Stanislaus County vote rejects financing for planning agency’s building purchase downtown

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As debate over the project heated up, Stanislaus County supervisors did not approve a tax-exempt loan Tuesday for the purchase of a downtown Modesto building for a regional transportation agency.

Tuesday’s 2-2 vote does not derail the controversial project of the Stanislaus Council of Governments, which proposes to spend $3.35 million to purchase the architecturally significant building for its offices and meeting chamber.

County Supervisor Terry Withrow, who strongly opposes the purchase, said that he hopes the decision makes the proposal appear less viable and that the StanCOG policy board scuttles the plan at its next meeting May 15.

The building at 833 10th St. was a bank for several decades and was remodeled in 2019 for a high-end steakhouse, which never opened. It is currently the home of Dazz Event Center for weddings, corporate events and fundraisers. StanCOG would move from leased space on I Street to the 10th Street building.

The StanCOG policy board voted 9-3 last week to purchase and remodel the building for about $6.6 million. The agency has planned to finance 75% of the $3.35 million purchase price through a tax-exempt loan, with interest savings amounting to $200,000 over the life of the loan. Now, the project may have to use conventional financing.

“I could not be more against this project,” Withrow said. “I cannot support this in any way.”

Withrow and Supervisor Channce Condit voted against the tax-exempt loan for the building purchase and remodel. The proposed financing needed three votes for approval. Board Chairman Mani Grewal stepped away on a conflict of interest. Supervisors Vito Chiesa and Buck Condit favored the project.

Withrow set the stage for board drama when he disagreed with County Counsel Thomas Boze’s opinion that he had a conflict of interest. Withrow, who’s a board member of Oak Valley Bank, the lender for the project, said the bank has not approved the loan yet and he remained at his seat.

Chiesa suggested the board postpone the item, but he didn’t have the votes to table it.

Project opponents have said the building is a fine example of Modernist architecture. They oppose expanding the footprint of government agencies in downtown Modesto, where a new courthouse is under construction amid other government office buildings.

Modesto Councilman Chris Ricci said the StanCOG project was rushed through the approval process. He said he didn’t hear about it until this week.

The transportation planning agency should not be buying real estate downtown and shouldn’t take on the debt, Ricci said. The project does not fit with what the downtown is meant to be in terms of restaurants and nightlife, he said.

Councilman Nick Bavaro also spoke in opposition. He estimated the building purchase and remodeling work would end up costing $8 million in taxpayer money because costs of renovations tend to rise.

“StanCOG should not be in the business of buying assets like a building,” Bavaro said. “Plus it takes a viable piece of property downtown off the property-tax rolls.”

Withrow questioned the purchase price of $3.35 million, saying the same building was sold for $1.4 million in 2018. “I don’t think it has appreciated that much,” the supervisor said, adding that older buildings are costly to maintain.

Decision adds $200,000 to project cost

Chiesa said the StanCOG board already has approved the project and a conventional loan will add $200,000 to the cost.

StanCOG is an agency that plans for road and highways, public transportation, rail and other pieces of the transportation network. The county has five of the 16 seats on the StanCOG policy board. Chiesa expected the same conversation will be held when some of the same officials convene for next month’s StanCOG meeting.

StanCOG staff stressed that funds from the countywide Measure L transportation tax are not being used to purchase the building. The money would come from funding approved by Congress for operational costs of transportation planning agencies.