Downtown Fresno property owners have a hard time selling while they wait for a developer’s plans.
By Jeff St. John
Randy Miller and Robert Toman have a dream — a downtown Fresno brewpub within baseball-throwing distance of Chukchansi Park.
And Miller’s wife, Nancy, has the perfect location — a former furniture store at 762 Broadway that has been in Nancy’s family since her grandparents bought it in the 1920s.
But Broadway Ale Works — the business the Millers and Tomans hoped to open in the 3,500-square-foot brick building with the well-known Francisco Vargas “Welcome to Fresno” mural painted on the outside wall — is now on hold.
That’s because the building lies within the six-block area the Fresno Redevelopment Agency intends to buy and lease to Forest City Enterprises, a massive Cleveland-based development company. The project is among 40 properties in the area that face an uncertain future.
Forest City has a $232 million plan to build 700 new homes, as well as stores and commercial buildings, in that six-block zone — the first phase of the long-range “South Stadium” redevelopment project that eventually would transform 85 acres of Fresno south of the Chukchansi Park baseball stadium.
“Would that be good for downtown? Certainly,” Randy Miller said. “Would it be good for us? Absolutely. But taking our building away? That’s not so happy.”
The Redevelopment Agency, which would buy land in the zone and lease it to Forest City for redevelopment, could use its power of eminent domain to acquire properties whether or not the owners want to sell.
The procedure is similar one used by Forest City in cities across the country, such as Oakland.
Redevelopment Agency officials and Fresno City Council members, who approved Forest City’s plan last year, see eminent domain as a last resort. Better, they say, would be for property owners who want to stay there to renovate their buildings up to the development’s standards and remain.
And the project’s future is far from assured. First, Forest City must complete a yearlong environmental review, and the City Council must decide if it can come up with the public financing Forest City says it needs to do the job — as much as $100 million, according to Forest City’s initial estimates.
All that uncertainty has property owners concerned. Some, like the Millers and Tomans, question the wisdom of their investing time and money in a business that may be forced to move in a few years.
“I don’t want to pay $100,000 for a brew system and then learn I have to move it because they’re taking over,” Toman said. “I’d like to save our on-hand capital until we’re sure we won’t be taken over by eminent domain.” While he and Miller haven’t given up on their plan, they’re moving forward “cautiously,” Toman said.
Other property owners in the area say they can’t sell or lease their buildings, because nobody wants to move into a building that may be torn down to make way for Forest City’s redevelopment.
“They have held us hostage,” said Octavia Diener, owner of the former Densmore Engines building on the corner of Fulton and Mono streets. Diener had hoped to rent out the 20,000-square-foot building after she closed the engine remanufacturing business in 2004.
But, she said, whenever someone looks into renting the building, “They go to the city, and the first thing the city tells them is, ‘That’s under this redevelopment plan.’
“Are you going to lease a building where, at any time, the city can come in and take the property? Or are you going to go somewhere else, where you don’t have that cloud of eminent domain hanging over your property?”
Diener said she isn’t against downtown redevelopment. She just wishes the city would buy the properties it wants to redevelop now, rather than waiting.
Roadblocks to sales
Unfortunately, city and Redevelopment Agency officials say, that isn’t possible until the environmental review is done and the matter of public financing is resolved.
“I think it’s a great project that’s going to make a lot of difference” for Fresno’s downtown, said Matt Myers, the Redevelopment Agency’s manager for the Forest City project.
But because the redevelopment project is still in the planning stages, “until the process is done, we can’t say which properties will or won’t be needed” to be torn down to make way for Forest City’s new homes, commercial buildings and parks.
City Council Member Larry Westerlund, who also is chairman of the Redevelopment Agency board, said the agency wants to work with property owners to help them renovate their buildings to the standards of the project and remain — if at all possible.
Forest City “has always expressed an interest in working with property owners, if there’s a way to do so and make a project that’s unique and authentic,” he said.
Meeting the higher building standards necessary to stay in the redevelopment zone turned out to be a headache for Jose Lorenzo, owner with his wife of J&E Restaurant Supply.
Lorenzo originally planned to spend about $470,000 to build a 13,000-square-foot warehouse at the corner of Van Ness Avenue and Monterey Street. But with the 20-foot setbacks, stucco exterior and other features the Redevelopment Agency demanded he include in the building’s design, he ended up spending about $600,000 for an 8,700-square-foot warehouse.
Lorenzo questioned whether the Forest City redevelopment would ever get built, given the public financing hurdles the city is likely to face.
“Especially when they’re talking about all these phases, all these years — I don’t think it’s going to happen,” he said. “At the same time, they hold businesses back.”
But not all the property owners in the area feel the same way. Myers said that several buildings in the area have changed hands since the redevelopment plans first took shape, showing that not everyone has been scared away from investing in the area.
John Ostlund, owner of Fresno’s Jeffrey/Scott Advertising and K-Jewel 99.3 FM, didn’t let the uncertainty stop him from buying two buildings in the six-block Phase 1 area a few years ago.
“When I bought them, I wasn’t thinking of eminent domain at all,” he said. “If I renovate them, I will do so to higher standards than are required, because I want to be there for the long term.”
Pros and cons of eminent domain
It’s certain that at least some buildings would have to be torn down to make way for Forest City’s vision for the area. But those property owners who may be asked to sell — or forced to sell through eminent domain — will be well compensated, Myers said.
In fact, the use of eminent domain powers comes with strict rules on paying fair market price and covering many costs for property owners, Myers said. In combination, those incentives usually boost the value of properties purchased through eminent domain about 20% over what they could fetch on the open market, he said.
Still, promises like that may not be worth the hassle for many potential downtown tenants, said Stewart Randall, senior vice president for Colliers Tingey International in Fresno.
“If somebody bought or leased one of these buildings, even though they would be compensated if eminent domain occurred, it’s still an enormous inconvenience for any small business,” he said.
Fresno Mayor Alan Autry said he also has grown more concerned about Forest City’s lack of progress over the years.
“The Forest City big bang may never happen,” he said. “Time is not an ally here. We’ve got to move forward with our downtown revitalization,” possibly by opening up some public subsidies to local developers, he said.
But as far as Pat Cody, owner of Wilson’s Motorcycles, is concerned, the clock on the South Stadium redevelopment has run out.
In December, Cody decided to move from the Broadway location he had been in for 18 years to a larger building on Foundry Park Avenue near Highway 99. While he had outgrown his Broadway location, Cody said the threat of losing it to eminent domain also forced his hand — and now he can’t find a buyer for it.
“I’ve been turned down by a Realtor who doesn’t even want to list the property because it’s a waste of their time,” he said. So now Cody wants the city to buy it from him, “so I can roll that money into the new project and move on.”
But Cody’s decision to leave the South Stadium area wasn’t something the Redevelopment Agency wanted, Myers said. In fact, he and other agency officials “did everything we could to encourage him to stay,” he said.
But now that Cody has moved, the agency has no authority to buy his land until the City Council approves a final project, Myers said.
Miller and Toman said they’ll build their brewpub someday — if not on Broadway, then somewhere else. But they said it would be nice to take part in a downtown renaissance, if it happens.
“It would be nice if they said, ‘We’re going to demolish you and move you,’ or, ‘You can stay here,’ ” Miller said. “Make up our minds for us.”
The Fresno Bee: http://www.fresnobee.com