A prominent Fresno developer has filed a claim with the city of Fresno accusing councilman Miguel Arias of engaging in a “pay to play” scheme in connection with a proposed project on the north end of the Fulton Mall.

GV Wire has obtained a copy of the legal claim. It was filed July 30 of this year by developer Cliff Tutelian and seeks damages in excess of $12.45 million.

The claim follows Fresno County District Attorney Lisa Smittcamp saying in June that she was starting an investigation of Brown Act violations by council members in connection with the city’s involvement with Granite Park at Cedar and Dakota avenues. The Brown Act is the state’s open meeting law.

Arias vehemently denied any wrongdoing on Monday, saying any meeting he took with Tuetelian was attended by other city officials.

“Mr. Tutelian is now resorting to baseless allegations to try and get his way. The simple fact is that he promised to obtain the necessary land and financing and he failed to do so. His time ran out, even after the City gave him additional extensions. I am confident our legal system will uphold the City’s position,” Arias said.

Neither Tutelian nor his attorney, Michael L. Farley of Visalia, returned GV Wire’s requests for comment.

A city spokeswoman had no comment on the status of Tutelian’s claim.

Tutelian’s Project Would Include Retail and Housing

Tutelian specializes in developing Class A properties. His projects include the historic Grand Tower, formerly the PG&E building on Fulton; the Kepler Neighborhood School; and Park Place, on north Palm Avenue at Nees Avenue near the San Joaquin River.

His firm, Tutelian & Company, Inc., secured an exclusive negotiating agreement (ENA) with the city to develop the block where the CVS pharmacy sits at Fulton and Merced streets.

The project would include retail, as well as market-rate and affordable housing.

“The City of Fresno, through their Counsel President (Miquel Arias) (sic), attempted to get Claimant to engage in a “pay to play” scheme, soliciting bribes and demanding personal favors in exchange for approvals,” the claim said.

A claim is a request for government to fix damages. If a claim is rejected, the plaintiff is free to sue in court. Both the city and Arias are named in a draft version of a lawsuit that was attached to the claim.

Tutelian seeks damages based on six causes of action — breach of a written contract, two counts of fraud, unlawful business practices, violation of civil rights, and specific performance.

The city council discussed the item in a closed session on Aug. 19 but didn’t say anything publicly about the case.

Claims of Pay to Play, Bribery

According to the draft lawsuit, the city in 2013 agreed to lease  Tutelian 100 spots in the “Lot 2” parking location. In 2018, the two sides engaged in a deal for Tutelian to develop the land surrounding the CVS, which included Tutelian purchasing the parking lot for $420,000.

The draft suit alleges that Arias tried to shake down Tutelian for a $12,000 contribution, and further alleging that Arias expressly stated that the developer is “cheap and needs to learn how to contribute like others if he expects help.”

The draft suit further alleges that Arias suggested to Tutelian “hiring one Council Member’s husband … (continued) to demean Mr. Tutelian as ‘cheap’ and (made) statements including ‘don’t hate the player, hate the game,’ and ‘it was time for the rich to pay up.’ ”

Arias said he has never solicited a donation from Tutelian, and noted that the maximum legal contribution to council campaigns is well below $12,000 (at the time it was $4,700 per election cycle).

While there are no council members then or now with husbands, Councilwoman Esmeralda Soria is the only councilmember with a male fiancé, developer Terance Frazier.

When reached by GV Wire, Soria reiterated the fact that she does not have a husband.

Frazier did not respond to a request for comment before the publication of this story.

First Claim Filed in 2019

Tutelian filed a claim against the city in 2019, for what he said was the city terminating the parking lot lease. The claim was dropped and the ENA was extended for six months through March 2020, and again for another nine months through the end of the year.

The draft suit alleges that Arias continued to add conditions on the development agreement between Tutelian and the city “in order to create obstacles for Plaintiff… to attempt to prevent the ENA from proceeding.”

During a Nov. 19, 2020, council meeting to discuss an ENA extension, Arias said, “I’ve struggled with this proposal since Day One.” Arias added that he was uncomfortable engaging in an exclusive negotiating deal with “property (Tutelian) does not own.”

Tutelian, speaking to the council that day, said that COVID and the subsequent slowdown at City Hall affected his negotiations with other parties, including CVS.

Arias pushed for only a 60-day extension through February 2021, with a 4-3 majority agreeing.

In the lawsuit, Tutelian said he would not be able to comply with the city’s demands in such a short amount of time.

An item to extend the ENA was scheduled for Feb. 4, 2021, but Arias pulled it from the city council agenda.

Councilman Garry Bredefeld objected, wanting to keep the item on the agenda. The council voted 4-3 to exclude Tutelian’s extension from the agenda, with Bredefeld, Mike Karbassi, and Luis Chavez voting to keep it.

Arias: No Wrongdoing

Arias issued a lengthy statement to GV Wire, in response to Tutelian’s allegations.

“I want to clear up the facts regarding Mr. Tutelian’s claim against the City of Fresno,” he wrote.

“The previous Mayor and his administration gave Mr. Tutelian an exclusive negotiating agreement (ENA) that allowed him to unilaterally negotiate the development of the north end of Fulton Street in Downtown Fresno, including both public and private properties. Neither of the other private and public owners were consulted prior to the agreement nor were they parties to the agreement.

“The ENA granted to Mr. Tutelian required that he meet certain provisions by a certain date, which he did not meet, before the time limit expired. Mr. Tutelian promised to obtain the necessary parcels of land and arrange financing for the development. After numerous extensions were given to Mr. Tutelian, he remained unable to meet these conditions, and the agreement expired. He now wants another extension over someone else’s property without their consent.

“Mr. Tutelian is now resorting to baseless allegations to try and get his way. The simple fact is that he promised to obtain the necessary land and financing and he failed to do so. His time ran out, even after the City gave him additional extensions. I am confident our legal system will uphold the City’s position.

“I will continue to support development projects that benefit my constituents and the residents of Fresno. What I will not do is give in to special interests and their personal threats and their frivolous, retaliatory litigation.”

(GV Wire’s Bill McEwen contributed to this article.)

Read the Claim