City Pays Bad Loan on Granite Park Project | ABC30 Fresno

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By ABC30

Friday, September 11, 2009

Fresno, CA The city didn't have much choice but to pay off the bad debts since it had co-signed loans on the /*Fresno Met Museum*/ and /*Granite Park*/ years ago.

There's new construction at Granite Park now, with contractors working on nine new office buildings. But the buildings actually aren't part of the Granite Park project the city now owns. That's 18 acres with almost nothing on it. The dirt is mostly untouched and the trees are dead.

This is Granite Park and it's not the picture of a great investment, especially at 2004 prices. But that's when the city of Fresno co-signed a loan on the property with a nonprofit agency called the Granite Park Kids' Foundation. Its board included developer /*Milt Barbis*/, who was also in charge of the commercial side of the project.

"Unfortunately, the economy changed and we've seen the bottom fall out of that and so now we're in a different role than we expected," said city manager Andy Souza.

The city's new role is owner. The nonprofit disappeared, but the $5 million loan didn't, so the City Council met in a special session Thursday to approve new bonds to pay it off. The city is planning to pay almost $400,000 a year for the next 20 years to pay off the loan.

"That money can be used in a lot more important areas: hiring more police, more firefighters, things that government should be doing," said Chris Mathys of the Valley Taxpayers' Coalition.

This council couldn't stop the ball that was already rolling, but two of the current members -- Henry T. Perea and Cynthia Sterling -- supported the original deal in 2004. With the benefit of hindsight, their colleagues now say securing a loan for a non-profit is never a good idea.

"That is definitely going to raise a lot of alarm bells with me and the city probably shouldn't be involved in those kinds of ventures," said council member Lee Brand.

But now this version of Fenway Park belongs to the city of Fresno. And so does this dirt. An assessment due next week should help the city determine how to make the best out of a bad situation. The solution could have the city looking to partner up with yet another business.

"We're going to look to are there opportunities to join public/private partnerships?" said Souza. "Maybe there are people willing to bring recreational amenities that we haven't had before."

The city's deal has nothing to do with the commercial portion of the granite park project. That's still in limbo.

Managers at OMNI Financial, which owns the 24 acres where Cabo Wabo used to sit, say they're waiting for the city's next move before making their own.