Modesto’s courthouse land deal on special Tuesday council agenda

04/11/2014 2:54 PM

04/11/2014 10:54 PM

Modesto’s city leaders have been privately negotiating for many months to buy up an entire block of downtown so the city can resell the land to the state for a new courthouse.

Some of the previously secret details of that land deal will be made public and considered for final approval Tuesday during a special City Council meeting.

City officials refuse to disclose the appraisals on which the land deal supposedly is based, but it appears the value of city property will be used to subsidize the private landowners on that block.

The state is willing to pay $5,083,000 for all the land between 10th and Ninth streets and H and G streets. That’s how much the state’s appraisals determined the entire block is worth in its current condition.

The city and its former redevelopment agency own about half the block, including five parcels and the alley. But City Council members will consider approving a deal that will net the city just $330,000 for its land, while the block’s six private landowners collect $4,553,000.

The staff report on the deal shows an additional $200,000 from the state will be used by the city to purchase environmental liability insurance.

The report estimates it will cost the city $367,000 to remove all utility lines from the alley running through that block. Coincidentally, the state calculates the block’s total value will increase by $367,000 once the utilities are moved. The state has agreed to pay the city that much – but only that much – once those lines are gone.

Who will pay the bill if removing the utilities ends up costing more than $367,000 isn’t explained.

In the backup material for Tuesday’s agenda, city officials do not reveal the appraised value of the public’s land on that block.

Modesto’s former redevelopment agency owns 31,500 square feet at H and 10th streets, which it uses as a parking lot.

Two years ago, state appraisers determined a similar downtown parking lot was worth $500,000. That 31,363-square-foot lot is near H and 14th streets, just down the street from the proposed courthouse, so it could be considered of comparable value.

Also part of the courthouse deal is 14,000 square feet the city owns at the corner of G and Ninth streets. When the city acquired that property in 2002, loan documents show its value was at least $271,163. Since then, the city has made numerous improvements to the property, which it uses as its fleet maintenance facility.

The courthouse land deal also would give the state the city-owned alley that dissects the block, but how much that 8,000-square-foot strip is worth isn’t being disclosed.

The appraised value of the six private properties isn’t being revealed, either. City officials simply state: “No private parcel owner is receiving less than the appraised value.”

Here’s what the city wants to pay those private property owners:

•  $2.5 million for 900 H St. Owned by Greg Reed’s G&K Enterprises LLC, this 28,000-square-foot parcel includes an occupied office building. When that property last sold in 2004, which was near the peak of the real estate market, its price was $2,250,000.
•  $625,000 for 711 10th St. Reed’s G&K Enterprises also owns this unoccupied 7,000-square-foot parcel, which includes an unoccupied century-old building. The last time it sold in 2004, the price was $265,000.
•  $492,000 for 712 and 706 Ninth St. Owned by Gary and Myrna Gervasoni, this 10,500-square-foot lot includes Gervasoni’s restaurant. The wording used by the city for this deal is different from all its other proposals. Apparently, the acquisition will include financial compensation for the people currently leasing the restaurant because they had some kind of first-right-of-refusal contract to buy the building.
•  $325,000 for 716 Ninth St. Owned by Curtis Mote, this 3,500-square-foot parcel includes a vacant two-story commercial building.
•  $270,000 for 701 10th St. Owned by Charles W. Noble, Dorothy M. Noble, Von Deen Bubeck and Jerry Bubeck, this 14,000-square-foot lot includes a vacant building.
•  $341,000 for 713 10th St. Owned by Gina Rugani, Michael Gene Rugani and Sandra Ann Heffernan, this 3,500-square-foot lot has a vacant building.

Tuesday’s special meeting will begin at 5:30 p.m. in the council chambers at 1010 10th St.

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