Developer Kashian gets city to pay $2.7 million in water fees to rescue housing project
A new affordable housing complex for seniors in southeast Fresno is getting a $2. 7 million boost from the Fresno City Council to help pay water-system connection fees before the apartments can be opened for occupancy.
Prominent Fresno developer Ed Kashian’s Lance-Kashian & Co. has already completed construction on the 180-unit Brandhaven project in his broader Fancher Creek Town Center mixed-use plan for housing, retail and commercial businesses near Tulare and Clovis avenues, and another 240 affordable housing units for families are either under construction or planned.
But the city cannot issue a certificate of occupancy for the completed apartments or anything else until fees are paid to Bakman Water Co., the private company that operates the water system serving the area, for hooking up to the service for fire suppression and other water needs.
At its meeting Thursday, the Fresno City Council unanimously approved a proposal by Councilmember Luis Chavez to cover up to $2.7 million in connection fees owed by Kashian to Bakman Water. But the vote only came after several members raised serious questions about how construction was allowed to move forward before a water service agreement was even in place.
The city will pay the fees from its share of federal American Rescue Plan, or ARPA, funds received during the COVID-19 pandemic. The subsidy was one part of a two-piece action. The other piece was to exempt Kashian’s affordable housing – and other fully affordable housing projects moving forward – from the city’s existing Better Business Act if federal or state money is used to support them.
That law, authored by then-Fresno City Councilmember Lee Brand in 2009, imposes rigorous standards on projects in which the city invests. It includes requirements for evaluating myriad details regarding the ability of developers to financially follow through on their commitments before the city makes any contributions of money.
An ‘urgency’ to enable occupancy in the apartments
Chavez, whose district in southeast Fresno includes Kashian’s Fancher Creek project, brought the issue to the council on an accelerated basis with only about a day’s notice for a special meeting. Chavez cited the urgent nature of having seniors on a waiting list for the Brandhaven apartment units who may be at risk of becoming homeless without immediate action to get the water fees paid.
“We know that affordable housing is a priority for this council,” Chavez said. “I think we’ve put our money where our mouth is in the past, and that’s what I’m requesting.”
Questions remain, however, about whether the Kashian project would even be subject to the Better Business Act; that’s an evaluation that is being undertaken by both the city attorney’s office and City Manager Georgeanne White.
“I would say this is the means to achieve (occupancy) on an abbreviated timeline,” White told the council. White said that if it were determined that the Better Business Act did apply to the project, it would take her office at least 45 to 60 days to complete the extensive financial review of the applicants.
“So what I explained to Councilmember Chavez … is if he was trying to get somewhere quickly, I can’t get there quickly if the Better Business Act applies,” White said. “And I know there is a sense of urgency to get the certificate of occupancy.”
That certificate cannot be issued until there is an agreement for water service that provides sufficient flow to meet the city’s fire-suppression standards.
Support for housing or a subsidy for a developer
Kashian’s company has also developed numerous other projects in the Fresno area, most notably the River Park shopping center on North Blackstone Avenue.
Since entering a development agreement with Kashian in about 2010 for the Fancher Creek project, White estimated that the city of Fresno has already pitched in nearly $10 million from federal Community Development Block Grant and federal HOME funds for the affordable-housing components of the project. That includes about $6.1 million for two phases of Sarah’s Court, a total of 240 affordable units for families.
Contributions in Sarah’s Court, White added, represents the largest investment that the city of Fresno has made in any single development project.
The additional $2.7 million for the water connection fees would bring the city’s financial commitment to the housing projects to “$12.5-ish million,” White said. The water connections would not only benefit the housing portion of the Kashian project, but also the retail and commercial components as well.
Councilmember Miguel Arias said he would reluctantly support Chavez’s proposal. “In this case we’re dealing with two private parties who sued each other over fees … and now we’re being asked to pay the litigated cost that one party was determined to be responsible for,” he said. “How is it we can legally cut Bakman Water a check when Bakman Water is not part of the development agreement on this project?”
“Is it accurate to say the city is stepping in to pay the financial obligation that the (Public Utilities Commission) determined was the developer’s responsibility and not the water districts?” Arias asked.
Chavez countered that characterization. “I would phrase it that the city is stepping in to support affordable housing by helping with the infrastructure costs,” he said, “just like we’ve done with other projects.”
Why was construction allowed before a water agreement?
Arias also questioned how or why Kashian was allowed to begin construction on the housing project “when the developer didn’t have an agreement to connect to water that’s needed for fire sprinklers.”
White said she was at a loss to explain how the process was overseen under then-Mayor Lee Brand’s administration and a different city manager. “At the time the decision was made — and I don’t know who said yes — somebody in the previous administration said yes to allow construction.”
“I’ve seen a letter from the fire department saying, ‘We’re going to allow you to begin construction, but you won’t get occupancy until you meet fire flows,” White added, noting that the city requires the capacity to have 2,500 gallons per minute for fire suppression. “I don’t know why it happened, but it happened.”
“I can assure you that as long as I’m in this chair, we’re not going to be in this position again,” White told the council.
Chavez agreed. “The process should have been, we should have had that (water agreement) secured beforehand … and that did not occur.”
Thursday’s vote does not automatically clear the way for would-be residents to immediately start moving in to the completed Brandhaven portion of Fancher Creek. Before the city can make the payment to Bakman Water for the connection fees, the Kashian project must first become part of a community facilities district — a self-taxing arrangement that provides for long-term maintenance of infrastructure associated with the center.
“They haven’t submitted an application” to join a community facilities district, White said. “They have to get the application in and they haven’t done that.”
Sal Gonzales, co-president and chief operating officer of Lance-Kashian & Co., said he anticipated that the company may be able to submit some of the materials needed to apply for annexation into a district in the coming week, after which the city would begin its process of processing the application.
Gonzales added that while the company would welcome the city’s support in other ways on the future Sarah’s Court housing stages of the Fancher Creek project, he committed that there would be no additional request to the city to cover additional water connection fees to Bakman Water.
This story was originally published April 28, 2023 at 4:46 PM.
