SCOTTS VALLEY - Homeowners in several Scotts Valley neighborhoods could pay for the right to build on environmentally sensitive habitat if city leaders approve a habitat conversation plan at tonight's City Council meeting.

City leaders will consider adopting a habitat conservation plan developed between the city's planning department and the U.S. Fish and Wildlife Service. Under that plan, the federal government would issue the city an incidental take permit that allows development on land that's home to the endangered Mount Hermon June Beetle, assuming measures are taken to mitigate the damage.

Eligible property owners in the neighborhoods of Whispering Pines and east and west Scotts Valley would then be able to develop and expand on the parcels, according to a staff report.

Those neighborhoods, which Scotts Valley City Councilman Randy Johnson estimated contain up to 900 homes, are in the Zayante Sandhills area, which is habitat for such endangered species as the Mount Hermon June Beetle and Ben Lomond Spineflower.

"The habitat conservation plan has been bandied about for the longest time" and has proved frustrating to homeowners who want to construct decks or build additions to already existing structures, Johnson added. Under the proposed plan, the city would have final say over environmental regulations rather than the federal government. The county's Board of Supervisors approved a similar habitat conversation plan Tuesday.

City leaders also will discuss the long-planned Holiday Inn Express development on Scotts Valley Drive, which was approved in 2009. The 25,000-square-foot, three-story hotel will have more than 100 rooms, as well as underground parking garage, swimming pool and landscaping, according to a staff report. Construction likely will start in September and last for about 15 months.

The developer, Anatol Schliapnikoff, is asking that instead of having to pay the $786,000 in impact fees upfront, they be deferred for five years and that he be allowed to pay them over the ensuing five years.

The justification behind the request is that it would allow time for the hotel to establish itself and build up its revenues, according to a staff report. The city would benefit from the creation of new jobs, both during the construction and after the hotel is up and running, as well as occupancy and other taxes.

Council members also will consider applying for a $1.2 million federal grant, which would then be loaned to the developer and paid back with interest. According to city manager Steve Ando, those funds would be used to pay for furniture, and possibly operating capital.