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While some tenants at the BookSmart shopping center continue to worry about their future in the face of upcoming redevelopment plans, Morgan Hill Mayor Steve Tate penned a reminder that a key spokesman for the businesses has profited off the pending sale of the property to developer City Ventures.
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In a lengthy April 28 e-mail blast to local residents, Tate noted that a partnership known as Depot Center Morgan Hill Inc. (DCMHI) in 2007 purchased an option to buy the retail and restaurant center, which now includes nine tenants, from owner Llagas Valley Investments. BookSmart, which is owned by Brad and Cinda Jones, was a partner of DCMHI.
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In 2010, the RDA approached Jones and DCMHI about acquiring the option. The RDA subsequently purchased the option for $1.7 million. DCMHI kept $1.5 million of that sum, and Llagas Valley took home the remaining $200,000, Tate’s letter noted repeatedly.
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The RDA intended to complete the purchase of the property from Llagas Valley at an additional cost of $2 million before April 2016, and redevelop the site with a multi-story parking garage.
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Jones, who has been a vocal proponent of keeping the Depot Center tenants downtown even though it appears increasingly unlikely they will be able to, said DCMHI was also owned by three other Morgan Hill families he declined to name. BookSmart’s profits from the 2010 sale went back into remodeling and inventory at the store, Jones said.
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What city officials didn’t know, explained Councilwoman Marilyn Librers, was the state would shut down the RDA in 2011 and force the sale of the option, diverting all the resources back to the general funds of local agencies, including the city, county and school districts.
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“We have empathy for all the merchants that are going to be impacted,” Librers said. “Unfortunately, this was not a city decision—it was a state decision. We didn’t know back then (the RDA) was all going to crumble and fall.”
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Plans for Depot Center changed after extensive public input early last year. The parking garage, which is now under construction, shifted a block south to the “Sunsweet” property between Third and Fourth streets. Depot Center is now tapped for a modern mixed-use residential and retail development by City Ventures.
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The state Department of Finance in 2012 specifically required local taxing agencies who now control former RDA resources to sell the BookSmart option and redistribute the proceeds among themselves, Tate’s letter explained. These agencies include the city, county, school district and community colleges
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The latest result is these agencies and the DOF in February approved the city’s proposal to sell the Depot Center option at a significant loss to City Ventures for $100,000, Tate added.
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City Ventures earlier this month put down $100,000 in escrow for the option, and has 60 days to decide whether or not they want to complete the property purchase for an additional $2 million. That deadline is June 16, Tate said.
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City Ventures has proposed building a mixed-use project that includes 5,000 square feet of retail space, “live-work” residential units along Depot Street and townhomes.
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Jones wrote a widely circulated letter last week that appeared on the Times opinion page, calling the City Ventures sale a “bad deal” for Morgan Hill.
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“Obviously, based on the mayor’s narrative on the resale of the (Depot Center) property, the city is feeling the heat from the community,” Jones said April 29. “(But) we want to focus on the future and what’s best for the community, and for the downtown.”
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Librers said Tate’s April 28 letter is partly in response to a flood of e-mails from residents concerned about the Depot Center transaction.
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Earlier this month, the council approved a $1 million relocation package for the Depot Center tenants and three other businesses on the Granada Theater/Downtown Mall site, another former RDA property to be redeveloped later this year. Tate’s letter noted that the city “is committed to assisting the impacted businesses” but has “absolutely no obligation” to do so. The relocation package is funded by leftover RDA cash.
Stressful transition
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Still, the uncertainty of where they will move is a stress to Jesus and Reyna Gomez. The couple own Jesus Restaurant, which is located in Depot Center at 95 E. Third Street.
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Their daughter, Evelyn Gomez, can’t help but look around the restaurant and feel sad. She worked there with her sister and two brothers, alongside their parents, cousins and extended family. She realizes her 5-month-old son probably won’t get to celebrate his first birthday at the family’s second home.
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Gomez’ parents founded the Mexican restaurant in 1989, when Jesus bought the location’s former eatery, El Tesoro, and made it his own.
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The restaurant, which employs 13 people, represents not just an income for the Gomez family and others—it also symbolizes the American Dream and all the values that allowed the family to prosper since Jesus, 57, emigrated from Mexico in 1976. He had little education, but he and Reyna, his wife of 31 years, worked hard enough to open a second location in Los Banos in 2005.
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Though she recently earned her teaching credentials, Evelyn spends much of her time helping her parents, who speak limited English, work with Morgan Hill city officials, contractors, bankers and real estate agents to find a new home for the restaurant.
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Evelyn estimates it will cost up to $200,000 to move into a new space just north of town, and worries the city’s relocation package won’t be enough when the numbers are finalized. The family has considered selling the parents’ Morgan Hill home to pay for the move, but that’s a last resort.
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Jesus’ biggest fear is the city’s development timeline will force him to close up shop.
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“It makes him proud that his customers love his food, and to see many generations come to eat here,” Evelyn said, translating her father’s Spanish. “And it scares him, the possibility of not staying open, and people not being able to enjoy his food.”
