One variable in whether Club One can continue to pursue a deal to purchase the Spiral Garage is whether the city would have to put it out for bid. File Photo.
Plans to relocate Club One Casino to another Downtown Fresno location suffered a major blow when one of the businesses involved pulled out of the deal with the city in July.
But that doesn’t mean the deal is dead, as Kyle Kirkland, the casino’s owner and CEO, said in a recent interview it’s his intention to “regroup, meet with the city some time in the next couple of weeks and figure out if we can continue with that.”
In December 2018, the Fresno City Council agreed to sell to Club One and its development partner, Brixton Capital for $1.7 million, what is commonly referred to as the “Spiral Garage,” at 830 Fulton St., along with 50,040 square feet of former retail and office space — formerly part of the downtown Gottschalks department store.
The office and retail space has been vacant since 1988, when the department store pulled up.
The two properties are also located a couple of blocks south of Club One, which had planned to move into the former Gottschalks property and convert it into a larger casino and entertainment center.
Kirkland clarified that Brixton was going into this as a development partner, meaning it would have bought the buildings and Club One would have leased it, so Brixton wouldn’t have been a financial partner with stakes in the casino and parking operations.
No money had changed hands yet, and the city and the partners had only a disposition and development agreement (DDA), with the purchase of the buildings’ at their combined assessed values coming later.
That came to an end July 15, when Brixton sent an email to the city stating that it “is not going to be proceeding on the acquisition of this property.”
While Brixton expressed confidence that Club One could make a successful go of the move, the email didn’t’ express the company’s reason for pulling out of the venture, and a Brixton official contacted declined to disclose it.
For his part, Kirkland speculated that development of a card casino may have been too outside the Solana Beach real estate investment firm’s development experience.
Still, he said, he’s going forward with plans to get into a larger space, so Club One could offer more bar and restaurant space, along with more space to hold special events that could include seminars, conventions, concerts and other large gatherings.
The new casino would be off Fulton Street, allowing it to be part of the growing restaurant and nightlife scene, as well as being an attraction drawing customers to the area, which Kirkland said would benefit all businesses on the block.
Kirkland acknowledged that the estimate for converting the building and reworking the parking garage to hold more cars could end up costing up to $3 million more than the $13-$15 estimate Kirkland had last year.
He said the estimate change isn’t the result of structural problems, as initial inspections indicate the buildings are in good shape. The problem is that construction costs have risen considerably over the last several months, jacking up the cost.
“There’s no real change in our vision for it. It’s probably a little more complicated, expensive than we’d hoped.”
But what comes next may end up being more complicated. Kirkland and Brixton approached the city about buying the downtown buildings, so the city didn’t request other bids on it.
Whether the city would require bids or stick with its development agreement is unclear, and it’s also unclear if Club One and a new development partner would have to start the process over from square one or not, as city officials couldn’t provide that information by press time.
“I think the city needs to do what it thinks is best for its process and the area,” Kirkland said. “ It’s my sense that … we’d have to renegotiate or have another agreement with the city to do that.”
Even with the cost to renovate the buildings now estimated at nearly $18 million, he said he still wants to go forward with the deal.
“I think the idea is we have to come back with another partner and say, ‘Hey, listen, this is what we think it looks like. There’s no real change in our vision for it. It’s probably a little more complicated, expensive than we’d hoped.
Kirkland believes city leaders will continue seeing this as a good deal.
“Knowing what I know about the building and our plans for it, I think what we were proposing is a very exciting, transformative project that has real value in terms of employment, local taxes, traffic in the area, entertainment. I’m comfortable that we would still be a very viable competitor for that property.
“We have been downtown 24 years, we have a real use for it, and — as I have said repeatedly — we’re willing to work with the other people in the neighborhood to make sure it works for everybody,” Kirkland added.