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April 12, 2014

Questions swirl around Stanislaus County courthouse land deal

Modesto’s City Council will hold a special meeting Tuesday to consider buying up all the land between H and G streets and Ninth and 10th streets, and then reselling the whole block to California’s court system for the courthouse.

It’s expected to be the most expensive public building in Stanislaus County history, and the big spending is about to begin on the long-planned downtown Modesto courthouse.

Modesto’s City Council will hold a special meeting Tuesday to consider buying up all the land between H and G streets and Ninth and 10th streets, and then reselling the whole block to California’s court system for the courthouse.

The city already owns nearly half the land on that block, but it’s the six private landowners there who will reap virtually all the profits from the courthouse deal.

The state has agreed to pay $5,450,000 for the entire block after the city removes all the utility lines from its alley.

The best-case scenario has the city of Modesto ending up with $330,000 of those funds. That’s far less than what the city’s 53,500 square feet of land there is worth.

The city also is taking on a financial risk: If it costs more than $367,000 to move those water, sewer, gas, telephone and TV cable lines and storm drains, Modesto will be stuck with the bill.

And Modesto taxpayers will be liable for up to $100,000 in costs if any environmental problems are found.

Details still lacking

The private landowners on the block, by contrast, will be paid $4,553,000 for their properties.

Exactly how city officials calculated which landowners will receive which amounts has not been revealed. The city received at least two appraisals for each of those properties, but it refuses to make those appraisals public.

There appears to be massive discrepancies between the values placed on some of the privately owned parcels compared to any of the publicly owned parcels.

Repeated requests by The Modesto Bee to get any city official or Mayor Garrad Marsh to answer questions about the land deal have been refused.

Prominent community members also have been rebuffed in their pleas for more details.

“I’ve never seen any government act like this in my whole career,” said Ray Simon, a former Stanislaus County supervisor who served about 40 years in public office. He helps lead Citizens for I Street, a community group that’s concerned about the courthouse land deal.

“There ought to be a lot of suspicion on the part of the public about this,” Simon said. “It smells.”

Questions being raised about the deal include:

•  How privately owned land values were established.
•  Why Modesto officials want to essentially give away city-owned property.
•  Specifically how the city staff calculated it would cost $367,000 to remove all the utilities from the alley.
•  How much money the city already has spent on this deal and how future costs will be covered.
•  Why the city is not complying with California’s new financial disclosure law regarding economic development subsidies.
•  Why the City Council is cramming 12 resolutions into one massive agenda item at a special council meeting, which wasn’t made public until Thursday afternoon.

“What they’re doing is putting a stain on the courthouse, which is supposed to stand for truth, honesty and fair dealing,” Simon said about Modesto city officials and those from the state’s Administrative Office of the Courts.

Simon is particularly concerned about the city’s apparent lack of compliance with a newly enacted public disclosure law. Government Code 53083 requires extensive details be revealed before cities provide financial subsidies for any economic development project.

“That new law is critical. How can they sidestep a law that was passed and signed by the governor of California?” Simon asked.

Call for ‘transparency’

Modesto attorney Michael Normoyle, who represents Citizens for I Street, said the community deserves “transparency and full disclosure” concerning all aspects of this courthouse land deal.

Normoyle said the city’s “data dump” of 866 pages of documents, released for the first time late Thursday afternoon, makes it extremely difficult for the public to analyze and understand what’s going on.

What’s “glaringly absent” in all those documents, Normoyle said, is anything about the value of the city’s land on that courthouse site.

The state got land appraisals to determine the value of every parcel of that block, and the city knows how much the city’s properties were determined to be worth. But those appraisals – paid for by a public agency for publicly owned land – are being kept secret from the public by city officials and state court officials.

Repeated requests by The Bee to see those appraisals have been denied.

One Modesto businessman, Niniv Tamimi, has many questions about appraisals for that 10th Street block. Tamimi manages and has an ownership interest in the downtown block between I and H streets and 13th and 14th streets. That block, where The Bee leases space but has no financial interest, is the state’s second-choice site for the courthouse.

Tamimi has a copy of the state appraisal for his I street block, and he said it is “to the penny the same price” the state now is offering to pay for the 10th Street block. Tamimi said private owners of the I Street block are willing to accept that appraised value and sell their property to the state for that amount.

Tamimi thinks it’s more than coincidence the state now is offering an identical amount for the 10th Street block.

The state plans to completely level whichever block it ends up buying.

The $367,000 question

According to the proposed purchase agreement with the city, the state will pay $5,083,000 for the land on the 10th Street block, plus $367,000 for “the increase in value of the property as a result of completion of the removal of utilities.”

In another coincidence, the city’s staff estimates it will cost $367,000 to remove those utilities, which currently run through the city-owned alley.

But nowhere in the 866 pages of documents regarding the courthouse land deal does it explain how the city’s staff determined what that work will cost.

That’s important because Modesto taxpayers will be required to pay all costs above $367,000.

Simon fears removing those utilities will cost much more than the city is telling the public. He recalled it costing about $500,000 a decade ago when similar work was done to make room for the Gallo Center for the Arts at I and 10th streets. Since then, he said, prices have gone up.

The city also will be financially liable to spend up to $100,000 to clean up any environmental contamination found on the block. That’s in addition to the $200,000 the city must pay to buy a “pollution legal liability environmental insurance” policy.

Normoyle said another financial risk for Modesto taxpayers concerns what happens to that block’s properties between now and when the state ultimately buys the land from the city, which may not happen for more than a year.

“This is going to turn the city into a landlord,” Normoyle warned.

Normoyle said he and others plan to ask questions at Tuesday’s special council meeting.

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