The list of potential developers that have shown an interest and
capacity to build a pair of mixed-use projects, including a
multi-screen cinema, on city-owned downtown properties has been
narrowed down to three.
The list of potential developers that have shown an interest and capacity to build a pair of mixed-use projects, including a multi-screen cinema, on city-owned downtown properties has been narrowed down to three.
If the city council accepts the staff recommendation, the properties now containing the Granada Theatre and Royal Clothiers will be transformed into multi-level structures containing ground-floor shops and upper-level residences by San Jose-based Barry Swenson Builders, Santa Ana-based City Ventures or Seal Beach-based The Olson Company.
After a lengthy evaluation process, city staff selected these “top three” developers from a list of 17 that responded to a request for qualified developers in September 2009. The narrowed-down list was arrived at with the assistance of a financial consultant, and after city staff interviewed the 12 developers whose plans were consistent with the city’s. A citizens review committee made up of downtown residents and business people was formed earlier this year to help the Redevelopment Agency evaluate the proposals.
The three firms were selected because of their background in developing projects similar to what is called for in the city council’s established concept for downtown Morgan Hill and all three indicated they have the money to buy the properties from the city.
“These three seem to have the concept that was the most in line with the Downtown Specific Plan, and they had the managerial and financial capacity to implement the project,” City Manager Ed Tewes said.
The properties in question are on Monterey Road, and are currently owned by the RDA. One of the properties, known as site A, currently houses the now-defunct Granada Theatre, the Downtown Mall (which contains the Music Tree, Eco-Sparc and the Morgan Hill Downtown Association), and the Morgan Hill Cigar Company.
The other property, known as site B, is less than one block south, at the corner of East Second Street. That parcel now contains Royal Clothiers, a small park and a parking lot.
All three submitted tentative proposals to build projects in line with what the city council envisions. Specifically, that includes retail or office space on the street level, with living space upstairs in downtown buildings. The council has also indicated it wants to bring a multi-screen cinema to site B. In February 2009, it approved RDA funds to assist CineLux Theaters in temporarily reopening the Granada until the new facility is constructed, which CineLux has agreed to operate if that jibes with the new owner’s plans.
Barry Swenson Builders is a “vertical company” that performs every development task in-house, from architecture to leasing to construction contracting. Their proposal envisions the cinema and a “boutique grocery store” such as a Whole Foods or a New Leaf, as the anchor points for each of the two sites, according to Christy Marbry, Senior Development Manager for Barry Swenson Builders.
They also proposed condominiums above the retail stores and theater, which would be “affordable by design,” and between 600 and 800 square feet. The company would be able to begin construction as soon as it has lined up its two primary retail tenants.
“Morgan Hill definitely has a lot of potential,” Marbry said.
The company pointed to similar projects it has completed in Monterey, San Jose and Healdsburg as examples of its qualifications. The firm could begin construction within 18 months, Marbry said.
City Ventures was founded by former executives of The Olson Group. City Ventures suggested a downtown Morgan Hill development containing 13,000 square feet of retail and 40 market-rate homes on site A, and a four-screen cinema, office space and seven “luxury homes” on site B, according to the city staff report.
And while The Olson Group indicated in its response to the city that it might not be interested in developing a cinema, it has proposed a 10,000 square-foot retail development on the ground floor of the property currently containing the Granada, with 22 townhomes and two-car garages upstairs and to the rear of the property.
Phone calls to the Olson Group and City Ventures were not returned.
If the council selects one of the 17 developers to embark on the first phase of downtown redevelopment, that selection will determine exclusive negotiating rights between that party and the city, according to Assistant to the City Manager David Heindel. From there it will be determined whether or not the company will buy or lease the property (the RDA’s preference is to sell), the sale price and detailed plans.
None of the top three developers has proposed saving the Granada, to the chagrin of the Save the Granada Foundation. Pamala Meador of the foundation said the staff recommendation is “no surprise” to her. Over the last year, her nonprofit group has gathered 1,000 signatures on a petition urging the council to restore the Granada for use as a live entertainment and non-first run film venue, and to preserve the building for its historic value.
The foundation was one of the 17 responders to the city’s RFQ, and proposed to lease the property from the city and use money it has raised as well as $310,000 in RDA funds to refurbish the theater. Those funds have already been approved for that purpose, but not allocated to a specific contractor or developer.
But such a proposal conflicts with prior city council decisions to pursue a cinema on the other downtown site, while possibly saving the sign and marquee on the existing Granada. And it conflicts with the RDA’s desire to sell the properties instead of manage them as a commercial landlord.
“My understanding is the city staff was given a task to come up with a certain result, and they’ve always been against opening the Granada Theater,” Meador said. “If they sell that site to an outside developer and erase the mistake they made by buying at the top of the market, how does that help our community? It doesn’t.”
The city purchased the property for about $8.6 million in 2007.
Meador indicated there is a proven demand, as well as a proven tourism value, for the kind of theater her group proposed. Visitors came from as far away as Daly City to a recent concert the foundation held at Live Oak High School as a fundraiser, and she noted the 500-seat Granada would be the largest theater of its kind from south San Jose to Monterey.
The city’s RFQ also applied to two other downtown properties – one that is privately owned on Depot Street and is occupied by BookSmart and Jesus restaurant, and the Caltrain parking lot on Butterfield Boulevard that is jointly owned by the RDA and the VTA. These two properties are not considered in the staff recommendation for Thursday, due to the complex ownership situations and the higher priority of the two sites on Monterey Road.
More on the 17 proposals submitted to develop RDA-owned downtown properties can be found at www.morganhill.ca.gov/
index.aspx?NID=931.
The top three developers have been invited to the April 1 council meeting, which will be conducted in the CCC, which is more conducive to multimedia presentations and is roomier than the council chambers.
Meador said she hopes to draw a large contingent of Granada Theater supporters to attempt to dissuade the council from abandoning efforts to keep it open for the long-term.
