Bay Area Developers at Odds with City Hall over Lucrative Land Deal

Big-time Bay Area developers Tom Armstrong and Chop Keenan have joined forces with former San Jose Mayor Tom McEnery to push the city to change its zoning classification of a piece of property on South King Road. The land is currently home to Asian/Indian radio station KLOK 1170 and a sprawling field that would be better off as a massive lot of single-family detached homes, according to the power brokers. But in an effort to create jobs, the city’s general plan forbids the conversion of light industrial property to residential, and current Mayor Chuck Reed and city planning director Joseph Horwedel are trying to quash the proposal, which is located in Vice Mayor Madison Nguyen‘s district. That might not make a difference, though, as some men can’t be denied. McEnery has routinely squeezed City Hall while reshaping the San Pedro Square area in Downtown San Jose, while Keenan is best known as the man who brought Half Moon Bay to its knees and the verge of bankruptcy after a land development dispute. While these are men who normally find a receptive audience on the 18th floor, they’re offering a unique swap. In exchange for the reclassification of land on King Road, Keenan and others would be willing to sell the city some parcels in Coyote Valley, which could then be developed in the future—or never. Insiders say the deal would basically pay the three developers and their partners on the front end and back end, while the city would be unlikely ever to pull the trigger on developing Coyote Valley. Additionally, the developers are gauging elected officials’ flexibility on amending city code for this project as a litmus test for larger development targets in Almaden and Evergreen. Also part of the well-connected consortium, Susan Mineta, niece of former mayor and U.S. Congressman Norm Mineta, is doing outreach to the community and City Hall.

The Fly is a weekly column written by San Jose Inside staff that provides a behind-the-scenes look at local politics.

10 Comments

  1. Great more traffic.  We need jobs in San jose, not more commuters.  While we are at it, let’s develop the 180 acres on Capitol expressway used by the Reid-Hillview Airport.  That could be 80 acres of industry, 40 acres of housing, and 60 acres of park.  That makes much more sense, and will benefit San Jose and Santa Clara County.

    • I realize in some circles it is popular to minimize or disregard the value that Reid Hillview adds to the city and county. Contrary to popular opinion, the airport has its own intrinsic value. It is self-supporting, relieves general aviation pressure that would exist at SJC in terms of accommodations, and also serves as an auxiliary support and staging area for emergency air support services such as air ambulances and firefighting aircraft.

      The periodic bleating from the airport’s detractors reflects a lack of education and an overall ignorance of the value that the airport actually offers, and it would be a shame to lose access to it as a result of a successful – albeit misguided – effort to close the airport and convert the property to other uses.

  2. So this deal seems to be: sell the City land that cannot be developed in Coyote Valley, for market value in return for favorable rezoning on King Rd.  Then later buy this land back from the City at below market rate, because it’s not developable, and then lobby to change Coyote’s zoning requirements, and develop it.  The outcome of rezoning lands in Evergreen and Almaden will be used to push Coyote development. 

    What a brilliant plan to make the City a silent, and quite possibly unwitting partner in this shakedown.

    • The Engineer & So So Interesting The City is definitely NOT Stupid, NOT unwitting and NOT being baited in to anything. 

      Rather the City and the Developers are experienced and willing partners.

      Any doubts?  Look no further back in history to the RDA’s land purchases for the so-called “A’s stadium.” The subsequent shell game that transferred the land from the RDA/City to the “successor” agency (Diridon RDA) and the City Council’s conferring of the right to purchase that land to Lew Wolfe (Owner of the A’s BUT EVEN MORE RELEVANT: DEVELOPER!!!) for a mere $50,000 deposit in the event that the A’s are NOT permitted to move to San Jose.

      My contention here is that:

      (1) Reed and the Council HAVE ALWAYS KNOWN that MLB and the Courts are NOT Likely to grant an A’s move.

      (2) Wolfe KNOWS the MLB and COURTS are not likely to grant the move which is why (VERY PUBLICALLY AND UNASHAMEDLY) WOLFE is not pushing for approval!!!

      (3) The CITY purchased the land at/near the top of the market (with borrowed money) $200 – $300million and it is now worth $30-$60million in the current market and EVEN LESS if the A’s are deprived of relocation.

      So a situation has been created by Mayor Reed and the City Council (former RDA Chairman and Board of Directors) where a Developer (who conveniently owns a baseball team) OWNS THE RIGHTS TO PURCHASE THAT LAND AT WHATEVER THE MARKET RATE IS!!!

      Once Developer Wolfe owns the land he can do what ever he likes with it , develop , hold and sell for a profit and the only losers here are the real “unwitting” accomplices:  THE TAXPAYERS and VOTERS who let these criminals into office.

  3. Don’t worry, Chuck Reed never met a parcel of land he wasn’t willing to spend top dollar for (money he’ll say he doesn’t have for pay/pensions for City Employees) then turn around and unload that land at pennies on the dollar to developers like McEnery and Keenan…

    Reed IS who we KNOW he is (apologies to Dennis Green) – a lousy Mayor, a poor fiduciary and probably one of the worst “business minds” to ever draw a breath but he sure did show those unions who’s the boss.

  4. There are also areas near Santana Row that are being looked at, one is the theaters and the other is the retirement community located in the back. This is one of the nicest mobile home communities in the bay area. There is a huge push to rezone it to allow for more homes and retail space as I understand it. This is one of the only affordable housing areas in west San Jose. All the residence are home owners and take very good care of their homes. If this land is redeveloped all of these people will need to move.

        This area of San Jose is already way over developed having more homes and retail areas will increase the traffic exponentially. The people who live in the mobile home community are very concerned, and we are reaching out to the city. I find it troubling that developers and city officials have these types of relationships to begin with.

    • The mobile home park wouldn’t require rezoning to develop would it?  I’m not sure what developers want to do with the movie houses, but it’s likely to be commercial.  As long as it doesn’t require rezoning, I’m inclined to let developers do whatever they want – provided they pay the going rate for infrastructure and traffic mitigation.

      Those Century theatres aren’t the Winchester Mystery House.  To make the claim that they are historically significant is a real stretch.  After they are gone there will still be 2 instances left in West San Jose.

      And what is it with trailer parks anyway?  If you own one of these things, are you supposed to provide below market rent for the rest of your life?