The developer chosen by the city to rebuild nearly two entire
blocks in downtown Morgan Hill will no longer have an exclusive
right to purchase the properties as of tomorrow, but they hope to
work out a deal by next week. For the last 11 months, city staff
and San Jose-based Barry Swenson Builder have been in the
”
exclusive negotiating
”
phase to redevelop the vacant Granada Theater property, which
also contains the Downtown Mall, as well as the site that houses
Royal Clothiers. But they might not be able to reach a development
agreement.
The developer chosen by the city to rebuild nearly two entire blocks in downtown Morgan Hill will no longer have an exclusive right to purchase the properties Friday, but they hope to work out a deal by next week.
For the last 11 months, city staff and San Jose-based Barry Swenson Builder have been in the “exclusive negotiating” phase to redevelop the vacant Granada Theater property, which also contains the Downtown Mall, as well as the site that houses Royal Clothiers. But they might not be able to reach a development agreement.
The negotiating period ended Thursday, opening the publicly owned properties to the rest of the market, according to city staff. The original deadline of Oct. 22, 2010 was extended twice by the council, and staff Wednesday did not recommend another deadline extension.
Still, both parties hope to conclude the project they started when the city council selected Barry Swenson Builder from about 17 developers who were interested in the sites in April 2010. They hope to return to the city council Wednesday with an “agreement to reach an agreement,” potentially leading to a contract between the city’s redevelopment arm and the builder, in which the city will sell the properties and the builder will agree to build a project that represents the city’s long-term downtown plan, according to assistant to the city manager for downtown development, David Heindel.
“From a practical standpoint, if the people you’ve been speaking with the last 11 months are very close (to a deal), would you stop talking to them?” Heindel said of the importance of the redevelopment projects.
In April, Barry Swenson Builder sent the city a letter indicating they would start with the Royal Clothiers property, as the builder needed more time to complete their proposal for the Granada Theater site, city staff said. Conceptual plans for the Royal Clothiers site include a multi-screen cinema, likely to be operated by CineLux, plus office space and residential units for rent on two upper levels.
Also in April, the builder suggested it was unwilling to invest its own money in the project but would work as the city’s design and construction contractor. However, since then the builder has changed their mind and is open to investing in the project, according to Barry Swenson Builder project manager Tina Viglizzo.
Last year, during the vetting process to solicit proposals and determine which developer should partner with the city to redevelop the properties, which were purchased by the city’s redevelopment agency in 2008 for about $10.5 million, city staff and council members noted they wanted to keep the public’s share of any risk of failure at a minimum.
Viglizzo added that the cinema concept they presented at a community meeting in September 2010 is still planned.
“We are still very interested in keeping this project moving forward,” she said.
Since the RDA purchased the properties, the council has adopted the “downtown specific plan,” a blueprint for “smart growth” in the downtown area, where a variety of employment, living, entertainment and transportation options will be available. The two sites that just re-entered the open market today will ideally contain mixed-use developments, with retail, dining and entertainment options on the ground floor, and a variety of housing units – apartments, townhouses, condominiums, for sale and for rent – upstairs.
The properties were transferred earlier this year to the Morgan Hill Downtown Development Corporation, a nonprofit controlled by the city and created by the council out of fear of the proposed state budget, which would eliminate RDAs statewide. The MHDDC’s intent is to shelter assets acquired by the RDA in recent years, while preserving the city’s ability to execute its established redevelopment plans.
City staff explained at Wednesday’s council meeting, where they presented an update in the process, that with the properties back on the market, and if the city and builder cannot reach an agreement to develop the sites, they might have to start the entire process over again. That could include sending out another request for proposals and bids – a process that drew responses from 17 potential investors last year. Or the properties could be sold, leased, or developed through some other method subject to the council’s current whims, staff said.
Heindel said neither the city nor the builder want to go back where they were at this time last year.
“Even if you were to start to market the property tomorrow, to get where Swenson is now could take some time,” Heindel said. “Our interest is in getting something done, and using a reputable, qualified firm to do it. The city council made a determination a year ago that Swenson is a reputable, qualified firm.”
City Council meeting
- 7 p.m. Wednesday, May 25 at the council chambers, 17555 Peak Ave.
