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Behind Fresno’s pitch for the HSR maintenance yard

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Behind Fresno’s pitch for the HSR maintenance yard

George Hostetter on the battle for HSR’s maintenance yard and the mountain of questions and bureaucracy it comes with.

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America’s fastest iron horse isn’t leaving much of a paper trail in Fresno.

Be on your toes, all you taxpayers in this wonderful democracy.

At issue is the state High-Speed Rail Authority’s need to build a “heavy maintenance facility” for its system of bullet trains.

High-Speed Rail Authority (CHSRA) officials have yet to pick a site for the facility. Fresno desperately wants to be the winner. Success could mean perhaps 1,500 good-paying jobs.

Other places in the Valley are in the hunt. Bakersfield, in particular, is a strong contender.

Fresno-area officials keen on landing the maintenance facility finally got busy in recent months. The Fresno Bee’s Tim Sheehan chronicled these efforts in stories published Aug. 2 and Oct. 28.

In a nutshell, local officials think a spot south of Fresno is perfect for the maintenance facility. The spot consists of 17 parcels totaling 252 acres.

The challenge: Each of the 17 parcels is independently owned.

TIME TO GET HELP

Obviously, local officials have a problem. How does Fresno get control of the 252 acres so it can make the perfect pitch to the CHSRA folks?

After all, the CHSRA folks don’t want to be told: “Here’s the site; you figure out how to assemble the land.”

Not with Bakersfield just down the road (or line) with an offer that already clears that hurdle.

And getting owners of the 17 parcels to agree to sell their land to the CHSRA figures to be like herding cats.  What are the chances the first property-owner to sign on the dotted line gets the same per-acre price as the last property-owner to sign? I’m guessing if those people are smart enough to own land, they’re smart enough to understand the value of negotiating position.

So, Fresno officials did what the rest of us do in a pinch. They got an expert.

The expert is Fresno-area lawyer-developer Tim Jones.

Jones would make phone calls and knock on front doors. He would talk to owners of the 17 parcels. He would make deals that guaranteed the availability of each and every one of those 252 acres should the CHSRA folks pick Fresno as home to the heavy maintenance facility.

Fresno could make its pitch and look like it knows what it’s doing.

LOTS OF HEAVY HITTERS

Now, keep in mind that when I say “Fresno” I actually mean a bewildering array of government entities and interests.

The Fresno Council of Governments is involved. This entity includes representatives from each of the county’s incorporated cities. One of its duties is thinking about how to spend Measure C money.

That means COG has a collective point of view. That also means each city has its own point of view.

The Fresno County Transportation Authority is involved.  One of its duties is thinking about how to spend Measure C money.

That means its nine-member governing board (one seat is currently vacant) has a collective point of view. That also means each member (most are elected officials at the municipal or county level) has an individual point of view.

Fresno Works is involved.

This voluntary association devoted to bringing the heavy maintenance facility to Fresno includes private sector organizations and local government officials. One of its duties is to cast an envious eye at Measure C money.

Once again, that means there is a collective point of view and individual points of view.

And the Economic Development Corporation serving Fresno County is involved. One of its habits is chewing on the fate of Measure C money.

You know the routine. The EDC has lot of government and private sector officials speaking both collectively and, when back on their home turf,  individually about concerns.

This is what I mean when I say “Fresno” wants the bullet train’s heavy maintenance facility. This is what I mean when I say “Fresno” turned to Tim Jones to bring order to the chaos of those 17 independently owned parcels.

How, you ask, are all these entities involved?

BOARD TO SHOW ITS RESOLVE

The answer could have emerged from the Oct. 28 meeting of the Transportation Authority board and my stroll Mondayafternoon around downtown Fresno.

Transportation Authority Executive Director Ron Peterson at the Oct. 28 meeting presented a proposed resolution to his governing board. He wanted the board to act.

The proposed resolution notes that Jones plans to assemble the 17 parcels by entering into a separate escrow with each of the owners.

An escrow is sort of a holding pen for details and hopes in a possible real estate deal between two parties. If everything works as planned, the real estate deal goes through. If not, the deal falls apart and everyone goes back to square one.

The resolution before the Transportation Authority board said Jones would be “using his own funding to open escrow accounts with security deposits” on parcels in the 252-acre site.

The resolution would set aside up to $750,000 of Measure C money to “be used as reimbursement to a local developer (Mr. Tim Jones) ….”

We all know about Measure C. That’s the half-cent boost to our sales tax. The money goes for transportation projects like roads and trails. Every municipal government in Fresno County, every resident in those cities, every rural resident – they all love Measure C money. There’s never enough to go around.

The $750,000 itself comes from a special pot of Measure C money totaling $25 million. Local officials some time ago promised to give the $25 million to the bullet-train folks if Fresno were chosen as home to the heavy maintenance facility.

Call it a $25 million incentive. The $750,000 would help incentivize the incentive.

PRIVATE SECTOR RISK IS A NO-NO?

Sheehan’s stories in The Bee were well written. But I am ignorant. I got thoroughly confused about the purpose of the $750,000 as described in the proposed resolution.

The proposed resolution said Jones would be making “security deposits” as he opened escrow accounts.

What’s a “security deposit” in this context? Is it a premium, a bonus if you will, promised to a property owner who agrees to go into the escrow holding pen?

I don’t know. The resolution and staff report don’t say.

But it’s clear that Jones would be making these security deposits with his own money.

The resolution outlines three possible scenarios with the $750,000 of Measure C money.

First, the bullet-train folks quickly pick Fresno for the heavy maintenance facility. Jones with his security deposits, the property owners and the High-Speed Rail Authority folks do their own thing as far as transferring title to the 252 acres. The $750,000 of Measure C money doesn’t come into play.

Second, Fresno quickly learns that it didn’t get the maintenance facility. Jones and his security deposits go their own way, wherever that might be. The $750,000 of Measure C money doesn’t come into play.

Third, the CHSRA folks continue to dilly-dally when it comes to picking a site for the maintenance facility.

Let me quote at length from the resolution: “Scenario #3 – No decision is made by the CHSRA (California High-Speed Rail Authority) on the HMF (heavy maintenance facility) during the initial one year term of the escrows. A decision would have to be made by the COG (Council of Governments) and FCTA (Fresno County Transportation Authority) Boards to extend the escrows beyond the initial one year term, the developer would then be reimbursed for his initial security deposits, not to exceed $750,000.”

Holy cow, I thought to myself. This all seems strange to an Average Joe like me. But I have a pretty good idea of what “reimbursed” means.

LOTS OF OBVIOUS QUESTIONS

Where did Jones come from?

What kind of deal does he have with the Council of Governments? Or the Transportation Authority? Or Fresno Works? Or the Fresno Economic Development Corporation?

If there is no formal deal, why not?

What kind of negotiating is Jones (or his allies) doing with these property owners on behalf of all these government entities? Is Jones (or his allies) presenting himself to property owners as representing a government entity such as COG? Is there a per-acre limit to what he offers a property owner?

Is there any guarantee to the taxpayer that the cost of the 252 assembled acres being purchased by the bullet train folks won’t equal the $25 million of Measure C funds that Fresno is transferring to the bullet train folks?

If assembling these 17 parcels is so important to these governments, why didn’t they do it themselves?

Why didn’t they do an RFP (Request For Proposal) to get the best deal for an expert land-assembler (bearing in mind that Jones, at the end of the day, may have the best deal)?

Why should the taxpayer make any land-assembler whole to the tune of $750,000 maximum just because the land-assembler’s venture into the marketplace turned sour?

Is it because the developer is doing all that work simply as a good deed, stands to make no money from success, and therefore should be “reimbursed” for his good-faith efforts on behalf of the public?

Or does the developer (and any unidentified partners) stand to make a tidy profit from the sale of 252 acres to the bullet train folks, and wants to eliminate as much risk as possible to his bottom line?

Those are just some of my questions. I figured a lot of taxpayers might have similar questions.

I figured the high-speed rail project and the selection of the heavy maintenance facility site are huge public-policy issues. I figured everyone involved is a public figure.

TRANSPARENT GOVERNMENT TO NO ONE’S RESCUE

I admit it – there’s a lot I don’t know about real estate and high-level politics. So, on a rainy Monday afternoon I decided to get some answers. I went to the Fresno County Transportation Authority headquarters and the Fresno Council of Governments headquarters, both in downtown.

I asked to see all the documents pertaining to this deal with Jones.

The Transportation Authority folks sent me to COG Executive Director Tony Boren.

Boren was kind enough to meet with me. His answer was simple. There are no documents. No paper trail.

I could draw only one conclusion: Everything described above must have just happened by coincidence, like spontaneous combustion or a divine miracle.

There’s a logic to such sentiment.

All the government entities involved with this heavy maintenance facility crusade – COG, Transportation Authority, Fresno Works, EDC, City Hall, Board of Supervisors, Measure C Committee This, Measure C Committee That – all seem to involve the same players. They meet among themselves all the time and talk in lingo that makes sense only to them.

Many of their meetings are open to the public. But who among Average Joes has time to attend them all? And if you do attend, you do so as an outsider.

You know what can happen.

One thing leads to another among small armies of insiders who know they have to go along to get along. Pretty soon there are huge sums of taxpayer money floating in various directions with absolutely no paper trail to explain to the taxpayer what’s really going on.

BORGEAS WANTS ANSWERS

Supervisor Andreas Borgeas, to his credit, was among the Transportation Authority board members at the Oct. 28 meeting to tell staff to return in December with a better paper trail.

I spoke with Boren, Borgeas and Fresno City Council Member Lee Brand on Monday.

Brand isn’t on the Transportation Authority board. The City Council’s representative is Steve Brandau, who wasn’t at the Oct. 28 meeting. But Brand is running for mayor (Ashley Swearengin is termed out in January 2017). Brand pays close attention to bullet train issues in part because he knows questions on the issue will arise on the campaign trail.

Borgeas spoke mostly on background. His statement for the record was: “Our paramount obligation is to look after the taxpayers’ money. Unless there is a written proposal, there is not much to discuss.”

Borgeas said the deal points in the proposed Oct. 28 resolution had been vetted and approved earlier by a COG policy committee and a COG citizens advisory committee.

My response: No one at either one of those meetings wondered about the lack of a paper trail?

Without betraying confidences, it’s sufficient to note that Borgeas’ has concerns about how the local bureaucracy is handling this heavy maintenance facility quest.

Brand said he sees panic in the actions of local officials. Bakersfield has a strong offer. No one in Fresno wants to go down in history as “losing” the heavy maintenance facility. Who wants to be mentioned in the same breath with the local officials who “lost” the University of California campus to Merced in the previous century?

Brand is no fan of the entire bullet train project.

“The whole thing is so shaky,” he said.

WE’RE DEALING WITH HUMAN NATURE

Boren said we all should wait until the Transportation Authority board’s Dec. 9 meeting.

“Everything will be right there, in black and white, for all to see,” Boren said.

We talked about how the maintenance facility issue got to the front burner among various COG committees. He said officials at the EDC recently expressed strong concern about the sad state of Fresno’s offer compared to Bakersfield’s strong offer.

Everyone wanted to act quickly, Boren said.

I noted that my Google search conducted Sunday night turned up the 52-page Bakersfield offer submitted to the bullet train folks. The offer is dated Jan. 7, 2010. Everyone knew nearly six years ago that Bakersfield’s site, more than 600 acres, has just one owner.

Boren said it was his understanding that Tim Jones is teaming up with Pearson Realty to assemble the 252 acres. He said the work of Jones and Pearson Realty is a blessing to Fresno and the county.

At the same time, Boren said, he could understand how citizens might wonder at the lack of a public paper trail.

Boren and I also talked a bit about hypotheticals.

Boren said it makes no sense for COG to buy the 252 acres with Measure C money. For starters, that would entail a lot of work for a small staff. And no one wants to be stuck with 252 acres of farmland if the maintenance facility goes elsewhere.

I asked: Why not let the bullet train folks use eminent domain to buy the 252 acres? After all, they are fast becoming experts on eminent domain.

Boren said he didn’t know the answer.

Boren said there’s an incentive to owners of the 17 parcels to agree to sell to a land-assembler. For example, he said, owners who voluntarily agree to sell might get $45,000 an acre (he was using made-up figures to make his point). Holdouts might see their land bought through eminent domain and get $40,000 an acre.

My response: Yes, the holdout land-owners lose in that scenario. But look at it from the taxpayers’ point of view. It’s all public money. In this scenario, the taxpayer is paying $5,000 an acre more than necessary to acquire the land for a public use (heavy maintenance facility). What do elected officials who allowed this to happen tell voters come election time?

At the end of our chat, I said to Boren: “We’re talking about land and public money. What could possibly go wrong?”

Boren gave me only a courtesy smile.

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George Hostetter

George Hostetter is a contributor to CVObserver and advisor to The Collegian, the student newspaper of Fresno State.

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