City of Fresno has $20M for downtown housing. Will it speed work on empty buildings?

Hoping to accelerate construction of new apartments downtown, the city of Fresno is going to give out $20 million in loans to developers who are ready to build in Chinatown and the downtown core.

It’s a move intended to drive “new construction” or “substantial rehabilitation” of multifamily housing in the area, according to a city bid posting. That could push developers to make some visible progress on the use of some of the area’s long-vacant buildings and empty lots — a top issue for city leaders who’d like to triple downtown’s population to 10,000 residents.

Some spaces, including various Fulton Street buildings and an empty lot owned by local development firm Lance-Kashian, had redevelopment plans announced several years ago that have yet to pan out.

City Councilmember Miguel Arias recently told The Bee he thinks the problem is too many investors have come to downtown Fresno posing as developers but they’re really just waiting to make a quick buck by flipping properties.

Mayor Jerry Dyer says the problem is high construction costs that prevent investors from moving their projects forward.

“Generally it comes to, ‘How can the city help them?’ ” he said in a recent interview with The Bee.

The city has already been trying to reduce developers’ costs in recent years by using state money to renovate downtown and Chinatown infrastructure. The money in the loan fund comes from the $100 million the Fresno received from the state this year for its downtown infrastructure upgrades.

According to the city’s bid post, the 36-month, 5.5% interest-rate loans are intended for higher-density “shovel ready” projects in the area bound by: Calaveras Street in the north, Cesar Chavez Boulevard in the south, Highway 99 in the west and L Street in the east.

The city is accepting applications for loans of up to $8 million per project through the end of the year.

Dyer previously told The Bee he would like projects that add a mix of incomes downtown, with a “heavy emphasis on market-rate,” which means priced at a rate naturally reflected by area supply and demand and without income restrictions.

Jan Minami, executive director of the Chinatown Fresno Foundation, told The Bee she would like to see the next project in the area also focus on higher income levels that would help it achieve its commercialization goals.

Developers’ financing shortfalls stalling downtown housing?

Dyer said developers often are unable to obtain bank loans that will cover their entire construction costs and are left with a financing gap. Developers often have to find other investment dollars to fill those gaps, he said.

The city’s loans are intended to act as that “gap financing” in the short-term while developers obtain alternative dollars.

Elliott Balch, president of the Downtown Fresno Partnership, told The Bee those “last dollars” are critical for housing projects.

Balch, who previously worked as the city’s downtown revitalization manager, said most of the housing built in the area over the past 25 years has used gap financing on top of its regular capital.

“We’ve lost some of those tools over the years, but it’s not an unusual or a new thing for downtown,” he said. “It’s much needed.”

Who wants city loan for downtown housing?

A bid portal shows two applications linked to the local development firm Lance-Kashian, and one to Sevak Khatchadourian, the Los Angeles businessman who has invested in various Fresno buildings. Khatchadourian and Lance-Kashian President Sal Gonzales did not respond to The Bee’s request for an interview for this story.

Khatchadourian has bid for the loan program through 1101 Fulton Mall LLC, which owns the Helm Building on Fulton Street. He bought the building in 2012 and announced in 2022 that he would be converting the upper floors into apartments after successfully revamping the Pacific Southwest Building.

Lance-Kashian has been planning to build 54 market-rate apartments above retail at the intersection of Van Ness Avenue and Stanislaus Street for more than five years on land acquired from the city. Gonzales told the Fresno City Council a few months ago the project had “fully approved plans,” but needed $9 million in gap financing to cover a total cost of about $29 million.

A few firms known for building affordable and mixed-income housing have also applied to the city’s loan fund.

Erik Galicia

The Fresno Bee

Erik is a graduate of the Missouri School of Journalism, where he helped launch an effort to better meet the news needs of Spanish-speaking immigrants. Before that, he served as editor-in-chief of his community college student newspaper, Riverside City College Viewpoints, where he covered the impacts of the Salton Sea’s decline on its adjacent farm worker communities in the Southern California desert. Erik’s work is supported through the California Local News Fellowship program.