Written by The Business Journal Staff
A Southern California-based developer is at the center of an ambitious plan to transform one of Downtown Fresno’s biggest eyesores into a multi-unit residential complex offering affordable housing.
The Hotel Fresno, currently vacant, boarded up and a magnet for vandals and vagrants, could be the recipient of a $24 million makeover if APEC International is successful in securing a package of grants and low-interest loans to finance the redevelopment of the historic property.
This month, APEC submitted an application for nearly $10 million in low-income housing tax credits that is the last crucial piece of the developer’s financing plan.
Lefeba Gougis, general counsel at APEC, said the company hopes to hear “sometime in June or July” whether it will receive the tax credits from the California Tax Credit Allocation Committee.
“It’s a competitive process so you can apply more than once,” Gougis said. “If we don’t get it in the upcoming round, that will delay the project for at least six months.”
In order to fund the project, APEC is also applying for another $3.5 million in historic preservation tax credits. “Because the project would qualify for placement on the National Historic Registry, we are able to apply for and obtain historical tax credits if we renovate the building to what are called ‘Secretary of the Interior’ standards.”
This is not the first attempt to bring the Hotel Fresno back to life. In 2008, an investor group led by Jake Kojikian purchased the already destitute property and vowed to invest millions to rehabilitate it. But after encountering a series of roadblocks, that effort eventually fizzled.
APEC is currently in escrow with the investor group led by Kojikian. “The escrow is scheduled to close concurrent with the acquisition of the construction financing,” Gougis said. “We handle everything — planning, applications and day-to-day contract management — from our office here in L.A. and hire on-site managers at all of our properties.”
Cap-and-trade auction provides grant funding
The current Hotel Fresno redevelopment effort began taking shape in July 2015 when the California Strategic Growth Council awarded $121.9 million in grants and loans to 28 Golden State housing and transit-friendly infrastructure projects, including APEC’s Hotel Fresno plan. Funds for those awards — all projects designed to reduce greenhouse gas emissions — were generated by proceeds from the state’s new cap-and-trade auctions.
APEC received a $4.8 million grant as part of the July 2015 awards, which the company plans to use as part of its plan to gut the old hotel structure and create 79 new residential apartment units — 40 to be offered as affordable housing to those with low and moderate incomes and the other 39 units to be rented at the “market rate,” according to Gougis.
Nearly a year before APEC received the $4.8 million grant award, city leaders pledged their support for the developer’s plan, saying it was crucial to the revitalization of Downtown Fresno.
In late 2014, the Fresno City Council voted to award APEC $1.9 million in low- and moderate-income housing funds — and kicked in nearly $1 million more in deferred development fees to kick-start the project.
City officials also agreed to sell APEC two vacant City-owned parcels near the rear of the hotel so that the company can build a new parking structure for their project.
Built in 1912 by renowned architect Edward T. Foulkes, the Hotel Fresno was once one of the city’s premier hotels and a popular gathering place for members of Valley high society. But the facility fell on increasingly harder times during the mid-1900s and finally closed its doors for good in the early 1980s.
Located at 1257 Broadway St. adjacent to the Internal Revenue Service building and just across the street from the rail line that could one day carry bullet trains in an out of Downtown Fresno, the seven-story hotel’s once regal façade is now tagged with graffiti. Employees at the IRS building call it “the cat hotel” because of the dozens of feral cats that have made a home in the dilapidated structure.
If APEC is awarded the tax credits this summer, Gougis said the company is prepared to close on its construction financing “by or before” the end of the year and could break ground in early 2017. That timetable would put the project’s completion date “sometime in the second quarter of 2018,” he added.
In addition to the tax credits and grants, APEC also will use a conventional construction loan to help bankroll its project.
“Construction should take 12 to 14 months,” he said, adding that once completed, APEC plans to retain ownership of the property and have a third party manage it for them.
So who is APEC?
A privately held company based in Los Angeles, APEC International LLC’s managing partner is Eugene Kim, a veteran SoCal developer and contractor. The company has been in business since 2003 and has four full-time employees, including Gougis, who joined APEC in 2008.
APEC has built 300 low- and moderate-income housing units in California, most of them located in the Los Angeles area. Several years ago, the company purchased the Chestnut Apartments in Fresno and rehabilitated the 90-unit affordable housing complex, which it continues to manage.
Fresno City Councilmember and mayoral candidate Lee Brand said he is impressed with the previous projects APEC has been involved in. “They have a very good track record and are real professionals,” he said.
“This latest deal makes much more sense from a financial point of view,” Brand added. “These guys have been very realistic about estimating the overall project costs — and very smart in going after the available tax credits.”
“Affordable housing [projects] are all we do,” Gougis said. “We’re excited to get started in Fresno. We think it’s really going to be a great project for the city.”
George Lurie | Reporter can be reached at:
490-3464 or e-mail firstname.lastname@example.org