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Eureka City Schools' main office.
A day after the Eureka City Schools Board of Trustees voted unanimously to deny the company's request to extend escrow for a third time on the Jacobs Middle School property exchange agreement reached in December, the mystery developer AMG Communities-Jacobs, LLC, issued a statement confirming it is pulling out of the deal and blaming the city of Eureka.
City officials immediately pushed back on the statement as "laughable" and inaccurate, noting that at no point since the newly formed LLC entered into the $6 million exchange agreement with the school district has anyone from the company contacted the city to discuss its plans.
Sent from the info@thejacobscommunity.com email address AMG spokesperson Sara Lee has previously used to contact the media, the statement is attributed simply to "AMG Communities."
The statement says the company "decided to withdraw" from the agreement "and to wait until the passage of Measure F ... to reconsider purchasing the property if it is still available at that time," referencing the ballot initiative coming before voters in November that aims to block the city of Eureka's plans to convert municipal parking lots in downtown and Old Town into apartment complexes, while also rezoning the Jacobs site to accommodate single and multi-family housing. The measure is being bankrolled by Robin P. Arkley's company, Security National, which has spent more than $700,000 on the campaign to date.
The statement then vaguely blames the city of Eureka for "strident opposition" to AMG's plans.
"We sought this property and were willing to make a substantial investment in the community because we believe the community supports the construction of badly needed housing at the site," reads the statement from AMG, whose principals have repeatedly declined to be identified publicly. "Our investors were willing to pay an above-market price for the property in order to provide as much benefit as possible to the school district. However, the strident opposition of several city officials, including certain members of the city council, to efforts to rezone this site for family housing has created a political climate that is too risky for the size of investment needed to bring our vision for the Jacobs site into reality."
Eureka City Manager Miles Slattery said the company's assertion is simply false, saying the city used all available avenues to try to contact AMG to discuss the company's plans and needs. Specifically, Slattery said the city attempted to contact Brad Johnson, AMG's attorney, Thomas Swett, another attorney who filed the company's articles of organization, a Security National spokesperson and even emailed the above info address listed on the company's website but never received a response.
"This is an absolutely laughable statement, probably the most laughable statement I've heard since I became city manager," Slattery said, adding that when asked the city promptly helped Eureka City Schools with a request for a lot line adjustment needed to facilitate the exchange.
Eureka Development Services Director Cristin Kenyon also pushed back on the company's assertions.
"I know of no city opposition to rezoning the site for housing," she said in an email to the
Journal. "As a largely built out city, we are excited about the opportunity the Jacobs site presents for more housing."
Kenyon said the only negative remarks she's heard from city officials haven't been about the developers' plans for the Jacobs site but the process under which Eureka City Schools entered into the exchange agreement, which has also drawn criticism from the Humboldt County Civil Grand Jury and the League of Women Voters of Humboldt County for a lack of transparency, due diligence and public input.
Like Slattery, Kenyon also noted that AMG was never in contact with the city, which she described as "highly unusual."
"To my knowledge, no one from AMG ever reached out to the city to discuss redevelopment of the site," Kenyon said. "It was highly unusual not to be contacted, before and during escrow of large properties, buyers typically request permit files and ask lots of questions about allowed uses, zoning standards, impact fees, public improvements required, infrastructure capacity, etc."
AMG's statement closes with an allegation that city has somehow been anti-housing development.
"With a few expectations in Southern California, nearly every city in the state is working hard to attract developers interested in providing housing that is affordable to average working residents," the statement says. "The city of Eureka, by comparison, has been working hard to repel this type of investment. That is unfortunate and a loss to city residents."
Again using the word "laughable," Slattery says the city is "bending over backwards to make any kind of housing," pointing to a variety of housing projects in various of development and efforts the city has undertaken to help developers secure funding, tax credits and variances. Ironically, some of those projects include the proposed apartment buildings set to replace city-owned parking lots, the ones Measure F would thwart.
Eureka has also received state plaudits for its housing efforts, with the governor's office naming it one of several dozen "proposing" communities in California back in January. Additionally, Attorney General Rob Bonta issued a statement the following month praising Eureka for acting "swiftly and fiercely" to address the statewide housing shortage while announcing he'd filed an amicus brief in support of Eureka's defense of a lawsuit brought against it by another Security National funded effort seeking to thwart the parking lot developments.
While AMG's representatives have repeatedly declined to identify who exactly is behind the LLC, citing attorney-client privilege, there are overlaps between the company and the Arkley-led parallel efforts to protect Eureka's parking lots and stymie the city's plans. Johnson, who acted as AMG's attorney and negotiated the property exchange with the school district, also represented the Security National funded Citizens for a Better Eureka in lawsuits brought against the city challenging its parking lot development plans. Johnson — as well as AMG spokesperson Sara Lee — have also been paid by the Measure F campaign for legal and professional services, as well as consulting work. And as the
Journal reported last month, emails released by the district indicate that at as of Nov. 8, the district's attorney believed Johnson was representing Arkley when the two were negotiating the property exchange.
Nonetheless, both AMG and a spokesperson representing Arkley and Security National have repeatedly said Arkley is not an owner or investor in AMG, with spokesperson Gail Rymer saying in December, "No one from Security National, Housing for All or Citizens for a Better Eureka have any involvement with the Jacobs property swap."
The exchange agreement has been mired in controversy from the moment the Eureka City Schools Board of Trustees approved it Dec. 14, agreeing to trade 8.3 acres of the defunct Jacobs site for a small residential property on I Street and $5.35 million in cash. Because the agreement was nominally a property exchange, it allowed the district to forgo the regimented surplus property sales process, abruptly cutting off months-long negotiations with the California Highway Patrol — which reportedly had offered $4 million for the site, hoping to move its Northern Humboldt headquarters there — and pivoting to the private developer.
But the deal that was initially supposed to close within weeks soon began to drag, with the district and AMG agreeing to two escrow extensions, the latest of which was supposed to close today. The extensions were designed to give the district time to pursue a lot line adjustment for the property, which officials say it completed, and AMG to make needed repairs to the I Street property or agree to pay their cost to the district. At last night's meeting, Assistant Superintendent Paul Ziegler told the
Journal AMG requested another extension "past November" but the district felt the developer had everything needed to close escrow and was simply dragging its feet.
Toward the close of the meeting, Board President Susan Johnson asked Superintendent Gary Storts what comes next.
Storts noted that after the AMG deal terminates, the district will no longer be in contract for the property, saying he'd bring various options back to the board to consider at a future meeting. The district had previously reported that CHP remains interested in the property.