One of Fresno’s most prolific developers, Ed Kashian, is asking the city council to bail him out of a water dispute by spending $2.7 million in federal pandemic relief funds to get water to his Fancher Creek Town Center in the rapidly growing southeast section of town.
The city seems poised to grant the request, but will have to revise its own policy against loaning or granting over $1 million without first determining if the effort is a sound investment.
The driving force behind all these maneuvers is the lure of 120 affordable apartment units being built by Kashian as part of the mixed-use Fancher Creek Town Center development.
Coucilmember Luis Chavez proposed an amendment to the city’s grant/loan policy that would exempt affordable housing, senior housing, and mixed-use projects – exactly what Fancher Creek Town Center is – from having to prove their investment value.
“We’re in a housing crisis,” Chavez emphasized. “We need to do whatever we can to build more housing.”
“There is a vetting process in place for affordable housing projects – they have to compete for tax credits, and other funds already,” he added.
The $2.7 million bailout and policy change to allow it will be discussed starting at 1:30 p.m. Thursday at a special council meeting that was noticed just 24 hours in advance. The meeting will be held on Zoom and in the council chambers at 2600 Fresno Street.
The items are raising eyebrows at City Hall.
“We’ve never awarded anything like this without a competitive bid process,” said city councilmember Miguel Arias. “Why are we bailing out a developer from his due diligence process?”
Sal Gonzales, a representative for Fancher Creek Town Center, could not be reached for comment.
Long running water fight
Kashian already broke ground on the affordable 120-unit apartment complex, known as Sarah’s Court, in February.
But it did so even as it has been in a long running dispute over who should pay for water infrastructure needed by the complex. The dispute is with the small Bakman Water Company, a private water utility serving a pocket of the Sunnyside and Fancher Creek neighborhoods in southeast Fresno.
The original amount was $2.2 million for a water storage tank and other needed infrastructure.
Bakman said Kashian should pay the cost, as any other new development would.
Kashian, in proceedings that went up to the California Public Utilities Commission, argued that affordable housing should be viewed differently. Infrastructure costs are frequently cited by developers as a barrier to solving the state’s housing crisis, particularly for affordable housing.
The CPUC found in favor of Bakman in a final ruling on March 6. Kashian should pay for the water infrastructure, the state agency said.
Pandemic relief bailout money would go to water company
Instead, the developer has come to the City of Fresno for help.
The city of Fresno has long maintained that Bakman Water District, not the city, should be responsible for providing water to the Fancher Creek Town Center development, according to a 2010 development agreement.
Now, the city may find itself in the position of paying Bakman for the infrastructure Kashian needs to complete the development.
If Fresno agrees to the bailout, it would not change the development agreement, according to Georgeanne White, Fresno’s City Manager. The funds would be awarded to Bakman Water Company, on behalf of the developer.
“I’m always concerned when taxpayer dollars are used to subsidize projects and the precedent being set,” said White. “That is why each project must be thoroughly analyzed on its own merits to ensure the return on investment justifies the subsidy.”