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Key downtown Fresno project in works: A lot is riding on housing-retail plan near Selland.(Fresno Bee (CA) (KRT) Via Acquire Media NewsEdge) Jun. 1--Two developers who have built a local sports empire soon will break ground on a project meant to revive downtown Fresno as center stage for urban life. The risk is considerable. Failure could imperil taxpayer dollars, tarnish the historical reputation of Mayor Alan Autry and give a skeptical public one more reason to doubt downtown's value as anything other than a government center. But so is the potential reward. That's because supporters of the project -- called "The Legacy Downtown" -- see it as a key piece of a series of developments stretching across the heart of Fresno's urban center. City Hall officials and Legacy developers Chris Cummings and Brian Glover say this stretch, with its critical mass of entertainment options, hotels and convention facilities, will change downtown in unimagined ways. "The reconstruction of downtown Fresno is going to happen along that axis," Cummings says. Although they have yet to secure financing, Cummings and Glover say they plan to break ground June 9 on The Legacy, a residential-retail complex to be built on a 4-acre, city-owned parking lot next to Selland Arena. It's expected to have 171 apartments, including 24 for low-income renters. There are to be offices, spaces for boutiques, restaurants and nightclubs, and a public ice rink. "A hundred years of investment has gone into downtown -- $1 billion in the last five years," Glover says. "It's not going away. People work down here. Now, let's get them to live down here." Smaller projects, such as the Vagabond Lofts, already have brought some new residents downtown. But "it's the first real mixed-use project in the core of our city," says City Manager Andy Souza. "It's historic on many levels." Here's what the city has at stake: A taxpayer investment of up to $6 million. City officials emphasize that the funds are to be paid only after the project is completed and generating tax revenue, or when the city buys a service such as renting the ice rink. But if The Legacy goes bankrupt, Souza acknowledges, the city could be forced to take it over, at least temporarily, to save the public's investment. A key piece of what Autry calls downtown's "miracle mile." The Legacy would be the end of a stretch of development that begins with Chukchansi Park, moves along Kern Street to Civic Center Square and turns right on M Street toward Selland Arena. City officials are counting on its housing, convention facilities, hotel rooms and entertainment to create a slice of what downtown has been missing for nearly a half-century -- life around the clock. "If you're going to resurrect downtown, you have to have people with spendable income," Council Member Mike Dages says. Validation of City Hall's new downtown revitalization philosophy. City officials in the past four years have touted huge projects in or near the city's core. But Forest City Enterprises' South Stadium project still is waiting to turn its first shovelful of dirt, and billionaire developer Donald Trump's effort to buy the bankrupt Running Horse golf and residential project in southwest Fresno fizzled. Autry says the focus now is on "getting the stuff in the ground" -- build something of substance, and watch it spark progress. Autry is termed out of office in seven months. He dismisses any suggestion that The Legacy is to be his legacy. Yet the project clearly will influence history's judgment. Autry won a landslide victory in 2000 over former Mayor Dan Whitehurst in part by vowing to heal a north-south rift he called the "tale of two cities." Central to Autry's plan was turning downtown into a place where Fresno's diverse population comes together to play, eat and, for many, live. The promise remains largely unfulfilled. Says Autry, "I'm going to get The Legacy project in the ground." Bringing hockey back to Selland The Legacy and the "miracle mile" are all about deals. On Aug. 21, the City Council set the stage by making two key decisions about city-owned Selland Arena, authorizing Souza to negotiate a 20-year lease bringing the Falcons back to the venue and spending $1.5 million to install a new ice floor. The lease, signed in November, provides an anchor tenant for an arena that has gone through a multimillion-dollar city-financed renovation. Cummings and Glover, who are co-owners of the Falcons and Fresno Grizzlies, say the move gives their hockey team a fighting chance at survival. They say the Falcons lost money at the Save Mart Center, but decline to provide specifics. At Selland, the Falcons will pay $5,000 in rent per game for 36 home games -- $180,000 total. They will get a $1 rebate for each person attending a game (even if they don't buy a ticket) beyond a regular-season attendance total of 125,000. If the Falcons in 2008-09 average close to 6,000 fans a game, as they did two years before leaving for the Save Mart Center, they would cut their $180,000 season rent at Selland nearly in half. If the Falcons franchise went bankrupt, Souza says, the city would take over the team and search for a new owner. Along with the proposed lease, city officials also went to the City Council in August with what they said was a health and safety emergency: Selland's 42-year-old ice-making system had broken down and a hazardous heavy metal -- chromate -- was found. Council members were asked to waive competitive bidding requirements and authorize city officials to buy and install a new system, to cost no more than $1.5 million. A Legacy is born Souza returned to the council on Oct. 16 with an even bigger deal: a development agreement and a 50-year land lease with a Cummings-Glover partnership to build The Legacy. Council members approved both. The city and Redevelopment Agency are providing the developers with $750,000 in housing funds after the project is built and up to $2.7 million to be paid over a maximum of 13 years out of property taxes generated by the project. The subsidies will bridge a gap caused when rents can't cover construction costs, a problem common to developments in struggling urban cores. Stephen R. Blank, a finance expert with the Washington, D.C.-based Urban Land Institute, says public subsidies for developers can be a valuable redevelopment tool. But, he cautions, city officials should first thoroughly research the project and its ramifications. "If [Fresno officials] are taking a proactive approach, that's healthy," Blank says. The land lease also calls for the city Parks and Recreation Department to rent the ice rink from The Legacy for 35 hours a month over 30 years, at $84,000 per year -- a total of $2.5 million. Both sides agree that, with the nation's credit markets in disarray, these public guarantees help Cummings and Glover when they go to lenders in search of financing for the $42.9 million project. The residential-retail portion and the ice rink probably will be financed separately, but loans haven't been secured, Glover says. Getting a private loan for the ice rink is challenging, he says, because many lenders view such a facility as a public asset that should be funded by taxpayers. The Legacy's apartments could be home to as many as 500 people. Cummings and Glover, with other investors, own the Fuego soccer team as well as the Grizzlies and the Falcons. They expect many players and front office staff members to be renters. In city documents describing The Legacy's projected operational expenses and income, Cummings and Glover indicated they expect to pay the city $80,000 a year to lease the land. But this issue is not settled. Souza says The Legacy's rent will be determined by an independent appraisal of comparable downtown parcels. The Legacy's value is to be found in more than contractual details, say city officials. Because it will be built on a surface parking lot, they say, The Legacy is a harbinger of downtown's future development pattern. They say surface lots waste developable land and generate few tax dollars. Autry says The Legacy "is going to be a net gain for everything -- the general fund, the quality of life in our city, for those developers that are willing to invest [in downtown]. That's what I'm excited about. Downtown needs to be a place where you make money." Doubling the bet Fresno has heard this before. It's the same argument made nearly a decade ago by supporters of a city-built, city-owned downtown stadium. A divided City Council voted to build the stadium on Oct. 17, 2000. "It's going to change our downtown skyline," said then-Council Member Garry Bredefeld. It did change the skyline. But it didn't change downtown's social and business fabric as its supporters had hoped. New government buildings have been built since the stadium opened in May 2002, but the long-sought private investment in retail and housing has been modest and sporadic. The sequence of events leading to The Legacy began with the council's vote to build the stadium in fall 2000 and its later override of then-Mayor Jim Patterson's veto. As Cummings and Glover emphasize, the big challenge for the $46 million stadium's tenant is the rent: $1.5 million a year. "Worst lease in minor-league baseball history," Glover says. It was a crushing burden to the original tenant, the Fresno Diamond Group. And because it was undercapitalized, the Diamond Group was unable to turn the stadium into the multiuse venue it was meant to be. As Cummings and Glover note, this reduced the number of people coming to the stadium and dampened incentive for private investors to start new businesses near it. This lack of nearby action hurt the stadium's viability as an entertainment venue. Then another blow hit downtown and the stadium: Fresno State built the $100 million Save Mart Center. The Falcons fled north, and the aging Selland lost its luster as an entertainment venue. Downtown lost another magnet to draw people after work hours, and the stadium paid part of the price, Cummings and Glover say. The next problem was a miscalculation over parking. Soon after the Falcons left Selland, city officials acknowledge, the city borrowed $58 million, nearly half of it to pay for construction of a parking garage next to the Convention Center. This decision in 2004 was a vote of confidence in the stadium, city officials say. The stadium was only two years old, and they thought they saw an explosion of downtown growth on the horizon. This included a new hotel next to the New Exhibit Hall. But many of the projects stalled or died, and the garage went largely empty. With parking income lagging, the Parking Division had to borrow from the city treasury to make bond payments. The division's deficit now is $8 million. The need to bring more people (and their cars) to downtown is another incentive to jump-start growth with The Legacy, city officials say. Cummings and Glover arrived on the scene in fall 2005 when they and other partners bought the Grizzlies. They say it didn't take them long to size up the problems and identify potential solutions. First, Cummings and Glover say, they had to stabilize the Grizzlies' finances. Selling the stadium naming rights to the Picayune Rancheria of Chukchansi Indians for $16 million over 15 years was a big step. The stadium also is getting more use; Glover says it hosts nearly 200 events a year. They also had to give consumers more reasons to come downtown, Cummings and Glover say. The purchases of the Falcons and the Fuego were steps toward that goal. The next steps were taken in quick succession, Cummings and Glover say. They brought the Fuego to the stadium for home games. They made noises about bringing the Falcons back to Selland. City Hall responded with noises about remodeling Selland if the Falcons would come. To no one's surprise, the Falcons-city deal got done. But, Glover says, their business plan was missing a final piece: "If there was just more residential" in downtown. Cummings and Glover say housing creates a powerful cycle: The presence of more people after work hours leads to the need for more services and entertainment, which leads to an improved quality of life, which leads to more people seeking downtown housing. City Hall and developers for decades have recognized the importance of housing to downtown's future. Much-publicized housing plans have been common. But "getting something in the ground," as Autry says, has not. Cummings, Glover and city officials are betting The Legacy is the missing piece that unlocks the stadium's power to revitalize the city's core. It's unclear how the two sides settled on specifics of The Legacy deal; unlike the stadium with its decade-long, highly publicized negotiations, The Legacy was born largely in private conversations between the developers and city officials. Glover acknowledged as much at the Oct. 16 City Council meeting. And the city's deal-making with Cummings and Glover perhaps isn't over. Cummings and Glover say they want to meet with city officials to review the stadium lease. They say they want "more community involvement from an ownership standpoint" of the Falcons, although they don't provide details on what that would mean. They say they're talking to city officials about ways to finance the ice rink, which lenders generally view as a public asset best owned by taxpayers. But, other than emphasizing that any deal will not harm the public, Cummings and Glover say it's too early to discuss specifics. What's also unclear is whether City Hall, already deeply committed to a Cummings-Glover vision that is connected to so much of the Autry administration's plans for downtown redevelopment, would be at a disadvantage if these low-key discussions turn into deal-making negotiations. Such a scenario, the Urban Land Institute's Blank says, "changes the complexion dramatically. I would say all bets are off. That's a whole new set of negotiations." Autry says he knows some people fear the city will get "so entangled" with the Cummings-Glover vision that "you can't go back." He says he doesn't expect problems, but adds that he has thought in those terms, too. "As we get down the line, we'll have to see if those things happen," Autry says. The public must keep its eye not just on The Legacy's details, Autry says, but on how it fits into the big picture of downtown redevelopment. Says Autry: "My unshakable principle is you have a downtown, or you don't have a town." The reporters can be reached at [email protected], [email protected](559) 441-6330. To see more of The Fresno Bee, or to subscribe to the newspaper, go to http://www.fresnobee.com Copyright (c) 2008, The Fresno Bee, Calif. Distributed by McClatchy-Tribune Information Services. 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