More questions about two companies still in the running to
redevelop downtown Morgan Hill properties could emerge at Wednesday
night’s city council meeting.
More questions about two companies still in the running to redevelop downtown Morgan Hill properties could emerge at Wednesday night’s city council meeting.
The council is scheduled to select a developer to enter into a business partnership for the two properties, where the long-term vision calls for mixed-use, multi-level developments that combine retail, office and residential space, as well as parking and a multi-screen cinema.
Barry Swenson Builder and City Ventures are both qualified to carry out the council’s plans, based on a preliminary proposal submitted last year, presentations to the body at a meeting earlier this month, and follow-up research and interviews with the candidates, according to city staff.
Following the April 1 meeting, where the companies pitched their respective proposals to the elected officials, the council wanted more information about each builder’s thoughts on the preferred density of housing on the sites, construction schedules and techniques, and whether the marketing strategy should center around the residential or retail units.
City staff presented a list of questions about these issues to the two developers after that meeting, and the builders submitted their answers in writing.
Mayor Steve Tate said reading the latest report on the two developers “made it harder” to decide which one to team up with. He said both companies are “outstanding” and have indicated they can be flexible to the city’s plans.
A key difference between the two companies is the way they intend to market the new properties. Barry Swenson Builder wants to center the projects around two “anchor tenants” – specifically the cinema and a boutique grocery store.
City Ventures foresees a more immediate demand for housing downtown, and would underwrite the project based on that need and demand. Doing so, company staff said in its responses to the city’s questions, would give them the financial ability to wait for retail tenants that are well-suited for Morgan Hill if they have to.
“A market-driven retail approach … could result in high-paying but undesirable tenants (dollar stores). Our approach gives us flexibility to pursue a current local tenant like ‘The Music Tree,'” City Ventures’ written follow-up report says.
Barry Swenson Builder plans to pursue a boutique grocery store such as a Whole Foods or New Leaf on the property that currently houses the Granada Theater, while marketing housing units on both properties. The other property is one block south, and is currently occupied by Royal Clothiers.
But the company has two backup plans to fill the ground-floor retail spot in case a grocery store tenant cannot be immediately signed due to economic conditions, according to Barry Swenson Builder Senior Development Manager Jessie Thielen. The first backup plan is a “neighborhood market” with a front kiosk, occupied by a number of vendors who would be “selling cooperatively to create the feel of a market,” Thielen said.
The second backup plan would be to temporarily divide the space into separate retail units, similar to the shops that are downtown now.
But either way, none of the plans would delay the start of construction, which will occur simultaneously for both sites, Thielen said. The company anticipates construction to be complete 12 months after it starts.
City Ventures, based in Santa Ana, would complete construction on the sites in about 15 months, according to its latest report to the city. The company sees “a strong demand in Morgan Hill for in-town living with homes priced in the $300,000s.”
It currently plans to build a four-story building on the Granada Theater site, containing ground-floor retail shops and housing upstairs. The density of the housing would depend on the local demand at the time construction starts. It has tentatively proposed one- and two-bedroom apartments that are about 800 to 1,300 square feet in size.
City Ventures did not return a phone call.
Barry Swenson Builder has proposed building 60 condominiums on the Granada site, with a mixture of lofts, studios, and one- and two-bedroom homes. On the Royal Clothiers site, where the city wants to see a cinema, the company wants to build about 10 upscale rental residential units.
A key difference between the two companies, according to Thielen, is that Barry Swenson Builder, based in San Jose, is “the hometown team,” and has assigned employees who live in South County to work on the Morgan Hill project.
“We feel like we understand the hometown sentiment,” Thielen said.
The city’s Redevelopment Agency owns the two properties, for which they paid about $10.5 million. The city plans to spend about $40 million developing the properties, as well as other parcels it owns downtown, in the coming years.
