The city couldn’t reach a deal with Barry Swenson Builder to
enact ambitious redevelopment plans, but eager developers remain in
line to spruce up some publicly-owned properties in downtown Morgan
Hill. The city council, acting as the Morgan Hill Economic
Development Corporation board of directors, approved three new
”
exclusive negotiating agreements
”
with two private contractors to carry out the city’s downtown
revitalization plans.
The city couldn’t reach a deal with Barry Swenson Builder to enact ambitious redevelopment plans, but eager developers remain in line to spruce up some publicly-owned properties in downtown Morgan Hill.
The city council, acting as the Morgan Hill Economic Development Corporation board of directors, approved three new “exclusive negotiating agreements” with two private contractors to carry out the city’s downtown revitalization plans.
Santa Ana-based City Ventures will talk with city staff about purchasing and developing two downtown sites – the Royal Clothiers building on the 17300 block of Monterey Road, and the “Depot Center” property housing BookSmart and other businesses at the corner of Depot and Third streets.
And Stephen R. Pace, of Lonestar Development, will negotiate a possible purchase and development agreement of the former site of Simple Beverages at the corner of Monterey and Third streets.
Two of the properties – Simple Beverages and Royal Clothiers – were purchased by the redevelopment agency in 2008, and transferred to the EDC when the nonprofit corporation controlled by the city was created earlier this year.
The EDC also owns an option to purchase the Depot Center, also transferred from the RDA which purchased the option for $1.7 million in May 2010. The corporation could exercise its option to own the property outright by paying about $2 million more to owner Llagas Valley Investments.
In April 2009, the RDA board entered a similar agreement with San Jose-based Barry Swenson Builder to redevelop the Royal Clothiers and Granada Theater properties. However, after more than a year and a series of deadline extensions, the city and builder were unable to reach a development agreement.
City Ventures was one of 17 developers who responded to the city’s original “request for qualified developers” in 2009, and came in a close second place behind Swenson in the selection process.
City staff and council members said it’s unfortunate the projects have been delayed, but they are encouraged by the interest that remains in the publicly-owned properties.
“I’m excited there was a line of people that are interested since Barry Swenson left off,” Councilman Larry Carr said. “I have a lot of optimism we’re going to move forward this time.”
Developers and negotiators for the city now have the benefit of a year’s worth of background and discussion gathered on the properties, including a number of public workshops in which Swenson and the city gathered volumes of information on local preferences for the projects. Plus, the market appears to have improved for the newly selected developers.
“These developers now have less uncertainty because the economy has gotten better in the last two years,” Councilman Gordon Siebert said. “They’re going into it with more knowledge and more ability, hopefully, to bring these (projects) to fruition.”
The three negotiating agreements approved Wednesday expire in November, a “faster and stricter” timeline than that given to Swenson, Carr said.
The city remains committed to its downtown specific plan approved in 2008, which envisions a lively downtown with plenty of retail, dining and entertainment options, an abundant supply and wide variety of housing choices, and easy access for pedestrians, bicyclists, motorists and public transportation users.
The purpose of the negotiating period is to give the developers and the city some breathing room to define a viable project and work on a more binding development agreement, without having to compete with other interested builders. Factors such as the EDC’s price for the properties, as well as the developer’s and public’s contribution for communal improvements such as parking would be determined in future development agreements.
Developers selected by the council presented proposals in line with the city’s plans.
City Ventures has proposed building a 10,000-square-foot, multi-screen cinema on the Royal Clothiers site – a specific goal identified in the city’s downtown plan.
On the Depot Center site, City Ventures has proposed building a multi-level structure with at least 25 residential units and 6,000 square feet of retail space, according to city staff. That property currently houses BookSmart book store, Peking restaurant, Jesus Restaurant, United Academy of Martial Arts, Marco Polo Eastern Treasures, Mac Plastics and Morgan Hill Access Television.
Lonestar Development, based in Santa Clara County, has proposed building a mixed-use, multi-story retail and office building on the former site of Simple Beverages, city staff said.
Specific details of the proposals are not yet available. Both developers are required to deposit $5,000 with the EDC during the negotiating period, which will be refunded as the developers show evidence of third-party commitments such as tenants or buyers.
The negotiating periods could be extended by the city manager up to 60 days to allow more time to draft a binding agreement.
The respective financial standings of the two developers are “different” than that of Swenson, City Manager Ed Tewes said, but he did not say how they are different. “We believe they have the financial capacity” to complete the proposed projects, he said.
Not a subject of the negotiations this time is the property containing the vacant Granada Theater. Last year, Swenson proposed building a mixed-use structure with a grocery store and other retail on the ground, with a variety of housing units on the upper floors. Then earlier this year, in the middle of negotiations, the company backed out of any effort to redevelop that property.
Other, unnamed developers remain interested in building on the Granada Theater property, but they and the city are not yet ready to enter exclusive negotiations, Tewes said.
