The Fresno City Council will try to put another million-dollar disaster behind it.
The council Thursday must decide whether to take ownership of a vacant lot that was supposed be an affordable housing project called Bastian Court.
The city spent nearly $1.2 million of federal money on a project that never got off the ground and now is little more than an illegal dumping spot in a part of downtown that has seen dramatic growth.
The feds want their money back from a city that is barely recovering from a brush with bankruptcy. The two sides have made a deal: The feds will withhold about $387,000 a year for next three years from Fresno's annual allocation of housing funds for the poor.
Fresno's list of financial fiascoes includes The Met, Granite Park and the Convention Center parking garage. Add Bastian Court to the list.
"It looks like another million dollars down the rathole," Council President Steve Brandau said.
Bastian Court was to be a five-story apartment complex with about 60 units for low- and moderate-income tenants on the northwest corner of Stanislaus and L streets. It was born in 2007 when Alan Autry was mayor. A San Francisco-based nonprofit and Cornerstone Church's foundation had teamed up as developers on the $14.7 million project.
The City Council in October 2008, a few months before Mayor Ashley Swearengin took office, agreed to invest $2.1 million of the city's HOME funds -- federal money handled locally.
The developers' challenge was getting their own money. The Great Recession hit. The developers never found their share of the financing.
City Hall, though, kept spending HOME funds on the project. The city in late 2008 reimbursed the developers more than $838,000 for the purchase of the property and various architectural and legal fees. Six months later, the city reimbursed the developers nearly $163,000 for more architectural and legal fees. In 2011, the city reimbursed the developers about $176,000 for the razing of an old building on the site.
All told, the city reimbursed the developers $1,176,317.13 from public funds. Finally, the developers threw in the towel on the project. They also were unable to repay the city.
The HOME funds had come from the Department of Housing and Urban Development. HUD officials by this time were doing an audit of the city's housing division.
The division, HUD said in a 2012 report, was an administrative mess. Bastian Court was among the biggest troubles. HUD said construction was supposed to begin within a year once City Hall committed HOME funds. That didn't happen.
But what really stumped HUD officials was why city officials kept pouring taxpayer money into the project when the developers consistently failed to put their own skin in the game.
HUD in its report wrote that the city "erred in reimbursing developers for predevelopment costs prior to the (project) obtaining permanent financing."
The council today will vote on whether to accept the deed for the property. According to a city report, the property is worth an estimated $250,000.
Assistant City Manager Renena Smith said the city has changed its policy: No HOME funds reimbursements until a developer has all financing in place.
Smith said the $387,000 yearly reduction in the city's HOME funds allocation represents about 20% of what the city would normally receive.
The reporter can be reached at (559) 441-6272 or email@example.com. Read his City Beat blog at fresnobee.com/city-beat.