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Spokespeople Mum as to Who is Behind Mystery Offer for Eureka Schools' Jacobs Property 

click to enlarge Eureka City Schools' main office.

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Eureka City Schools' main office.

More than six weeks after a newly formed LLC emerged seemingly out of nowhere to enter into a $6 million deal to acquire an 8.3-acre property from Eureka City Schools, the identities of those involved remain a mystery.

Spokespeople for AMG Communities — Jacobs LLC, which filed articles of incorporation with the California Secretary of State's Office just two days before the Eureka City Schools (ECS) board approved the deal at its Dec. 14 meeting — have now repeatedly declined to identify the entity's principals. A website created by the LLC — thejacobscommunity.com — states it is backed by a "small investment firm that holds interests in real estate and businesses," but Journal attempts to get additional information have been met with obfuscation.

On Jan. 25, the Journal emailed the LLC's spokesperson, Sara Lee, to ask the name of the backing firm and any specific real estate and business interests it holds.

"AMG Communities is a private group of small individual and family investors focused on the single purpose for which it was formed — acquiring the former Jacobs Middle School site," Lee responded.

The Journal attempted to clarify, asking whether this "private group" was the aforementioned firm or something less formal, to which Lee responded that, "yes, this is an informal group." She then declined to answer whether these investors are from Humboldt County or outside the area and to identify any other LLCs, real estate projects or businesses the group is involved with, or the identities of any of the particular investors.

"As this information falls under attorney/client privilege, we are unfortunately unable to answer that question," Lee wrote in an email, invoking a common law doctrine that prohibits attorneys from disclosing information from confidential communications with their clients.

Responding to a Journal email inquiry, ECS Superintendent Gary Storts, who took over for his retiring predecessor Fred Van Vleck just days after the Dec. 14 meeting, said the district's sole points of contact with the LLC have been its attorneys. Storts did not immediately respond to follow-up questions inquiring whether the district knows who any of the LLC's principals are or is aware of any other projects or real estate acquisitions they may have been involved with.

The secrecy surrounding the identities of those involved adds a new thread of mystery to an already atypical transaction.

Eureka City Schools had been working to offload the old Jacobs site, which has been shuttered entirely since 2009, with its buildings razed in 2021, for some years. The city of Eureka negotiated for months to purchase the site but abandoned the effort after the district turned down a $2.8 million offer — more than $1 million more than an appraiser estimated the property's value to be — before the California Highway Patrol entered the fray, looking to relocate its Northern Humboldt headquarters to the site. The CHP's negotiations — which appeared in the ECS board's closed session agendas seven times in 2023 — appeared to be progressing, with the agency holding a community meeting to gauge neighborhood support for its plans. According to the district, CHP offered $4 million for the site.

Seemingly out of nowhere, the agenda for the district's Dec. 14 board meeting offered the first public glimpse that a mystery suitor may be entering the fray, with a closed session item to discuss "price and/or terms of payment" for the Allard Avenue site that listed negotiating parties as CHP and AMG Communities — Jacobs, LLC. With little discussion, the board voted unanimously at that Dec. 14 meeting to accept the LLC's offer to exchange a small residential property on I Street dubiously valued at $650,000 and $5.35 million in cash for the property.

The agreement did not require a down payment from the LLC to enter into the $6 million deal, and instead simply required both parties to pay a non-refundable "independent consideration" to the other, with the district paying the LLC $100 and the LLC paying the district $1,000. Notably, the agreement also provides that either party can back out of escrow if they determine "all conditions" set forth in the agreement cannot be met, with the terminating party paying cancellation charges.

"Parties agree that this sum will fully compensate the non-terminating party for any and all damages related to the termination of this agreement and cancellation of the escrow and hereby waives any and all claims for additional compensation in connection therewith," the agreement states.

The only people publicly identified to date with AMG are Thomas Swett (a Sacramento attorney listed as an agent on its articles of organization), Brad Johnson (a San Diego attorney who signed the agreement with ECS and has recently represented other clients with an interest in the property) and Lee (an assistant of Johnson's who is now serving as spokesperson for the LLC).

The agreement provided a 14-day "feasibility" period for both parties to conduct various inspections and terminate the deal, if they so choose. Long after that period expired, Johnson and Storts signed a Jan. 24 letter extending the feasibility period until Feb. 26 in order to conduct property inspections and surveys and "obtain necessary approvals." The letter does not define "necessary approvals" and an email to Storts seeking clarification went unreturned.

Asked whether the district had done due diligence to ensure whoever is behind the LLC has the financial wherewithal to follow through with the acquisition, Storts said "due diligence work is ongoing" through the extended feasibility period.

"The parties are still reviewing the steps that will be needed prior to closing, and are awaiting a survey of the property line," Storts said, adding that the limited availability of surveyors was "the primary reason" the feasibility period was extended.

While any potential timeline for closing the deal remains murky at best, two things must occur first: The property must undergo a subdivision or a lot line adjustment approved by the city, and a still pending sale involving the aforementioned I Street property, which remains in escrow, must close. As to the subdivision or lot line adjustment — necessary to legally separate the 8.3 acres included in the deal from sports fields ECS plans to retain — Eureka City Manager Miles Slattery said the city has not been contacted by ECS or the LLC about beginning that process, which he estimated typically takes two to four months.

Adding to the mystery surrounding the deal is the property's role in a divisive initiative headed for the November ballot that seeks to block Eureka's current plans to convert city-owned parking lots in downtown and Old Town into multi-family housing developments. Bankrolled by Security National to the tune of almost $250,000 spent over just a couple of months, according to financial disclosure forms filed with the city, the initiative proposes to make up for housing plans it would likely stymie by rezoning the Jacobs site for residential development. A key argument those opposing the initiative have raised is that the proposal was unlikely to result in new residential development, as the Jacobs property was not controlled by the city and seemed soon to be owned by the CHP.

Both AMG Communities — Jacobs LLC's spokespeople and those of the Housing for All initiative and the group Citizens for a Better Eureka, which is also backed by Security National and has filed a handful of lawsuits seeking to block the city's parking lot plans, have denied any coordination between those behind the Jacobs acquisition agreement and those involved with the initiative and lawsuits.

In fact, while AMG Communities has remained tight lipped about exactly who it's comprised of, it has seemingly gone out of its way to distance itself from Robin P. Arkley II, the owner of Security National and a vocal critic of the city's housing plans. The frequently asked questions section of the website set up by the LLC includes seven questions, one of which is whether Arkley is an owner or investor in the LLC. (No, it states.) Similarly, when the Journal asked Lee to identify specifically who the LLC's principals are, she declined, but added its "group of small private investors do not include Rob Arkley."

Johnson, the attorney who signed the property agreement on behalf of AMG, is, however, linked to all three efforts, having filed the lawsuits on behalf of Citizens for a Better Eureka and represented the Housing for All initiative's proponents in efforts to get the initiative moved up to the March primary ballot, which the Eureka City Council rejected at its Oct. 17 meeting — just weeks before AMG would enter the fray with ECS. Asked about his connections to the various efforts, Johnson issued a brief statement noting he's represented "dozens of clients in this community" but declining to identify exactly who he's representing with AMG and in what capacity, other than to say the LLC is "not owned or managed" by the initiative's proponents or Security National.

With more questions than answers swirling publicly about the Jacobs deal, the ECS board is slated to again discuss it in closed session Thursday, with the item listed as a conference with Storts, the district's negotiator, "concerning price and/or terms of payment." The closed session will be held shortly after 5 p.m. at 2100 J St., with the board reconvening in open session at 6:30 p.m.

Thadeus Greenson (he/him) is the Journal's news editor. Reach him at (707) 442-1400, extension 321, or [email protected].

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Thadeus Greenson

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Thadeus Greenson is the news editor of the North Coast Journal.

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