A group of landowners in southwest Fresno have filed a $100 million tort claim against the city, saying that not only did a zoning change devalue their properties, but the city took a $64,000 payment and did not meet the terms of the deal.

Property owners Span Development and Buzz Oates filed the claim saying that the city has reneged on agreements after Fresno’s Southwest Specific Plan in 2018 changed the land zoning beneath their buildings from light industrial to mixed use, despite being fully built out, according to a news release

Property owners have said the rezone has made doing business much harder. This is because doing certain renovations, selling the property, or having too long a gap between tenants would make any industrial use noncompliant.

“The city rezoned the Elm Avenue properties from industrial zoning to neighborhood mixed use … without adequate notice to the property owners, rendering the existing industrial uses nonconforming and decimating Claimants’ ability to sell, lease, or obtain financing for their properties,” the claim states.

The city declined to comment on the litigation.

City Rezoned Fully Developed Land In Hopes of Creating More Housing, Retail

For several years now, the two property owners have sought to have their land at Elm and Annadale avenues rezoned back to industrial. This despite years before the specific plan, city officials  inviting industrial developers to that part of town, property owners have previously said.

After years of highly controversial back-and-forth hearings, the Fresno City Council in 2022 approved a rezone for roughly half of the Elm Avenue space but did not include Span’s or Buzz Oates’ properties.

The roughly 90 acres of fully developed land butting up against Highway 41 was rezoned in the southwest plan out of a desire to see more housing and retail, the document stated.

Now that the city has used that land to meet the state’s housing minimums, zoning back to industrial requires adding potential housing in other parts of the city.

Enter: the Central Southeast Specific Plan.

Property Owners Say City Broke Terms of Deal

In February, the City Council was poised to approve a similar specific plan on the southeast side of town. While that plan did add new land for housing, the city said it was not enough to make up for lost housing at Elm Avenue.

To make up the difference, Span and Buzz Oates together paid the city $64,250 to do necessary environmental work to make a parcel in the southeast plan higher density. To further complicate things, the city of Fresno interprets state law to mean that when housing is lost, it must be accounted for at the same meeting.

Property owners say it was their understanding when they paid the city that the Elm Avenue rezone and the Central Southeast Specific Plan would be heard at the same time to satisfy that requirement.

At the February meeting, however, Jennifer Clark, planning and development director with the city, said property owners’ rezone request could not be completed until after the specific plan was passed — making the rezone essentially useless, property owners say.

“Even after accepting the payment and deeming Claimants’ application complete, the city has failed and refused to perform the agreed work or to present the requested rezoning for consideration by the city council,” the lawsuit states.

Southwest Fresno Land Use a Political Hot Button

Fresno City Councilmember Miguel Arias has taken to social media to alert residents of the Elm Avenue rezone proposal, hosting a community listening session this month on the item.

Past hearings on Elm Avenue zoning changes have brought out many southwest Fresno residents in opposition to the request. The years-long specific plan process was an effort to revitalize southwest Fresno by making retail and housing development easier.

Elm Avenue property owners have maintained that they were not informed about changes until long after the process had taken shape.

Attorney Andrew Skanchy with law firm Downey Brand said the two businesses together pay more than $500,000 a year in property taxes.

“At a time when the city of Fresno is staring down a $23.3 million budget deficit compounded by last week’s $15 million jury award for the city’s past practices of discrimination, now is not the time to tell productive, revenue-generating enterprises to ‘kick rocks,’ ” Skanchy said in a news release.