UPDATE, Aug. 9, 1 p.m.: 

The day after the Board of Trustees’ decision reported below, AMG Communities - Jacobs, LLC, issued a statement confirming the dissolution of the agreement, though the mysterious corporation says it was their idea to back out of the deal. Read the statement (and a response from Eureka City Manager Miles Slattery) here.

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Original post:

Photo: Ryan Burns.

The Board of Directors Trustees of Eureka City Schools announced tonight that it will not agree to any further delay of the deal to sell the Jacobs Campus to a mysterious developer who promised nearly $6 million for the blighted property. 

Assistant Superintendent Paul Ziegler told the board after a closed session period that “AMG Communities - Jacobs,” the anonymous corporation that had outbid the California Highway Patrol by some $2 million for the property, had asked for yet another extension to close the deal, which was first agreed to back in December 2023.

“What I will say is the district has done everything in its power to be able to close by tomorrow’s deadline,” Ziegler said, speaking of the end of the term of the most recent escrow extension. “We are poised and ready to do so. However, AMG has indicated that it is not prepared to close and has instead asked for an additional extension.”

Ziegler went on to say that it has been “a long, interesting road to get to this point” but this particular road should end here.

“AMG has had plenty of time to perform and do what it needs to do to come to the table to close, and as I said just a minute ago, they’re not prepared to do so,” he said.

Eureka City Schools Board President Susan Johnson asked for clarification. 

“My understanding is that they’re asking for another fairly lengthy extension, and if we do not accept this extension, which is kind of what — which is the direction … that you’ve given us and that we’ve given you — that means that,” she stopped herself. “What does that mean? That means that this deal is is off and we’re done? What does that mean?”

Ziegler said that the agreement will almost certainly terminate tomorrow, and “by Monday morning, we have no further agreement with AMG.”

As the meeting wound down, Eureka City Schools District Superintendent Gary Storts said the potential sale of the Jacobs Campus will be brought back to the board at subsequent meetings to allow them to consider other options. The California Highway Patrol has remained in negotiations with the district to acquire the property, according to a Times-Standard story from last month. 

Trustee Lisa Ollivier said the board’s goal is “to benefit our students as much as possible, and that has not changed.”

The meeting concluded shortly thereafter. Ziegler told reporters that a $100,000 deposit from AMG will be returned, per the terms of the most recent escrow extension agreement. He also said that AMG had requested another extension “out past November,” which would have put the hypothetical close of escrow beyond Election Day, on Nov. 5, when the fate of the “Housing for All and Downtown Vitality Initiative” will be decided.

To briefly recount how we got here: Last December, in a move that has been roundly condemned for its lack of transparency and due diligence, the Eureka City Schools Board of Trustees unanimously agreed to enter a “land exchange” agreement with a secretive corporation called AMG Communities - Jacobs, LLC, which had been created just two days earlier.

Per the terms of the deal, the district agreed to swap 8.3 acres of the vacant Jacobs Campus site for a 0.125-acre residential property, plus $5.35 million in cash. By organizing the deal as a land exchange rather than a standard sale, the district cleverly sidestepped California Education Code requirements for the sale of surplus property.

The agreement came as a shock to the California Highway Patrol, which had been in negotiations with the district for years to purchase the Jacobs site and convert it into a new regional headquarters. But the CHP’s most recent offer, $4 million, fell a full $2 million short of what AMG was offering.

In the nearly eight months since that deal was struck, the close of escrow has been delayed again and again, and while AMG Communities - Jacobs, LLC set up a website explaining that it’s backed by “a small investment firm” and inviting people to submit questions via email, it has steadfastly refused to identify who’s behind the corporation. 

The company insists that Rob Arkley is not an owner or investor in AMG Communities, but documents turned over in response to a California Public Records Act request revealed that Arkley was involved in negotiations with Eureka City Schools in the weeks leading up to the school board’s December decision. In fact, emails exchanged prior to the deal show that district personnel, including then-Superintendent Fred Van Vleck and Assistant Superintendent of Business Services Ziegler, believed they were negotiating with Arkley’s representatives on the property exchange arrangement.

Furthermore, the few people who have been identified as working on behalf of AMG Communities have direct ties to Arkley. For example, San Diego attorney Bradley B. Johnson, who signed the Jacobs property agreement as an agent for AMG Communities and whose company, Everview Ltd., is listed in escrow documents as the purchaser of the I Street property, works extensively with Security National, the real estate mortgage servicing firm founded by Arkley.

Johnson is also the Secretary and Chief Financial Officer of Citizens for a Better Eureka, a Security National-funded political group that filed a series of lawsuits against Eureka aimed at halting affordable housing developments downtown. And Johnson is working as legal counsel for the backers of Measure F, the pro-parking ballot measure otherwise known as the “Eureka Housing for All and Downtown Vitality Initiative.”

As reported last week by Thadeus Greenson of the North Coast Journal, a woman named Sara Lee once acted as a spokesperson for AMG Communities-Jacobs LLC, and a Sacramento-based political consultant with that same name turned up on the latest “Housing for All” campaign finance disclosure forms. Security National paid her $11,192 for consulting work related to the ballot measure.

Despite these connections, Gail Rymer, a spokesperson for both Security National and Measure F, insists, “No one from Security National, the Housing for All Initiative or Citizens for a Better Eureka have any involvement with the Jacobs property swap.”

An email sent to AMG Communities - Jacobs, LLC, this morning asking about the status of the pending deal was not returned.

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NOTE: Outpost Editor Hank Sims contributed to this report.

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