Council to Hotel Fresno developers: Fix it up or lose key loan

The Fresno BeeDecember 19, 2013 

The Fresno City Council is sending a blunt message to the Hotel Fresno developers: Do your proposed rehab or City Hall will cut its ties.

The council on Thursday gave the developers 60 days to sell the downtown building or come up with firm financing for their planned renovation.

Failure to do either will result in the city killing a $1.9 million loan, the council said.

Jake Kojikian, a managing partner in the project, asked the council to postpone its decision until his group could respond in writing. The request fell on deaf ears.

Council Member Lee Brand after the meeting said the council is tired of waiting.

"Enough is enough," Brand said. "Let's make better use of the money."

Council members couldn't rouse themselves to anything more than a few tepid remarks. It was far different in September 2011 when the council (sitting as the Redevelopment Agency) approved the loan on a 5-2 vote. Several audience members cheered. Mayor Ashley Swearengin said she was "thrilled."

The historic building near Fulton Mall's north end has been vacant for years. The Swearengin administration desperately wanted it remodeled as part of its ambitious downtown revitalization plans.

The owners, Southern California developers who already have a couple of successful downtown restoration efforts under their belts, pitched a mixed-use project of apartments (some earmarked for lower-income residents) and retail. All the project needed was money.

Brand (who voted no with Council Member Clint Olivier) was a harsh critic from the get-go. The financial numbers make no sense, he said. The city is throwing away good money, he said. The city could get stuck with big debts, he said.

Three things unfolded over the next two years:

-- The developers' financing plan never jelled. It didn't help that the federal government in 2012 nixed a big loan of city-controlled federal HOME funds.

-- Brand was relentless in his criticism. He got the council's finance and audit committee (which he chairs) in March to say the loan was a questionable idea.

-- The Hotel Fresno remained a home to pigeons, eroding the last vestiges of City Hall support.

It's unclear what would happen to the $1.9 million should the loan commitment die. The RDA has been dissolved. Sacramento has a huge say in the fate of the former agency's assets.

Brand said the state might allow the city to spend the money on another project that includes low- and moderate-income housing. Or, he said, the money might be divided among various local government agencies.

If it's the latter, Brand said, City Hall's beleaguered general fund might get a boost of about $500,000.

In other action Thursday, the council:

-- Authorized the filling of eight positions to improve the review of development applications. The additions are part of efforts by city and community leaders to make Fresno more friendly to business.

-- Approved several staff recommendations, including certification of an environmental impact report and a rezone application, for Westlake. This is a proposed 430-acre residential-commercial project from Granville Homes west of Highway 99.

-- Approved a five-year deal with nonprofit Resources for Independence, Central Valley to maintain the proposed Universally Accessible Park and deliver programming in the park's community center. The park is slated for a site on Gettysburg Avenue, west of 99. There's no firm date on the start of construction.

-- Authorized the acceptance of a $500,000 state grant to fund a two-year project to fight gangs. The grant requires a $500,000 match from the city. The project will include funding for tattoo-removal and a program to raise gang members' self-esteem.

-- Thanked Patrick Wiemiller for his service to the city. Wiemiller, who oversees the public works and public utilities departments, is resigning to become city administrator in the Santa Barbara County town of Lompoc. His last day with the city is Jan. 3.

The reporter can be reached at (559) 441-6272 or ghostetter@fresnobee.com. Read his City Beat blog at news.fresnobeehive.com/city-beat.

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