Fresno City Hall is negotiating another real estate deal with the local Economic Opportunities Commission.
My prediction: The EOC gets everything it wants.
If so, the EOC comes out of the deal on top to the tune of $1,836,999.
The Successor Agency’s Oversight Board on Wednesday will decide what to do with a 5.48-acre property at the corner of Fresno Street and California Avenue in West Fresno.
The Successor Agency is what’s left of the old Fresno Redevelopment Agency. The Successor Agency, like the old RDA, is a City Hall creature.
Gov. Brown killed all of California’s RDAs some six years ago. The local Oversight Board ensures that all of the messy chores involved with dissolving Fresno’s RDA are done according to Hoyle. The sale of the RDA’s many properties was Chore No. 1. That chore remains unfinished.
The money from each sale is divided among various taxing agencies, such as City Hall, Fresno County, schools and special districts (the local Flood Control District, for example).
The old RDA used public funds to buy the properties. The aim is to turn the properties back into public funds, then return the money to the public (well, sort of).
The official address for the property we’re talking about is 1189 Martin Ave. The parcel is most of the triangle bounded by Martin, California and Fresno Street. There’s a pocket park at the corner of California and Fresno Street that’s not part of the parcel.
The 5.48 acres is home to the EOC’s Franklin Head Start-Child Development Center. The property is owned by the old RDA – in essence, City Hall. The property consists of classrooms that once housed Franklin Elementary School.
The EOC rents the site for $1 a month. The EOC wants to stay where it is. But the state law dissolving RDAs mandates that the property be sold.
The sticky question throughout this long dissolution process has been how best to sell RDA properties. The method of selecting Oversight Board members has resulted in a board that tends to see things City Hall’s way.
For some properties, City Hall likes the auction method – maximize the proceeds.
For other properties, City Hall likes to channel the property to a favored buyer – maximize (in theory) the public policy benefits.
How is the Franklin parcel to be sold? The Successor Agency’s staff (headed by Executive Director Marlene Murphey, who had been head of the old RDA) is playing it cautious.
The staff has listed three selling options:
1.) Auction the Franklin parcel to the highest bidder.
2.) Sell the parcel to the EOC for the appraised value of $1,837,000.
3.) Sell the parcel to the EOC for $1,837,000 minus the value of all the good things the EOC does through Franklin Head Start.
The Oversight Board in its meeting at City Hall will choose one of the three (assuming it doesn’t kick the can down the road).
Let’s cut to the chase: The EOC wants to buy the Franklin parcel for $1.
Fresno EOC Executive Director Brian Angus in a letter dated March 19 to the Oversight Board wrote in part: “Over the 4 decades that Fresno EOC has occupied the former Franklin School we have been an extraordinary tenant, investing over 1.5 million dollars in maintenance, repairs and upgrades which, over time, have enhanced the value of the property. Furthermore, the center employs 52 full-time staff in high quality jobs with benefits.”
Franklin Head Start through the years has served thousands of children and their families, Angus wrote.
“The benefits and lasting effect of quality preschool education, more specifically with the Head Start program, has been solidly documented through various studies and research that have been completed in these last 15 years,” Angus wrote. “Based on nation-wide studies, we have conservatively pegged the value of the services provided out of our Franklin center over the years to more than 280 million dollars. At the current annual program investment of almost 2 million dollars, the education and services we deliver to our families in this community surmounts the fiscal price of an edifice.”
If the Oversight Board doesn’t do the right thing, Angus wrote, “we will be forced to close” the Franklin Head Start-Child Development Center.
If the choice were between Franklin Head Start and a factory churning out cancer-causing pesticides, the decision would be simple. But that’s not the case here. What sits before the Oversight Board is another fight between government and quasi-government entities over taxpayer dollars.
Fresno EOC is a private non-profit. It was born during LBJ’s Great Society of the 1960s. Fresno EOC spends about $125 million a year on various social services. The vast majority of that money comes from taxpayers. For all practical purposes, Fresno EOC is part of the federal government.
In other words, EOC leaders could no more throw up their hands and quit doing their job because life through them a curve than could the City Council or the County Supervisors. Yet, it appears that the EOC has no viable plan for its West Fresno mission other than insisting that it be allowed to buy a $1.8 million public property for $1.
Wrote Angus to the Oversight Board: “During the course of these past few months we have requested financial assistance from The Office of Head Start. Unfortunately due to the tragic weather events that have hit our country this year, Head Start is allocating their limited facility funding to disaster stricken areas. This understandable prioritization of funding leaves us with no recourse to purchase the property.
“The era of Head Start at Franklin will end unless bold leadership is taken that allows us to take over ownership of the facility. Funds and staff time expended on relocating to new facilities is money and time taken away from programs for children and families. While EOC Head Start services will continue, without Franklin we can expect a reduced Head Start presence on the West Side of Fresno.”
This story isn’t about the quality of EOC’s work at Franklin. This story is another chapter in the never-ending tale of government consuming itself.
We’ve already noted that proceeds from the sale of RDA properties such as the Franklin parcel are redistributed to government entities (themselves perpetually cash-strapped) providing vital public services. To give you one piece of this particular conflict of interests, ponder for a moment one of reasons for the Governor’s dissolution of Redevelopment Agencies a half-dozen years ago.
Redevelopment Agencies worked on the concept of “tax increment” involving property taxes. No need here to dig deep into that concept. It’s sufficient to note that tax increment was key to generating consistent chunks of money to continually fund new blight-fighting redevelopment projects. That’s why the RDA bought the Franklin site in the first place.
But Brown had the political cover to kill Redevelopment Agencies because the tax increment concept produced lots of critics. Some critics said RDAs gave sweetheart deals to favored clients and developers. Some critics said the tax increment concept took money from other taxing agencies as property values of formerly blighted parcels rose.
That’s a way of saying that, yes, EOC may have provided $280 million worth of services at the Franklin site over the last 40 years, but that production was partially subsidized by taxing agencies such as City Hall, the County Hall of Records and the local Flood Control District. EOC is now asking that these taxing agencies top off those decades of subsidy by selling a public property appraised at $1.837 million for $1.
There are other interesting pieces to the story.
There’s no guarantee that selling the Franklin parcel to the highest bidder would produce $1.837 million.
There’s the 2016 appraisal that says City Hall at some point plans to extend Plumas Avenue through the Franklin parcel, cutting it into two pieces.
There’s no assurance that the EOC, should it buy the property, would stay at the Franklin site forever. City Hall recently completed the Southwest Fresno Specific Plan. Everyone hopes traditional West Fresno becomes a magnet for development. Opportunities to relocate the EOC Head Start program currently at Franklin could come knocking. In that case, the EOC could sell the Franklin parcel for a handsome profit and pocket all the money.
There’s the specter of Fresno Unified School District coming to the rescue. The EOC and the Successor Agency have been discussing what to do about the Franklin parcel for several years. In 2016, it looked like the Successor Agency might consider giving the parcel to Fresno Unified. The district, in turn, would lease the site to EOC for a nominal amount. The Successor Agency can give an old RDA parcel to another government agency doing the people’s business, but can’t give the property to a nonprofit such as EOC. This scenario would have solved the EOC’s problem (but produced no money for the taxing agencies). In the end, the Fresno Unified idea faded. Whether the idea is dead remains to be seen.
Finally, as far as City Hall is concerned, there should be the matter of trust. Is the EOC in this real estate deal playing fair or is it trying to pull a fast one? Think back to the Alan Autry era when the EOC decided to build a gymnasium/community center on California Avenue, near Elm Avenue, in West Fresno. The EOC filled out an application to successfully land big grant from the state Department of Parks to help fund the construction. The EOC promised to deliver a whole laundry list of social services to anyone coming through the gym’s doors. That never happened. The EOC quickly sold the gym to City Hall (for a lot more than $1, as I recall), and left it up to the city Parks Department to fulfill all those big promises. From what I hear, the less-than-perfect gym became an expensive white elephant for City Hall.
Whenever one of these “do we rob Peter to pay Paul” dilemmas landed on the council dais, former City Manager Bruce Rudd would say, “Council, it’s your policy call.”
Oversight Board – you’ve got a policy call on your plate.