Grand Jury finds Fresno County to be poor landlords

Grand Jury report finds Fresno comes up short on collecting rent, maintaining properties

The Fresno County Board of Supervisors convening for a meeting on Jan. 23. (Darren Fraser)
Darren Fraser
Published May 25, 2024  • 
12:00 pm

FRESNO COUNTY – According to a report from the Fresno County Grand Jury, Fresno County is a poor steward of its real estate holdings.

The report, titled “Toward Lasting Improvement: A Review of Fresno County Vacant Property and Real Estate Practices,” was the second report issued by the Fresno County Grand Jury this year.

In the summary portion of the report, the Grand Jury noted, “The Grand Jury identified problems in the County’s marginal real estate holdings, as well as a number of larger transactions that were characterized by delays or missteps. The issues the Grand Jury identified are sufficient to lead to the conclusion that the County needs significant reform in its handling and tracking of real estate.”

According to the report, a video on TikTok prompted the investigation. The video was uploaded by the county’s Security Services department as a recruitment tool for security officers. The video shows officers patrolling different locations, including the darkened corridors of an abandoned building which, the report surmises, is a building on the University Medical Center (UMC) campus, which has been empty for nearly 20 years.

The video noted that the Security Services department is responsible for patrolling over 500 (presumably, county-owned) buildings and responds to 26,000 service calls annually.

The report notes that a 2022-2023 county budget discussion revealed that annual security costs for UMC and other properties was approximately $2.5 million. Which prompted the Grand jury to ask: how many vacant or derelict buildings does the county own and do these or other county properties contribute to blight?

DISCREPANCIES

The report was based on interviews, Board of Supervisors (Board) agendas, onsite inspections, and property lists provided by various county departments, including the Internal Services Department (ISD), Assessor’s Office, Auditor/Controller’s Office, County Administrative Office (CAO), Sheriff’s Office (FSO), and Public Works and Planning.

The Grand Jury found discrepancies in the information. For example, the CAO provided a list of 265 insured properties valued at $1.4 billion. But these were roughly half the number of properties on a list provided by ISD. The ISD list and the list provided by the Assessor’s Office contained 406 properties, but each list contained properties not contained in the other list.

According to the report, the lists supplied were informal, inconsistent, and included outdated data, leading the Grand Jury to question why some properties were included in the county’s inventory.

The Tranquility Branch Library was built over 10 years ago, but the ground on which it stands is listed as a vacant lot on the ISD list. The Laton Branch Library has been part of the Fresno County Library since 1910 but is not included on the list of county-owned or leased properties.

One item included in the report raises the question of due diligence. In 2007, the county purchased about 90 acres on De Wolf Avenue in Selma. The cost was $4.6 million – over $50,000 per acre. The property was slated to be an agricultural center. According to the report, the county used Tobacco Securitization Funds to purchase the land. These funds are restricted for non-commercial uses. While the report does not give specific details, it noted that the use of these funds made the project unfeasible from the start and later made it complicated for the county to sell the property.

After it was finally determined the property was best suited for agricultural use, the land was again appraised at $17,000 per acre or $1.5 million. But, according to the report, funding restrictions prevent the land from being leased for farming, which would have generated the most income to help the county recoup its losses.

The report states, “The Grand Jury could not determine whether the deal was the result of incompetence or malfeasance or other factors.”

Fresno County owns land near the American Avenue Landfill in Kerman. According to the report, the land is reserved for future dump expansion. In 2010 and 2014, the county approved 25-year leases to a fruit and nut operator and a second operator. Both tenants fell behind on their lease payments. With respect to the former lease, the county failed to collect payments for nearly a year and half between 2020 and 2022, amounting to over $103,000 in rent due.

Regarding the second lease signed in 2014, the county amended the lease in 2016 to allow the tenant to make monthly payments, which amounted to nearly $24,000. The county evicted the tenant in 2022 because by 2021, the tenant owed over $1 million or 43 months of payments.

FINDINGS

Following its investigation, the Grand Jury made seven findings:

  • The county owns marginal real estate that has little purpose, is not regularly maintained, and is poorly tracked;
  • The county’s ability to track, manage, and plan for its current and future real estate needs is problematic and has likely led to ownership of unnecessary property and financial loss;
  • The challenges the county faces in reforming its real estate practices appear to be system and long held and will require cultural change and ongoing commitment to accomplish;
  • Staffing levels and organizational structure are likely less robust than required to plan for, fully monitor, or oversee the county’s real estate holdings;
  • The county apparently lacks a comprehensive plan to guide the management of its real estate assets. The county also lacks an adequately funded deferred capital maintenance plan to fully maintain the county’s buildings over time;
  • The current county system to collect and maintain property data is inadequate; and
  • The processes the county employs for tracking leased property and well as for leasing property are poorly tracked and will likely lead to errors.

RECOMMENDATIONS

The Grand Jury made 11 recommendations that should be implemented by various departments, including the Board, CAO, Chief Operating Officer, Director of Internal Services – Chief Information Officer, Director of Public Works and Planning, the Assessor/Recorder, and the Auditor/Controller.

By Sept. 30, 2024, develop a three-year capital plan for all major county projects with input from all departments.

By Oct. 31, 2024, the following should be in place:

  • The management and tracking of county-owned properties leased to other parties; 
  •  The management and tracking of properties the county leases from other parties. Both processes must be standardized; and
  • A property disposal policy that establishes responsibility for property inventory and discourages the accumulation of useless real estate.

By Nov. 30, 2024, the following should be in place:

  • A real estate/property strategic plan;
  • An up-to-date and comprehensive database of all county-owned real estate; and
  • Geographic Information Systems (GIS) mapping to post all property owned and lease by the county to the Fresno County website.

By Dec. 31, 2024, the following should be in place:

  • A data tool that will provide a foundation for planning and management to include descriptors, including, but not limited to, assessor’s parcel number, building address, description of property, date of acquisition, size, and county need – mandatory or not needed;
  • An annual property/real estate management report that includes property history, status, condition, and any progress towards goals for the property and make this report available to the Board and senior managers;
  • A county building assessment-needs matrix, reviewed annually, to establish building and property priorities; and
  • Standardized guidelines for space acquisitions that are equitable for all county employees based on their needs.
Darren Fraser
Reporter