Location, land deal for new Stanislaus County Courthouse decided in secret

jnsbranti@modbee.comJune 1, 2013 

— It will be the most expensive public works project in Stanislaus County history and forever alter downtown Modesto, but so far, the public has been cut out of the planning process.

Every decision concerning where the proposed $277.2 million Modesto courthouse will be built has been made in secret, with state court officials insisting they are exempt from open meeting laws.

Now Modesto city officials are privately crafting a plan to buy out six landowners on one block of downtown, improve the site to make it easier to build on and then resell that property to the state for the courthouse.

At best, the city will "break even" on the deal, officials acknowledge.

It might be a great plan, but who is making these decisions?

No public meetings have been held to discuss the city's development deal or how it will be paid for or what financial risks it creates.

The City Council never has discussed it publicly, no documents have been released explaining how such a deal might work, and only sketchy details have been released.

Last week, Brent Sinclair, Modesto's director of community and economic development, told The Bee he expects to present a plan outlining the costs, financing and other details to the council within 60 days.

But in an email to The Bee late Thursday explaining why the state wants to buy the block between Ninth and 10th streets and H and G streets, California's Administrative Office of the Courts suggests an agreement already has been reached.

"The city of Modesto has agreed to act as aggregator of all the parcels and representative for all the landowners. The way this works is that both escrows — the city to the (state's court system) and the parcel owners to the city — will close at the same time," wrote Keby Boyer, spokeswoman for the Administrative Office of the Courts.

How the city agreed to something the City Council has never publicly discussed was not explained, but the state expects to close the deal by early 2014.

The city already owns two of the eight parcels on that block, plus the alley that runs through the middle of it. The plan is for the city to buy the other six parcels from their private landowners, then move out all the utility lines running through the alley. After that, the entire block would be sold to the state.

Those utilities could include water, sewer lines, electrical, gas, telephone and cable lines.

Whether the block's office buildings, shops and restaurant would have to be closed or demolished for those lines to be moved has not been explained.

How much the city would have to spend to move those utilities, where it would get the money to do it and whether the state would refund that expense also has not been explained.

And before the state agrees to buy the land from the city, the property has to clear environmental inspections.

"At this phase of site acquisition, a more in-depth environmental study is being conducted to determine if there are any environmental contaminants on the site and to what extent," Boyer wrote in response to The Bee's questions. "Until that study is complete, there is no way to determine who will be physically and financially responsible for any cleanup, if applicable."

Bus station is former tenant

The block has been used by many businesses and for assorted purposes over the past 100 years, including as a bus station. What would happen if the city discovers contamination while digging up the utility lines hasn't been explained.

"The city of Modesto will not be left holding the land if the land purchase doesn't go through," Boyer said. "If for whatever reason the site purchase does not go through — which is unlikely because the new Modesto courthouse project was funded for site acquisition in fiscal year 2012-2013 — the city of Modesto is not obligated to buy the parcels and is free to cancel the transaction."

How the city could retain the right to cancel the land purchase while it moves all the utility lines from that block has not been explained.

The block is occupied by assorted businesses, including Gervasoni's Restaurant and numerous tenants in the Turner office building.

"By law, the state is allowed to pay up to the current appraised value for the land," Boyer said.

The state has had the block appraised, but it has not made that information public. The 33,383-square-foot Turner building, however, recently has been marketed for sale with an asking price of $3.2 million.

The six privately owned parcels there now pay more than $32,000 per year in property taxes, but government-owned property — whether held by the city or the state — is tax-exempt.

If the deal does go through, that block could sit empty for years waiting for the courthouse to be built. That's because the state does not yet have money budgeted to build — or even design — the structure.

"As of right now, the new Modesto county courthouse cannot proceed into the design phase because there are no funds available for this in the fiscal year 2013-2014," Boyer wrote. She said state budget cuts have delayed construction plans for many courthouses. "If funding is not restored to the courthouse construction program, or if more funding cuts are in store, more court construction projects may be delayed for a year, indefinitely delayed, or canceled."

The Modesto courthouse already is far behind its original construction schedule. The state has spent nearly 2½ years deciding which Modesto site it wants to buy for the project.

At least six downtown sites were considered, but Modesto city officials have steadily pushed for this block between Ninth and 10th streets, where it owns just over a half-acre on two corner parcels.

The city has been trying to get that block redeveloped for more than a dec-ade. It bought the corner of 10th and H streets in 2003, then immediately resold it to a developer who was supposed to build a high-rise multiuse project called Valley Tower. That project never got off the ground, and the city ended up getting the land back in early 2005.

Later in 2005, a different development group, calling itself Team Modesto, proposed another multistory, multiuse building there. But that plan dissolved when the real estate market collapsed in 2007. The city has been using that land as a parking lot ever since.

Advisory group formed

When the state decided in 2010 that it would fund a new Stanislaus County courthouse, the city and numerous private downtown Modesto landowners were contacted about the possibility of selling their land.

No public hearings were held about where the massive eight-story, 26-courtroom, 301,353-square-foot structure should be built. Instead, in late 2010, the state selected a 19-member Project Advisory Group to provide suggestions on site selection and design.

"The Project Advisory Group is the community's representative when it comes to offering input on the new courthouse construction project," Boyer explained.

But who are the community members in that advisory group?

Of the 19 members, 16 are public employees working for various government agencies, including Sinclair and another Modesto city planner. Also placed on the advisory panel were Modesto's former longtime planning director, a representative from the Stanislaus County Bar Association and a Modesto Chamber of Commerce representative.

The chamber's representative is Eric Benson, who is president of JS West & Cos. JS West owns the entire Ninth Street block facing where the new courthouse is supposed to be built. His family-owned company has been doing business there for a century.

"I didn't think it was much of a conflict," Benson said about being on the advisory group. He said he hasn't attended an advisory meeting in more than a year.

The advisory group "helped narrow down" the list of potential courthouse sites, Benson said. "I felt they listened to us, and the worst choices got taken off the list."

By late 2011, two sites became finalists: the one the city favored between Ninth and 10th and the block where The Bee leases space between 13th and 14th streets and H and I streets. The Bee's parent company sold that site to a group of private investors in early 2011 and no longer has a financial interest in the property.

Boyer said the state ultimately chose the site between Ninth and 10th streets because it is within the city's master plan for growth along 10th Street, it is closer to Modesto's regional transportation center and it provides more options within the city's zoning height regulations.

Benson said he agrees with the decision to build there.

"It will probably do wonders for the property values of the land adjacent to that facility," he said. "I think there's going to be demand for office space in and around that building."

Benson said JS West currently operates a profitable feed mill across the street from the courthouse site and expects to continue running it. "We will be a great neighbor to the new courthouse," he said.

Also on that JS West land, however, is an 11,749- square-foot building where the company formerly operated a furniture store. That building, at H and Ninth streets, is leased to the Wellspring Anglican Church, but the church plans to move out within the year.

"I'd love to see lawyers' offices in there," Benson said. "But I'm not going to make definitive plans until there's a shovel in the ground (at the courthouse site)."

Revitalizing 10th Street

Sinclair said the courthouse is a key component in Modesto's effort to revitalize 10th Street and draw more people to that part of downtown. He said the city believes increasing and concentrating the number of people downtown will result in more restaurants, stores and other businesses.

Tenth Street already has the DoubleTree Hotel, Tenth Street Plaza and the Gallo Center for the Arts. Sinclair said the courthouse and the proposal to build a downtown train station on Ninth Street near the courthouse could draw even more people.

Eventually, Sinclair said, the city envisions that vitality would attract developers, who would build housing downtown for a mix of people, from young professionals and empty-nesters to sen-iors who want to enjoy the revitalized urban amenities.

The City Council has not scheduled when it will publicly discuss the city's role in the courthouse deal.

Boyer said that when the project advances to the design phase, perhaps in 2014 or 2015, the state and the Project Advisory Group "will host an open house for the public to attend."

Bee reporter Kevin Valine contributed to this story.

Bee staff writer J.N. Sbranti can be reached at jnsbranti@modbee.com or (209) 578-2196.

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