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Housing Authority, HSR Authority prepare bidding war for Downtown parking lot

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There’s nothing like an auction where you set the rules. Just ask Fresno City Hall.

The city’s Oversight Board on Tuesday will decide who gets to buy Lot. No. 2 near the north end of what used to be Fulton Mall.

The lot is 1.38 acres in size. It’s now a parking lot along Tuolumne Street, next to Fresno Housing Authority headquarters.

The appraised value as of March 16, 2016 — $420,000.

Several things make this sale worthy of notice.

First, there is the lot’s location. It’s in Downtown, and Downtown (if all goes according to plan) will soon be home to nation’s first bullet-train depot. Officials at City Hall and the High Speed Rail Authority have big dreams for development opportunities within a one-mile radius of the depot.

Second, the Oversight Board is part of the complex structure created several years ago by Sacramento to dispose of redevelopment agencies. Lot No. 2 is owned by the RDA, now called the Successor Agency (it’s all City Hall, anyway). RDA properties are to be sold, with proceeds distributed to various government entities (City Hall and Fresno County among them).

Third, city officials have long figured the best way to get top dollar for RDA properties is an auction. Highest surviving bidder with real money wins.

Fourth, everyone experimented with the auction model in November with the Merchant’s Lot. That turned into a public relations disaster. To make a long story short, local developer Terance Franzier won the auction fair and square. But the Merchants Lot (2.8 acres) also is near the bullet-train depot’s proposed site. City Hall stepped in, exercised it’s “first right of refusal” after the bidding had stopped, and snatched the property from Frazier by simply promising to pay an extra $1,000. City Hall turned around and conveyed the lot to the High Speed Rail Authority for the purchase price. The winning side’s thinking: The Merchants Lot will be much more valuable to the public if developed according to a comprehensive regional plan.

Fifth, the scenario for Lot No. 2 is shaping up to be somewhat of a replay of the Merchants Lot drama.

The Oversight Board’s agenda lists an auction. Potential buyers had to turn in sealed bids to the City Clerk’s Office. Oversight Board Member (and former Fresno County Supervisor) Doug Vagim told me on Monday that so far only two sealed bids had been turned in. They came from the Housing Authority and the High-Speed Rail Authority.

The sealed bids are to be opened on Tuesday. If they’re found to meet all the rules, then an old-fashioned auction begins.

In theory, both sealed bids are for the minimum $420,000. The price goes up from there.

But the Oversight Board will consider two items connected to Lot No. 2 before the auction begins.

The first is a proposal to sell Lot No. 2 to the city at appraised value. If that happens, there’s no need for an auction.

The second is a proposal to reinstate the city’s “right of first refusal.” Such a right currently doesn’t apply to Lot No. 2. But such a right is definitely within the Oversight Board’s authority to grant. If the board doesn’t vote to sell Lot No. 2 to the city at appraised value but does vote to reinstate the city’s right of first refusal, the auction could proceed.

But why go through the charade? The Housing Authority (which answers in part to City Hall) and the High-Speed Rail Authority would be bidding against themselves with taxpayer money for no reason other than to jack up the price. All the while, City Hall would be waiting in the wings with that “right of first refusal” and an extra $1,000 tucked in its pocket.

Before you suggest no one’s foolish enough to bid up a sale price simply to burn taxpayer money, keep in mind that the bullet-train folks did exactly that at the Merchants Lot auction.

What would City Hall do with Lot No. 2? I don’t know. But a deal with the Rail Authority is a good guess.

There are other important pieces to the Lot No. 2 issue. Whether they all come to light on Tuesday is far from certain. Oversight Board members for the most part shy away from controversy. The board has generally seen things from City Hall’s perspective.

Vagim said he hopes city officials attend Tuesday’s meeting. He said he has one question for them.

“What’s going on?”

George Hostetter
George Hostetter is The Sun’s Fresno Civic contributor – covering the City of Fresno, County of Fresno, and Fresno Council of Governments.

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