Sunday, January 04, 2009

In Fresno, new mayor wary of lingering FCE project; developer's rep claims commitment

The new mayor of Fresno, CA, Ashley Swearingin, is wary of a delayed development called South Stadium, an 85-acre mixed-use project promised by Cleveland-based Forest City Enterprises.

KFSN reports:
She is not sold on developer driven investment like the agreement between Fresno and Forest City Enterprises.

"Frankly I'm not sure that the 85 acre exclusive negotiating agreement is the way to proceed, but we're taking a look at that right now," said Swearengin.


Exclusive agreements

At a debate in September, Swearingen, a Republican who led the Fresno Regional Jobs Initiative, said, "[L]et me speak in general terms and say that from a policy standpoint I never really supported or endorsed the idea of an exclusive negotiating agreement with Forest City. I think it’s the wrong way to go about downtown revitalization. Once it was done it was done and I was curious to see the outcome and I think thus far we just really haven’t seen anything, particularly when the Proposition 1C dollars were handed out and the Forest City project did not receive the funding that they expected to receive. So I think there are certainly red flags on that project."

Exclusive negotiating agreement? Doesn't she know that in New York, the president of the New York City Economic Development Corporation said of Atlantic Yards, "So, they came to us, we did not come to them. And it is not really up to us then to go out and try to find a better deal. I think that would discourage developers from coming to us, if every time they came to us we went out and tried to shop their idea to somebody else. So we are actively shopping, but not for another sports arena franchise for Brooklyn."

Swearingen's Downtown Revitalization Strategy states, "Unfortunately, our downtown has deteriorated beyond the repair of any one project, no matter how big or how small."

So she proposed multiple strategies. And the city's "biggest economic development challenge is really workforce development," says a strategy paper on Economic Development.

Local tensions

Fresno Bee columnist Bill McEwen wrote December 19 about some tension among city officials over the project, but said it was still more or less on track:
Moreover, Forest City remains committed to Fresno, even though it is being careful with its money and pulling back from taking on new projects, company senior vice president Susan Smartt told the City Council on Tuesday.

[Mayor Alan] Autry abandoned the Forest City bandwagon more than a year ago for two reasons: The firm never warmed to his idea of putting a water feature into the project, and it didn't turn dirt following the hype generated by the pursuit of Bass Pro.

But the City Council -- at least the one that listened to Smartt's report -- still sort of loves Forest City. On Tuesday, it wisely extended the firm's exclusive negotiating agreement for the South Stadium Project for another six months into mid-2009.

Forest City asked for a one-year extension. Outgoing City Council Member Brian Calhoun asked that his colleagues put the decision off until it could be made by the new council next year. Another outgoing council member, Jerry Duncan, proposed the six-month compromise, and it passed.

What does six months buy Forest City and Fresno taxpayers?

Time for Forest City to pursue state and federal money to close an estimated $100 million financing hole in the $300 million project.


That's a lot of government money.

Is FCE really committed?

Was Smartt blowing smoke about the developer's commitment?

Remember, FCE CEO Chuck Ratner said in a statement December 8 that the developer was cutting back:
1. Significantly slowing nearly all longer-term development. We remain committed to projects already under construction and to key, high-profile developments in core markets.

The Fresno project is not already under construction. It may be in one of FCE's core markets, which consist of Boston, New York City/Philadelphia, California, Washington, D.C./Baltimore, Denver, Chicago.

But is it a "key, high-profile development"?

Well, Chuck Ratner, in a conference call with investment analysts December 11, said that, while "virtually all new development [was] on hold... I need to emphasize here again that we remain committed to our projects under construction and we will meet our obligations and maintain our entitlements, including at our large multi-phase, mixed-use projects, such as Stapleton in Denver, Mesa del Sol in Albuquerque, Central Station in Chicago, the Yards and Waterfront Station in Washington, and of course, to Atlantic Yards in Brooklyn."

That doesn't sound like Fresno. The commitment may last only through last effort to gain sufficient subsidies.

Shifting project

According to the Fresno Bee, the city in 1998 advertised to get a developer to redevelop the area at issue. None would submit a bid. (That would not have happened with the MTA's Vanderbilt Yard in Brooklyn, which generated a bid even after Forest City Ratner was anointed by city and state leaders.)

Then the city began negotiating individually with developers. Fresno in 2004 agreed to work with Forest City Enterprises, which initially announced a plan to build two major retail outlets, smaller stores, and 600 homes.

But those major retailers didn't come through, so in August 2007, the developer switched gears, according to an 8/29/07 Bee article headlined Forest City plan OK'd, swapping those big stores for additional housing.

The first phase was supposed to take four years. There was no timeline for the second and third phases, involving a movie theater and commercial space.

Now there's no timeline for the first phase, either.

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