Investor who profited may consult for Modesto

kvaline@modbee.comAugust 31, 2013 

Modesto is poised to hire Paul Draper's Centerra Capital to help it buy and then sell land to the state for a new downtown courthouse.

City officials are asking the City Council on Tuesday to let them enter into an agreement with Centerra for real estate consulting. Draper founded Centerra, a Modesto-based real estate investment management company, in 1998.

The state proposes to build a $277.2 million courthouse on land bordered by Ninth and 10th and G and H streets. The city owns five of the 11 parcels at the site, according to the agreement. The rest are owned by private landowners.

The agreement states Centerra would represent the city and the landowners in their negotiations for the city to buy the six parcels. Centerra then would represent the city as it sells the 11 parcels to the state.

Centerra would earn a 3 percent commission from the city upon the sale of the entire site to the state. Centerra also may be paid a commission by the landowners in the sale of their parcels to the city, according to the agreement.

Draper is familiar with the site of the proposed courthouse. He was part of Team Modesto, a group of businesspeople that hoped to build a seven-story tower of condominiums, offices and shops at the site several years ago.

He could not be reached for comment Friday.

City Planning Manager Patrick Kelly said it's not unusual for the city to use a consultant in real estate transactions. He said because of budget cuts, the city no longer has a staff member with real estate expertise.

Duke Leffler, president of PMZ Commercial Real Estate, represents the state in its negotiations with the city. He said he and Draper have been involved in the project for about three years.

The 2.75-acre site includes a city parking lot and maintenance yard, the Turner Building and Gervasoni's Restaurant. Leffler estimates the state's purchase price will be $4 million to $5 million.

Modesto is trying to acquire all of the parcels so the state has to deal with just one seller. The city also will relocate the utilities at the site.

City officials envision the courthouse as part of its effort to revitalize downtown in general and 10th Street in particular. The street is home to Tenth Street Plaza, Tenth Street Place — the county-city administration building — and the Gallo Center for the Arts.

Bee staff writer Kevin Valine can be reached at kvaline@modbee.com or (209) 578-2316.

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