For the second time this year, a problem with tax credits has put on hold a possible deal for the Fresno County District Attorney’s Office to move into the historic Rowell Building in downtown Fresno.
River Park Properties III, a partnership led by developer Ed Kashian and his Lance-Kashian & Company, sent the county a letter on Friday terminating the 10-year, $15 million lease agreement that he and the county signed last fall for the six-story building at the corner of Tulare Street and Van Ness Avenue.
The problem, as it was in January when Kashian sent a similar termination letter to County Administrative Officer Jean Rousseau, is the inability of Kashian’s company to secure at least $8 million in federal New Market Tax Credits as part of the financing package.
“We have been working diligently to complete the Rowell Building construction to obtain the necessary (credits) needed,” Kashian wrote. “Simply put, because of such a late start we are not able to obtain the (credits) required. … Therefore, Landlord must regrettably elect to terminate the lease.”
After the first termination letter in January, Kashian and the county worked out an extension to July 15 to allow Kashian another five months to iron out the tax credit concerns.
It’s not certain what the latest delay will mean to the deal, but another extension remains a possibility. “It is still our desire and hope to finalize this transaction with the County in the near future,” Kashian wrote, “so we will continue to work toward completing the NMTC process and other necessary tasks.”
County leaders are assessing their next step. “At this time the county has not made any final decisions regarding the property or alternative measures and is evaluating all available options,” according to a statement issued Monday by Rousseau’s office.
County supervisors approved the original lease agreement in September with an eye toward putting most of District Attorney Lisa Smittcamp’s department operations under one roof rather than scattered among several other locations in downtown and other parts of the city. At six stories plus a basement, the building offers about 73,000 square feet of office space.
Among the possible alternatives is a backup plan identified by Rousseau in February – the former Crocker Building at the northwest corner of Fresno and L streets, across Courthouse Park from the Rowell Building. The county owns the four-story building, which has been used in recent years by the county’s Department of Social Services. “We’ve always had the Crocker Building as a fallback option for the D.A. just in case we couldn’t come to an agreement,” Rousseau told The Bee in February.
But at a little over 50,000 square feet, the Crocker Building is smaller than the Rowell Building.
If a new extension materializes, it would need to be approved by the Fresno County Board of Supervisors. But the board members are not scheduled to meet until Aug. 7. The first extension, to mid-July, was unanimously approved by the supervisors on March 20.
The building originally opened in 1913. River Park Properties III bought the building in 2014 and began renovation work on both the interior and exterior of the building. The deal with the county for 10 years and $15.1 million included an option for the county to either buy the building after 9 1/2 years or extend the lease for a second 10-year term.
The New Market Tax Credit program is intended to encourage commercial development in low-income communities. It allows developers to raise money for real estate projects by offering tax credits as incentives for capital investment. Language in the agreement between Kashian and the county includes a condition that the landlord receive at least $8 million in such credits for the deal to move forward.