Fresno downtown developer accuses councilman of bribery. The conflict is over parking lots
Fresno’s developers and politicians are fighting again — and in true Fresno fashion, it’s over parking lots and involves “pay to play” allegations.
Cliff Tutelian, a downtown developer who owns The Grand Tower and renovated Kepler Neighborhood School, alleges in a claim for damages that Fresno City Councilmember Miguel Arias solicited bribes and favors in exchange for a development agreement.
Arias, in turn, said his council colleague Garry Bredefeld helped Tutelian write the claim and is drumming up a distraction from his own political problems. Bredefeld said that’s a lie.
Everyone denies wrongdoing.
At the center of the dispute is parking “Lot 2” on the north side of Fulton Street in front of CVS and another one used by the Fresno Housing Authority. Tutelian wants to develop the downtown sites.
Former Mayor Lee Brand worked out a deal with Tutelian to make it happen, but years passed and no projects came to fruition. Plus, the Brand-era deal expired and is no longer legal due to new legislation.
Tutelian blames Arias for halting the project.
Tutelian declined to comment for this story. Phone messages and an email to his attorney were not returned. City officials also declined to comment on the claim.
The claim
Tutelian filed the claim in July seeking $12.45 million. He accuses the city and Arias of breach of contract, fraud and unlawful business practices. The city’s risk management department rejected the claim on Sept. 13. Tutelian has 60 days from that date to file a lawsuit.
In the claim, Tutelian alleges Arias demanded a $12,000 campaign contribution, saying “don’t hate the player, hate the game,” and that it was time for the rich to pay up. Tutelian alleges Arias suggested he hire a councilmember’s husband for the project. (No councilmember currently has a husband, although Councilmember Esmeralda Soria is engaged to developer Terance Frazier.)
Arias denied all of those claims and pointed out he never solicited a single campaign donation from Tutelian or invited Tutelian to any of his campaign fundraisers.
In December 2018, Tutelian and the Brand administration brokered an exclusive negotiation agreement for the CVS parking lot. The agreement included an option for Tutelian to purchase Lot 2.
Tutelian says in the claim he believes his lease agreement for 100 spaces in Lot 2 was terminated because he refused to “pay to play.” He previously offered to buy the lot for $420,000.
Arias, in an interview with The Bee, said the lease agreement was terminated because a city parking audit found Tutelian was receiving free parking from the city.
Tutelian filed a claim about Lot 2, but later dropped it, he says in the new claim, because city officials agreed to extend the exclusive negotiation agreement. He says City Attorney Doug Sloan cooked up the scheme with Arias.
The ENA was extended twice, and new conditions were added each time, Tutelian says in the claim. But when the third extension was proposed, Arias removed it from the city council agenda, effectively ending the ENA.
Tutelian’s claim notes that the South Stadium Project, slated to be developed on the other end of Fulton Street by Frazier and Mehmet Noyan, received nine extensions in five years.
In total, Tutelian estimated he incurred costs around $600,000, loss of value and use on the adjacent project, increases in construction and development costs due to delay and lost development opportunities.
If Tutelian files the claim as a lawsuit, the claim asks the court to transfer Lot 2 to Tutelian.
Arias called the allegations “baseless,” and said he’s confident the city’s position to deny the claim will be upheld.
Exclusive Negotiation Agreement
Tutelian said in his claim he performed all terms and conditions required under the ENA, including completing architectural and engineering studies and drawings, making financial commitments and negotiating with the property owner.
The mixed-use development calls for 160 residential units spread over three five-story buildings and 30,000 square feet of retail space, most of it devoted to a new CVS store and neighborhood market.
Arias said the ENA called for Tutelian to do three things: gain site control, gain financing and gain city support. Tutelian never purchased the necessary property or provided a financing plan to the city, Arias said.
In 2019, Tutelian proposed buying the Housing Authority’s parking lot. The city’s downtown plan calls for a multistory affordable housing building there. The Housing Authority board voted unanimously to deny Tutelian’s bid, saying in a letter the parking lot was not for sale.
Preston Prince, the CEO at the time, said Tutelian’s proposal didn’t fit the Housing Authority’s vision for the space.
“I feel like the opportunity to do something there should be much bigger than doing a sole-source agreement to a single developer,” he told The Bee. “There’s an opportunity to really collaborate amongst many partners to do something unique and creative.”
The only financing plan Tutelian provided to the city was a letter from his bank saying the money was there, Arias said.
“Ultimately, the ENA failed under its own weight,” Arias said. “That’s unfortunate, but it’s not rare when you’re looking at downtown projects. We have plenty of projects that begin and never come to fruition for the lack of financing or lack of land acquisition.”
Now, ENAs are a thing of the past in the city of Fresno because of two new policies. The first is California’s Surplus Land Act, which prioritizes affordable housing projects and went into effect Jan. 1. Also, the city council voted to do away with ENAs.
Now, any government-owned property must be declared surplus before it can be sold, and buyers must submit bids similar to other city processes.
In recent months, this has played out in Fresno with proposals to buy the Selland Arena.
Pay to play, or playing politics?
Arias told The Bee his council colleague, Bredefeld, met with Tutelian at City Hall on July 29 — one day before the claim was filed. Arias alleged Bredefeld helped write the claim and circulated it to media outlets this week.
“It’s no surprise that Mr. Bredefeld circulated the claim to local media the week after it was discovered that he testified for a domestic violence abuser that he’s been protecting since 2019,” Arias said, referencing the conviction and resignation of Bredefeld’s staffer last week.
“That’s totally a lie,” Bredefeld said.
He added: “Miguel Arias is a complete, pathological liar. He lies all the time. He made this up and has absolutely no proof of what he’s saying because it never happened.”
Bredefeld pointed out that the claim was a public document and any media outlet or person could request it from the city. He was not aware the claim was denied.
Bredefeld said Arias is trying to create a distraction from the allegations in the claim. He called Arias “corrupt” and said he’s “unfit for office.”
Fresno developers and politicians
The relationship between developers and Fresno politicians has a long history — sometimes cozy, other times rocky.
The most notorious example is Operation Rezone in the late 1990s, in which developers and Fresno councilmembers were charged and/or served prison time. In short, developers bribed city councilmembers to rezone land for housing development. The scandal is why Fresno has a stong-mayor form of government.
More recently, Bredefeld has led the crusade against developer Frazier over Granite Park operations and his relationship with Soria, saying there’s a “stench” at City Hall.
Newly minted Councilmember Tyler Maxwell also accused Mayor Jerry Dyer’s administration of attempting to codify “pay to play” through a strategy to expedite the building process in the city’s planning department.
And, it’s no secret that in Fresno, developers are major campaign donors. But it’s harder to prove politicians vote and make policy decisions based on the campaign donations.
On the flip side, Fresno developers often find themselves at odds with newer and more progressive councilmembers.
Take Measure P, the parks sales tax ballot measure. Darius Assemi, CEO and president of Granville Homes, largely funded the opposition campaign. But a majority of sitting councilmembers supported the parks tax.
Arias, who represents areas in the city formerly redlined, promised in his campaign not to bend to the pressures of developers. Yet he’s found himself in the middle of a rezoning proposal to southwest Fresno after residents there fought long and hard to keep polluting industries out of their neighborhoods.
In the case of Tutelian, Arias said he was warned.
“I was told prior to taking office, I was advised by downtown developers that any interaction I had with Mr. Tutelian should be in the presence of other city officials and attorneys because there was a high likelihood that it would result in litigation,” he said.