What's at stake:
A couple million in federal relief dollars will go toward covering water infrastructure costs for a housing development in Southeast Fresno, but the city's lawyers first need to determine whether it's legal.
Under circumstances that one councilmember likened to a hostage situation, the Fresno City Council unanimously approved a $2.7 million bailout to Fresno developer Ed Kashian — along with an exemption to the city’s due diligence policy for gifts of funds for affordable housing projects.
The money will be used to build out water infrastructure and pay for connection fees for fire suppression at the Fancher Creek Town Center in southeast Fresno – which will include 420 affordable rental homes, along with retail, shops, and a planned movie theater.
The developer has been on the hook to build this water infrastructure, in partnership with the Bakman Water District, since 2010, when a development agreement was signed for the entire Fancher Creek Town Center project, before the affordable housing projects were in play.
But the developer contested Bakmans’ requirement that the developer pay the needed $2.2 million to build out the water improvements, and took the dispute to the California Public Utilities Commission. They lost, in a March ruling.
Councilmember Luis Chavez, who brought the items forward in a special meeting with just 24 hours notice, stressed the urgency in awarding funds immediately because one of the affordable housing projects at Fancher Creek is already constructed, but the city can’t complete final inspections and let people move in without the improvements.
City manager Georgeanne White stressed how strange it was to allow a developer to construct a housing project without putting in place the required funding for water infrastructure and connections — which she said occurred during a previous city administration.
“I can assure you, that as long as I’m in this chair, we’re not going to be in this position again,” White said.
She also noted that the development agreement requires the developer to put in a community facilities district before people can move in — which would establish a fee for all future residents to help pay to maintain streets, parks, and infrastructure in the development, but that process hasn’t started yet.
Brandhaven, a senior affordable housing project at the Fancher Creek Town Center, named after former Fresno mayor Lee Brand – began construction in November of 2020. Sarah’s Court, a second affordable housing project, broke ground in February.
Councilmember Arias also expressed a lot of concern — but ultimately cast a supportive vote.
“What stops the next developer to say: ‘I’m going to build this project without paying my water fee connections, without paying my sewer fee connections, without paying for fire sprinkler fees into the 11th hour,’” Arias said. “‘Then I’m going to hold letting people move in hostage, unless the city pays for it themselves. When we know that we would not do that for anyone else.’”
Council Vice President Annalisa Perea, who also cast a supprotive vote, took issue with the short notice vote, especially since the city’s legal counsel needs to research whether the city can do what the vote sets in motion.
“As of this moment, it appears we are not 100% sure if this contract even is subject to the Act, and we’re not even sure if the project is eligible for ARPA funding,” Perea said. “So I’m just a little disappointed with the item and how it’s been brought before us.”
Perea added that she supports affordable housing projects but wants to make sure that the city is being equitable with its use of pandemic relief dollars from the federal American Rescue Plan Act Program, which is how the city will pay for the water infrastructure and connection fees at the Fancher Creek Town Center.
No councilmembers asked why the developer was not contributing their own funds to cover the water improvements for the retail and housing project, despite Sal Gonzales, Co-President and Chief Operating Officer of Lance-Kashian & Company, being present and answering questions at the Thursday meeting.