Sanctions Possible for Dos Vientos Developer : Thousand Oaks: Payment to city is 3 1/2 months late. Council could delay construction on or even eliminate 136 homes.

With a Dos Vientos developer unable to make a scheduled payment, the Thousand Oaks City Council today will weigh sanctions that could delay construction on or eliminate 136 homes from the planned Newbury Park project.

Developer Courtly Homes has pleaded for more time to come up with the overdue $806,000 payment, arguing that the sagging economy has unexpectedly pinched the company’s pockets.

But some nearby residents--already incensed at the project’s location among scenic, rugged foothills--urged the council to punish the developer by cutting the number of homes approved for construction.

The delinquent payment is part of a development agreement that guaranteed developers Courtly Homes and Operating Engineers the right to build up to 2,350 homes on the parcel, located just north of Potrero Road.

In exchange, the developers agreed to pay the city $12.6 million over a dozen years in addition to the standard fees for parks, schools and other services. Payments are due each time Thousand Oaks grants Dos Vientos a group of “development allotments”--explicit permission to build a certain number of units.

Because Courtly Homes has defaulted on the most recent payment, which was due in mid-June, the city can revoke the development allotments for the 136 homes linked to that payment. That move would force the developer to get back in line and reapply for the allotments next year, pushing back an already-delayed construction schedule.

Mayor Elois Zeanah, however, is calling for an even harsher response: eliminating the 136 homes from the Dos Vientos master plan entirely.

After revoking approval for those homes, the city could ask the developers to redesign the project, Zeanah said. Like many residents, she favors removing the homes expected to be built along Potrero Road in order to maintain the corridor’s rural ambience.

Thousand Oaks’ contract with Courtly Homes states that the “city in its discretion may terminate this agreement for failure of (Courtly Homes) to pay any amount due.” Thus, the development agreement apparently gives the council the right to strike the 136 homes now that Courtly Homes is 3 1/2 months in arrears.

But that option was not specifically included in a memo that City Atty. Mark Sellers wrote to the council. In listing possible courses of action, Sellers emphasized arbitration or even a lawsuit against the developer, although such a tactic could cost the city $1,000 a day in legal fees.

The city has only drafted a handful of development agreements in its 29-year history, so council members have not established any precedent in dealing with delinquent payments.

Both Zeanah and Councilman Frank Schillo, however, have indicated their determination to stick to the terms of the contract.

Neither politician bought Courtly Homes’ argument that the stagnant real estate market presented an obstacle as debilitating as an earthquake, flood or war and thus should trigger relief from the payment schedule.

“Acts of God . . . hostilities . . . strikes and other labor difficulties” are cause to exempt either the city or the developers from their obligations, according to the contract. Courtly Homes’ attorney, Chuck Cohen, has argued that the stubborn recession should fall under this clause.

But Schillo swiftly rejected the attorney’s argument. “We all have to live by our contracts, and developers should not be exempt because things get bad,” he said. “If I can’t meet my mortgage payments, the bank doesn’t say, ‘Oh, OK, don’t worry about it.’ ”

If the issue goes to arbitration, the city could use its leverage to extract concessions from the developer, Schillo said. For example, the council might ask Courtly Homes to speed up construction of a long-planned soccer field on the Dos Vientos property.

Some residents, however, said any negotiations would set a dangerous precedent by allowing the developer to wiggle out of a binding contract.

“If the council members were representing us, they would delete those homes,” said Michelle Koetke, who has led a neighborhood fight against Dos Vientos.

And Newbury Park resident Marc Josephson added: “This is a chance for the city to correct, in part, something it did wrong in the past” by approving the 2,350 homes. “Every little bit helps.”