'This is fun stuff,' Fresno developer says of his South Stadium project
A pair of developers unveiled sweeping plans Wednesday that – if built – would transform the south end of what is now Fulton Mall in downtown Fresno into a major residential and commercial complex just beyond the center-field fence of Chukchansi Park.
Mehmet Noyan and Terance Frazier showed renderings and plans for the first phase of their proposed five-phase South Stadium Project, which would turn a parking lot and two buildings along the Fulton Mall into 51 apartment units atop 10,000 square feet of retail and commercial space.
If the first phase is successful, subsequent phases would remake both sides of Fulton from Kern to Inyo streets, including the old Gottschalks building, as well as a residential complex along Inyo where Fresno Grizzlies players and staff now park.
The developers have been working on the plans for the $14 million to $15 million first phase for more than six years, but the coming opening of the Fulton Mall finally makes the development possible, Noyan said. Construction could begin as soon as Fulton opens, which is expected to be around May or June of 2017.
“This is an example of private investment that’s been waiting for the Fulton project to move forward,” said Fresno Mayor Ashley Swearengin, who joined the developers and City Council Member Oliver Baines at a news conference to share the plans.
The Fresno City Council will vote Thursday on whether to purchase land from its now-defunct redevelopment agency and essentially give it to the developers, as well as applying for Measure C money from Fresno County. The council would also agree to waive impact fees on the project and assist Noyan and Frazier with applying for state grants. The total price would be about $1.6 million in public money.
“We as a council have to show support to the private sector,” said Baines, whose district would house the project. “This is what a public/private partnership looks like. They (Noyan and Frazier) did their part; now we have to do ours.”
These are two guys with a demonstrated track record and deep pockets. That’s Step One.
Fresno City Council Member Lee Brand on developers Mehmet Noyan and Terance Frazier
The breakdown of the proposed costs to the public are as follows:
The city would spend about $430,000 to buy the parking lot and two adjacent buildings on Fulton, which would be demolished for the project. It would then sell these three parcels to Noyan and Frazier for $1 per parcel. The city would also waive about $500,000 in development impact fees normally paid during a project of this size.
Finally, the city would apply for $711,000 in Measure C Transit Oriented Development funds from Fresno County. Measure C was passed in the 1980s and extended in 2006. It assesses a half-cent tax to improve roads and transit programs. Funds from the Transit Oriented Development program are allowed to be used on high-density residential and mixed-use properties near major transit hubs.
History of failed plans
It was all optimism at Wednesday’s news conference, but the council may be leery about jumping into another development plan given recent history.
In 2004, the council voted to give Cleveland-based Forest City Enterprises exclusive development rights in the area as part of the first South Stadium Project. That plan, much larger than the one pitched by Noyan and Frazier, called for 85 acres of residential and commercial complexes at an original cost of $400 million.
Then-mayor Alan Autry made a hard push to Bass Pro Shops Inc. to become the anchor retailer in this proposed complex, even heading to the company’s headquarters in Missouri to pitch the development in person. It did not work.
The city held the space for Forest City for five years before the developer pulled out of the project. It failed to raise the final $100 million that was needed to build. Noyan and Frazier began working on their plans soon after.
The city also bet heavily on a plan to revamp the Fresno Metropolitan Museum. It ultimately lost about $4 million after it guaranteed the Met’s loans, on which the museum defaulted. The museum closed in 2010.
Fresno City Council Member Lee Brand, who pushed several measures to limit the city’s exposure to such problems, explained how the latest plan is nothing like the previous debacles. Brand is running to replace Swearengin in November.
“When Chukchansi was built and the city got involved with the Met, the deals were backstopped with general fund money,” Brand said. “Those contracts had clauses that said general fund money would be used in a worst-case scenario, then that worst-case scenario happened.”
He continued: “This time, the city is not loaning and has no long-term obligations. No general fund dollars will be touched, regardless of how development goes. The developers are assuming almost all of the risk.”
Brand said the city’s land offer is pretty standard for a development deal, and that land won’t be handed over until Noyan and Frazier come up with the $14 million to $15 million needed to finance the entire project. They would have one year to come up with it, or the deal would be off.
“Right now, that property is worth about a half-million (dollars),” Brand said. “In two or three, it could be worth $10 million or $15 million. The property taxes collected would rise tenfold. Add that to sales tax, and the city could make up that half-million in five or 10 years.”
He expressed faith in Noyan, who developed Palm Bluffs in northwest Fresno into “a huge success,” and Frazier, who the city recently entrusted with resurrecting the failed Granite Park retail development as green space and sports fields.
If the vote passes, work begins for Noyan and Frazier.
Securing the $1.6 million in public funds would be Step One. They will apply for a $1.9 million grant and a $1.2 million loan from the state as part of California’s Affordable Housing and Sustainable Communities Program. They will also apply for a federal tax credit of about $700,000, put up $1.4 million of their own money and ask for the remaining $7 million or $8 million from a conventional lender.
At this planning stage, however, the developers are dreaming big.
Noyan said the proposed phase one complex would be built in a U shape facing the stadium, meaning the residents of about 40 of the units could watch baseball games from their back patios. An outdoor private deck with a pool would be built inside the U on the complex’s second floor.
Part of the presentation to the city included the proposed rent for these units. A one-bedroom unit would rent for around $1,250 per month, and a two-bedroom would go for $1,700. These prices are listed as “average market rent.” They do not include a $50 per month parking fee.
$432,277The estimated value of the city land given to the developers
When asked about these seemingly high rates, Noyan said the market rates were based on new units with similar amenities renting on the far north ends of the city.
Around 10 apartments would be “affordable units.” The rent for these seven studios and three one-bedrooms would be around $500. They are required in order to qualify for the state funds.
Noyan said the affordable units would be sprinkled throughout the complex.
The bottom floor would ideally be filled with offices, restaurants and shops, Noyan said. It would also include 50 parking stalls for residents.
Noyan also plans to move his office into the new complex.
Should the first development phase be successful, Noyan and Frazier would move forward with the next four phases.
Phase two would involve around a $5 million renovation and adaptive reuse of the retail space under the parking garage directly across Fulton from the proposed first phase. The city currently owns this complex, which includes the southern part of the old Gottschalks building.
Phase three would convert a parking lot just beyond Chukchansi’s right-center-field fence into a complex similar to the phase one project. The fourth phase would transform the old Berkeley’s building at 887 Fulton Mall into a new real estate complex, and the final phase would do the same to the northern part of the Gottschalks building, which is privately owned.