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Without a Paper Trail

CPRA request reveals virtually no emails, texts preceding Eureka City Schools' mysterious property exchange agreement

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Days before retiring from his post at the helm of Eureka City Schools in December, Superintendent Fred Van Vleck secured what could objectively be seen as a legacy-defining transaction — a deal in which the district expects to unload a long-blighted, vacant property on Allard Avenue in exchange for $5.35 million and a small residential property on I Street.

The cash involved in the property exchange alone was $1.35 million more than the last best offer the district had on the table from the only other publicly identified bidder — the California Highway Patrol, which hoped to relocate its Northern Humboldt headquarters out of the tsunami zone to the former middle school site — so one might imagine Van Vleck being in a celebratory mood to share the news. But if that's the case, he left virtually no paper trail.

In response to a California Public Records Act request filed by the Journal seeking all written correspondences — including but not limited to emails and text messages — referencing the property exchange, the newly formed company slated to take ownership of the former school site or the lawyers with whom Van Vleck had reportedly been negotiating, the district disclosed one document. The sole written correspondence the district says it has on record from Van Vleck referencing the transaction is simply his forward of the district's press release announcing the sale to Walt Hanline, the executive director of the National Center for Executive Leadership, sent without any additional comment.

Perhaps stranger, though, is that the district reports through its attorney Harold Freiman, of the Walnut Creek firm Lozano Smith, that, with one exception, it was unable to find any correspondences to or from Van Vleck referencing a property exchange involving the Jacobs site, the company involved (AMG Communities-Jacobs LLC), any of its representatives or the realtor working on their behalf (Scott Pesch). The one exception: a text message to Van Vleck from school board President Susan Johnson, sent about 50 minutes before the board went into closed session on Dec. 14 to discuss the proposed property exchange for the first time, with a Lost Coast Outpost headline referring to the "mystery item" on that evening's agenda. Van Vleck did not respond, according to the documents released to the Journal.

Asked to clarify, Freiman said no documents were found and withheld after being determined to be exempt from disclosure under public records law.

"The district was not able to locate any," Freiman told the Journal, adding that he knows the district had access to Van Vleck's emails and searched through them. "You have what they were able to locate."

Based on the document trail provided by the district, it's as if the deal materialized out of thin air. That's not the case, of course, and Freiman did indicate there were documents responsive to the request — drafts of the property exchange agreement and the resolution approving it, as well as correspondences between the district and its lawyers — that were withheld. But if there were any of documents that would typically be generated by a public agency negotiating such a transaction — emails scheduling meetings, phone calls or site visits, or evidence of due diligence, like requests for financial documents or records associated with the property the district was looking to acquire — the district maintains they are no longer in its possession.

The lack of a paper trail leading up to the agreement only adds to the mystery surrounding it. It's now been 12 weeks since the board approved the property exchange agreement and the public still does not know who has entered contract to purchase 8-acres of publicly owned property in Eureka. To date, the only people affiliated with AMG Communities-Jacobs, the LLC created just two days before the school board approved its property exchange offer, are two attorneys — Thomas Swett, who filed its articles of incorporation, and Brad Johnson, who signed the property exchange agreement — and a spokesperson who works in Johnson's law office, Sara Lee.

Lee has described AMG Communities' principles as a "small group of private investors" but repeatedly declined to identify who they are, disclose if they live or do business in Humboldt County, or to identify other projects or investments they've been involved with.

While the documents provided in response to the Journal's records request don't indicate who is behind AMG or how the unusual, above-market-value property swap offer landed on the district's desk, they do provide morsels of additional information about the transaction and its timeline.

For example, the documents identify Everview LTD as the buyer of the small home at 3553 I St. and the accompanying accessory dwelling unit that the district is slated to acquire under the land exchange. Local real estate agent Charlie Winship, still the current owner of the property, had previously told the Journal he'd had no plans to sell the place but was approached sometime around June by local real estate Scott Pesch, who said he had an "investor looking to acquire several" multi-unit properties and asked if Winship would be interested in selling. Winship told the Journal he told Pesch he'd only consider an offer above market value but didn't hear back until November, when he was presented with an offer from a "private party." (It's worth noting it seems Winship didn't expect the offer as he entered a six-month lease extension with his I Street tenants on Oct. 30.)

We now know that Pesch's client looking to acquire multi-family properties was Everview, the law firm founded by Johnson, who indicated he signed the property exchange agreements with the district on behalf of AMG. The Journal asked Lee if Everview entered into contract to purchase the I Street property on behalf of clients who would eventually become the principles of the then-yet-to-be-formed LLC. Or are Johnson and/or his company, in fact, principles in AMG Communities-Jacobs LLC? Lee responded that the I Street purchase agreement is "expressly assignable" and has already been transferred to the LLC.

After the Journal pointed out that response didn't answer the questions posed and asked for clarification, Lee declined to provide it, saying "those conversations are protected under attorney-client privilege and cannot be discussed."

But Everview's involvement in the I Street purchase agreement — which it should be noted remains in escrow and will need to close before the subsequent Jacobs campus property exchange can be finalized — further connects Johnson to AMG's activities.

Johnson, Everview's founder and CEO, has been intimately involved in efforts led by local businessman Rob Arkley's Security National company to block the city of Eureka's plans to convert city-owned downtown and Old Town parking lots into multi-family housing developments. It was Johnson who filed lawsuits on behalf of Citizens for a Better Eureka seeking to negate the city's plans, and Johnson who sent letters to the city on behalf of proponents of the Housing for All Eureka initiative, which also involves the Jacobs property. Headed for the ballot in November, that initiative would effectively block the city's parking lot conversion plans by creating onerous parking construction requirements for new development, while adding a zoning overlay for the Jacobs campus that proponents argue would pave the way for development of the lost housing units.

While Lee has declined to say who is behind AMG, she volunteered that Arkley is uninvolved and a frequently asked questions section of a website AMG created for the property acquisition answers its own question by attesting that Arkley is not an "owner or investor" in the LLC.

Still shrouded in mystery, the Jacobs exchange has officially moved into escrow following an extended feasibility period in during both sides could do due diligence, according to Superintendent Gary Storts, who took over the role from the outgoing Van Vleck just days after the Dec. 14 meeting. Freiman told the Journal the only escrow instructions in place for the transaction are those included with the initial exchange agreement, which provide that either party can terminate the agreement without penalty if they pay escrow 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," reads the agreement.

After receiving confirmation from Storts that the exchange had officially moved into escrow and seeing the almost complete lack of a correspondence paper trail leading up to the district entering into the exchange agreement, the Journal asked Storts when he first personally became aware of the property exchange negotiations or the offer ultimately approved by the board Dec. 14. He had not responded by the Journal's deadline more than 24 hours later.

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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