Fresno

Developer sues Fresno city, county over axed deal for former UMC hospital

Nearly a year after a deal between the City of Fresno and Fresno County to construct affordable housing on the site of the former University Medical Center in southeast Fresno was nixed, the local construction company that found itself on the outs is taking both municipalities to court. 

Fresno-based developer CMG Construction Management agreed to purchase the property – located at the northeast corner of E. Kings Canyon R. and S. Cedar Ave. – for $4 million. 

Under the regulatory agreement, the city would oversee the development of the property in order to allow the county to bypass the Surplus Land Act. 

But the Fresno City Council axed the deal last March because of a conflict of interest surrounding Steve Rapada, the former chief of staff for County Supervisor Sal Quintero. 

Rapada was a paid consultant for Construction Management Group while serving as Quintero’s aide. Fresno County prosecutors charged him with one felony count of conflict of interest in October 2020.

He resigned shortly thereafter and awaits for a trial date.

Last June, the county put the property back on the market, setting a price of $6 million. 

According to the lawsuit, filed last week, CMG Construction claims that city and county officials conspired to breach the contract to steal the development concept and then sell the property to the city. 

“This matter involves the classic situation of big government eviscerating and usurping the private sector to the detriment of the taxpayer and the public at large,” the lawsuit reads. 

CMG Construction alleges that taxpayers will have to foot a bill of $500 million in “unnecessary expenses and lost tax revenue,” and the developer claims that the city’s involvement in major projects over the last few decades paints a grim future for the affordable housing project. 

“It cannot be emphasized enough that the City of Fresno historically has mismanaged and failed to implement projects and enterprises that it has managed and failed to implement projects and enterprises that it has managed ranging from the failure to redevelop the downtown area to its involvement with Farwest Airlines, Granite Park and the demise of the Fresno Metropolitan Museum…” the lawsuit reads. 

“In other words, there is no guarantee or reason to believe that the City of Fresno will ever develop the UMC property or manage it economically for the benefit of the public.” 

CMG Construction claims that the Fresno County legal counsel and the city’s legal team held conversations which indicated that the city would not perform its part of the regulatory agreement. 

The developer said the county should have returned a $500,000 deposit after the city allegedly told the county that it would not honor the deal. 

CMG Construction is seeking $80 million in damages from the city and county. 

The Fresno County Board of Supervisors held discussions during closed session on Tuesday about selling the property to the city for a proposed $4.25 million but did not come to a deal.

Daniel Gligich is a reporter for The San Joaquin Valley Sun, focusing on Fresno State Athletics and the southern San Joaquin Valley. Email him at daniel.gligich@sjvsun.com.