remaining contract details to negotiate if an alternative builder engages, including foundation costs, any buy-down or attrition protections the county might offer, and how deed restrictions would be handled relative to construction notes.

Staff committed to report back to the Board of Commissioners with the results of outreach and recommended contract terms so the board can decide whether to authorize a contract with an alternative builder or reopen the RFP process.

Ending The board adjourned the special meeting after receiving staff direction; staff will provide an update at the Dec. 30 or Jan. 7 meeting (whichever occurs first), or sooner if outreach yields a response.