19 July 2005
The new, clear option for downtown
Larry Westerlund's defense of his vote for the Fresno City Council's purchase of the Barrister Building parcel downtown says a great deal about redevelopment in Fresno. While his explanation of the cost of the parcel may have some validity, it instructs us more why government should not be in the real estate or hotel business in the first place.
The involvement of the City of Fresno via the Redevelopment Agency appears to have artificially spiked the cost of the parcel. Indeed, that may be true for the entire downtown area since any real estate in a "project area," like downtown, can be confiscated by the City at what the City considers fair market value if the real estate owners don't play ball with the City by signing an owner participation agreement (OPA). In the case of the property adjacent to the Exhibit Hall expansion, the City tried to get it for much, much less eight years ago through eminent domain, but the Ophelia family stood its ground.
The councilmember explains the price of the parcel, but does not as deftly explain the value of the City's involvement. He says that the City needs "options". Well, what about those options? The build-out option for the Exhibit Hall is seen by scarcely anyone as a major factor in the convention center's fortunes. Government convention centers have been failures all over the country, and Fresno doesn't appear to be an exception. Government holding onto property for ownership sake is a counterproductive option, as the land is more productive when a private entity uses it for commerce or for philanthropy.
That leaves us with building a hotel. Why should the City do it? Lloyd Kennedy of the Convention and Visitors Bureau insists that downtown needs 50% more rooms for his agency to do its job of filling convention dates. But if a new hotel fills up only at convention time, does a public expenditure toward a that hotel in an economy of 30% present-day vacancies have value?
The interest in the property at the northern corner of Inyo and M is restricted to those who will deal with the City. The City has tried for at least two decades with exclusivity arrangements to find a suitor to build its hotel without success. Like Grizzlies Stadium, the assumption is made by the city leaders that if it is built in the manner and place that they say it should be built, they will come. Well, it may not get built and they may not come if it is built in a non-competitive environment. The truth is that a company that will have to spend $80 million to build a hotel, or anything else, does not want to be told where to build it or have the Redevelopment Agency nitpicking its operations.
The OPA ratchets up the cost of doing business in the City without enhancing the value of real estate or business opportunities. The threat of eminent domain, now heightened by last month's the Supreme Court ruling, is a greater disincentive than ever before.
The Redevelopment Agency is broken and can only be fixed by its abolition.
The involvement of the City of Fresno via the Redevelopment Agency appears to have artificially spiked the cost of the parcel. Indeed, that may be true for the entire downtown area since any real estate in a "project area," like downtown, can be confiscated by the City at what the City considers fair market value if the real estate owners don't play ball with the City by signing an owner participation agreement (OPA). In the case of the property adjacent to the Exhibit Hall expansion, the City tried to get it for much, much less eight years ago through eminent domain, but the Ophelia family stood its ground.
The councilmember explains the price of the parcel, but does not as deftly explain the value of the City's involvement. He says that the City needs "options". Well, what about those options? The build-out option for the Exhibit Hall is seen by scarcely anyone as a major factor in the convention center's fortunes. Government convention centers have been failures all over the country, and Fresno doesn't appear to be an exception. Government holding onto property for ownership sake is a counterproductive option, as the land is more productive when a private entity uses it for commerce or for philanthropy.
That leaves us with building a hotel. Why should the City do it? Lloyd Kennedy of the Convention and Visitors Bureau insists that downtown needs 50% more rooms for his agency to do its job of filling convention dates. But if a new hotel fills up only at convention time, does a public expenditure toward a that hotel in an economy of 30% present-day vacancies have value?
The interest in the property at the northern corner of Inyo and M is restricted to those who will deal with the City. The City has tried for at least two decades with exclusivity arrangements to find a suitor to build its hotel without success. Like Grizzlies Stadium, the assumption is made by the city leaders that if it is built in the manner and place that they say it should be built, they will come. Well, it may not get built and they may not come if it is built in a non-competitive environment. The truth is that a company that will have to spend $80 million to build a hotel, or anything else, does not want to be told where to build it or have the Redevelopment Agency nitpicking its operations.
The OPA ratchets up the cost of doing business in the City without enhancing the value of real estate or business opportunities. The threat of eminent domain, now heightened by last month's the Supreme Court ruling, is a greater disincentive than ever before.
The Redevelopment Agency is broken and can only be fixed by its abolition.
# posted by Rodney Austin @ 1:42 PM 
