Morgan Hill Businesses Pushed Out in Last Gasps of RDA

Evelyn Gomez can’t help but look around Jesus Restaurant and feel sad. She worked here with her sister and two brothers, alongside their parents, cousins and extended family. She looks around and realizes her 5-month-old son probably won’t get to celebrate his first birthday at the family’s second home in downtown Morgan Hill.

Gomez’ parents, Jesus and Reyna Gomez, founded the Mexican restaurant on East Third Street in 1989, when Jesus bought the location’s former eatery, El Tesoro, and made it his own. The wood-grain-panels that line the restaurant’s interior are reminiscent of its founding era, when bar-style mirrors reflected customers’ faces under a watermark of various beer brands. A stack of sombreros sits atop a digital jukebox at the front of the dining room, and a glass display case in the foyer serves as the cashier’s counter. It protects Reyna’s collection of porcelain and glass elephant figurines, their tails pointed toward the front door “to bring in the money,” Evelyn says with a laugh.

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.

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—forced upon them by the city’s downtown redevelopment plan—to find a new home for the restaurant.

The city is offering money to move Jesus Restaurant and 10 other businesses located on downtown properties formerly owned by the defunct Redevelopment Agency. Those properties have been tagged in Morgan Hill’s downtown improvement plan since 2009, when the city decided a to make way for mixed-use retail-residential development. Current tenants, including the Gomez family, will likely have to move out before the year’s end.

Evelyn worries the city’s reimbursement won’t be enough. She estimates it will cost up to $200,000 to move into a new space just north of town. The family has considered selling the parents’ Morgan Hill home to pay for the move, but that’s a last resort.

Jesus’ biggest fear is the city’s development timeline—which started about two years ago and has been subject to the whims of the real estate market—will force him to close up shop.

“It makes him proud that his customers love his food, and to see many generations come to eat here,” Evelyn says, translating her father’s Spanish. “And it scares him, the possibility of not staying open, and people not being able to enjoy his food.”

The City Council voted unanimously April 1 to pay up to $1 million to relocate the targeted businesses and clear the way for construction crews. While the city has yet to finalize deals with developers, there is a tight deadline to dispose of properties formerly owned by the RDA that currently house established, family-owned businesses. These businesses include Jesus Restaurant, Cherisse’s Hair Salon and United Academy of Martial Arts—all of which are part of the BookSmart shopping center.

The council’s $1 million in leftover RDA bond proceeds will provide up to $35,000 per full-time employee to each business that qualifies, according to Assistant City Manager Leslie Little. The funds will not go to the employees, but to specific types of moving expenses, including rental trucks, equipment, construction, carpeting, shelving, real estate commissions and other fees. Eleven businesses—plus seven others ineligible for city help—likely have to move before the end of the year because they are located on property that has to be sold and developed for the purposes originally intended by the RDA.

In February, the council directed city staff to negotiate with City Ventures on the BookSmart site. City Ventures put down a $100,000 deposit on the option shortly after the council’s April 1 vote, and is now in the midst of a 60-day “due diligence” period that ends in June to determine if they want to proceed with the purchase.

While BookSmart and all nine tenants on the property will have to move some time after the purchase is completed, the bookstore is ineligible for relocation assistance. As a former partial owner of the option, the store opted out of future relocation assistance when the RDA purchased the option for $1.7 million.

But there could be a way to avoid evicting established business, says BookSmart co-owner Brad Jones. Llagas Valley Investments might be interested in buying the option back, which would allow for current tenants to stay on the property while minor improvements—that won’t significantly disrupt business—are made. That deal may have come too late, though, and it would require the same vetting as the City Ventures deal. All final transactions involving former RDA assets require approval of several government agencies.

Jones addressed the council earlier this month to emphasize how crucial it is for tenants to remain downtown, where they have become permanently woven into the city’s fabric.

“When development starts at the properties, family businesses are going to be exiled to some other part of Morgan Hill other than downtown,” he said. He added that these shops, hair salons and restaurants have collectively spent “over 150 years paying rents and providing jobs in the downtown, [and they] account for at least 100 jobs.”

Tenants have a “soft deadline” of June 1 to notify the city if they plan to take advantage of the reimbursement, according to city staff. Other tenants won’t be so lucky.

The Music Tree, Tryst, Morgan Hill Cigar Company, EcoSparc, Acevedo’s House of Poppy Jasper and other small shops all won’t qualify for the city’s relocation reimbursements because they previously received RDA assistance, or they signed short-term leases waiving any future assistance.

Jones said it’s not just the occupants of these buildings that make the downtown viable. The buildings themselves, with their historical charm and patina of wear, are key to a thriving city.

Quoting Jane Jacobs’ “The Death and Life of Great American Cities,” Jones wrote in a letter this week: “If a city area has only new buildings, the enterprises that can exist there are automatically limited to those that can support the high costs of new construction.”

14 Comments

  1. Good reporting Mr. Moore.

    Gov. Brown did Californa a huge favor in “killing-off” RDAs.
    San Jose’s RDA debt is beyond staggering and General Fund revenues are being used.
    Relocation costs for businesses in Morgan Hill-more wasted tax-payer monies spent on RDA give-aways.

    David S. Wall

  2. “It makes him proud that his customers love his food, and to see many generations come to eat here,” Evelyn says, translating her father’s Spanish.” He’s lived here since 1976 and he still doesn’t speak the language of the country that allowed him to succeed; but speaks only the language of the country he left because it allowed him nothing? Realmente no puedo entender su actitud. Creo que esta actitud es muy descortes.

    • Yes, there are many people in Morgan Hill who primarily speak a language other than English, as have their parents and grandparents and several generations before them, all in California, and all dating back to before anyone on the west coast spoke any English at all. People from Mexico who move here are likely to be absorbed into this culture, especially if they open a Mexican restaurant. It is not difficult to understand, and certainly not rude.

    • @JohnMichael:
      Do you live in Morgan Hill? Apparently not because you don’t understand our demographic. He owns a MEXICAN restaurant. He probably never needed to learn fluent English. I’m a huge proponent of learning the language of residence; however, in this case, who is he impacting?

      While you are certainly entitled to your opinion, I think your comment is out-of-line & ignorant.

    • If I were speaking my second language for an article in a newspaper I would want help too. He probably speaks English just fine for everyday – but not for something this important. No need to think badly of people.

  3. Is that all you got from this great article, Michael? Tisk, tisk…. Good luck MH businesses, we’re all hoping you stay & thrive.

  4. I love this place, and their food and family-friendly,, make you feel welcome place. It is one of my favorite places to go when I eat out.
    Part of the charm of Morgan Hill will be ruined with the forced moving out of established businesses – especially that we love
    . This is a darling little town- PLEASE keep it that way.

  5. This has always been a cute and quant little town build on small businesses we loved. I grew up here most of my life.I moved to southern cali for 5 years and when i came back recently i could See a huge difference. Its all about money and profit. I love upscale dining, but i also think its great to have a place where anyone can shop, eat, ect….which is not just geared towards the wealthy..I hope we can keep the small inexpensive, authentic fun loving places next door to the up scale. IT will keep some balance.

  6. I don’t understand the drama…. It’s all about the food and the people. There are plenty of empty space available for them to start again. The Las Palmas building on Dunne us empty right??? They can easily find a home and we will be there enjoying their food wherever they go.

  7. There is NO mention in the story about what is planned by the developers for the spaces. Is it a secret? I think any deadlines, plans etc. by a defunct agency or active agency, can be put on hold for good reason… the drought. There should be no more building that will tax water resources until the drought is over. This, acting like development doesn’t impact water, is nuts. Morgan Hill is not the only City doing this; developing is going on everywhere, my friends in Sonoma County are complaining, San Jose is building housing, Gilroy has huge developments in progress. It seems to me like like money is more important than water. Citizens are being asked to conserve but developers are allowed to generate projects that will use more long-term water when they’re done. I realize that builders are probably paying more for it but money does not generate water… the weather does.

  8. After loving and living in MH for 30 years, I am now considering moving to another town that still has a soul. Greed can ruin so much of the good in life.