Trouble in the Agrihood: Subsidized Development Falls Behind Schedule, Over Budget

Near Winchester Avenue and Stevens Creek Boulevard in Santa Clara sits a lonely 6-acre parcel of land, originally part of of a University of California agricultural research center that shut down in 2003. The land was set aside for housing development, and in 2015, Santa Clara’s city council selected a developer and approved a $15 million subsidy. The project was supposed to break ground in January 2017. But more than a year later, the lot sits empty, used for overflow parking from the nearby Westfield Valley Fair mall.

Shortly after the research center went dark, the city of Santa Clara bought the parcel at 90 N. Winchester Blvd. from the state for $11.5 million with the intent of developing it into low-income housing. In 2005, SummerHill Homes bought 11 of the acres and developed it into market-rate units, but the affordable housing element sputtered.

When Kirk Vartan, a San Jose resident and Santa Clara business owner, moved into the area, he immediately wondered what the deal was with the fence around the remaining 6-acre parcel. Since then he has been working with the city and developers to bring high-density neighborhood with an agricultural element to it, known as an “agrihood.”

By the end of 2014, community members had organized behind Vartan and began lobbying the city. The City Council began talks about revamping the site, complete with a community garden, a farmers market and a community center. As part of the sale, the site carried with it a contingency: a percentage of the housing must be “affordable.” That is, below market prices.

Even though San Jose-based developer The Core Companies was supposed to break ground at the outset of 2017, the company still lacks a development agreement more than two years after it received the green light. Its exclusive negotiating rights are up for renewal in April for the second time since state Sen. Bob Wieckowski (D-Fremont) obtained passage of Senate Bill 680, a piece of single-purpose legislation to permit the city’s land sale for the development.

One week after the governor signed the bill, Core gave $4,200 to Wieckowski’s re-election campaign. Legislators are exempt from the Fair Political Practices Commission’s Pay-to-Play Contribution Restrictions, which prohibit officials from accepting campaign donations of more than $250 for three months following a decision affecting an interested party.

Santa Clara council members have regularly decried the lack of housing in the area, specifically so-called affordable housing. So, when the project went out to bid in 2015, all the contenders proposed high-density developments that would put more than 100 apartments on the site. Though Santa Clara-based ROEM Corp. offered the most money for the land—which would have resulted in nearly $6 million going into the city’s general fund—the council went with Core’s proposal, which required a $3.8 million subsidy.

Assistant City Manager Ruth Shikada said it was likely that her office would recommend a renewal of Core’s exclusive negotiating rights when it came before the council.

Councilwoman Teresa O’Neill said that choosing Core had a lot to do with the company’s reputation for community outreach. However, that community outreach, O’Neill said, is largely the reason the project is behind schedule. She said she has been kept mostly in the dark about how the project is progressing.

“I would like things to move faster,” she said. “I am a little frustrated … I almost get the sense that there are some folks … [and] neighbors who would rather not see [the site used for] affordable housing.”

O’Neill pointed to the high turnover at City Hall since Mayor Jamie Matthews abruptly resigned in early 2016—a new city manager, city attorney, finance director, new council members and the city clerk’s resignation just last month—as a possible explanation.

“Unfortunately, our staff got totally overwhelmed on a number of fronts,” she said. “This is just one of many things that we are having to catch up on.”

Despite Core’s touted community skills, the council—at Vartan’s urging—opted to bring in New York-based nonprofit Project for Public Spaces to help with community outreach.

Vince Cantore, senior development manager at Core, said his company has a zoning application and confirmed the idea that public input and the involvement of Project for Public Spaces delayed the timeline.

“The placemaking effort set the project back in terms of schedule,” he said. “We get and respect the vision and passion and dedication they have brought to the project … Anybody that is aware of this project is going to know the intricacies. We have done a pretty good job of listening to key stakeholders.”

Cantore said one of the main changes to the development is the location of the farm, which will now face Winchester Boulevard. Although he said Core won’t be ready to break ground until spring of 2019, he believes the project is “in a stronger place than it was a year ago.” Once construction begins, Cantore said, the construction will likely take between two and three years.

As of its last design, Core’s project boasts 1.5 acres of farm land, 165 “affordable” senior apartments and 194 market-rate homes, including 34 for-sale townhomes.

Still, amid the delay, Vartan remains optimistic about the project’s potential. He said part of the delay has been because the concept was not “fully fleshed out” before the wheels were in motion, leaving a need for changes.

“Has it taken too long? Hell yeah … but it has taken too long because we haven’t done the work,” he said. “It is better to aim high and miss than aim low and hit.”

While the opinion that public input has caused delays seems to be the prevailing one in Santa Clara, other projects that Core is involved with have run into similar issues.

The Park Avenue Senior Apartments, which is owned by the Santa Clara County Housing Authority and getting built by The Core Companies, has also faced significant slowdowns. Although, a Nov. 30 memo from housing authority assistant director Flaherty Ward, paints Pacific Gas & Electric issues as the culprit.

The installation of a new gas main took nine months and, according to the memo, was a result of “several issues including incorrect PG&E drawings, PG&E material shortages, identification of PG&E approved subcontractor.” The gas pipe was completed in September 2017. Further, Core discovered in October that a supposedly abandoned transformer was still live. Since, PG&E crews were dispatched to the North Bay to mitigate wildfire damage, they were unavailable until January.

All this amounted to a 12- to 15-month delay and $1.5 to $3 million in added costs that Core will have to bear for the public housing project. In addition to that price hike, two change orders amounting to an additional $130,857 have driven up the price of the project to $34.4 million.

For what it’s worth, Ward noted that Core played a different role in the Park Avenue apartments than with the agrihood—the company is the building contractor for the former and the lead developer for the latter.

The slowdowns on the Santa Clara project have significantly driven up the cost, too, But Cantore said the agrihood being so “high-profile” makes those expenses bearable.

Ultimately, Vartan thinks the postponement is a small price to pay for the benefit a farm at one of the valley’s busiest commercial intersections would bring to Santa Clara.

“A two- to three-year delay seems like forever in current perspective and dollars, but in the context of a generational time horizon (that cities have), it’s really not that long,” he wrote in an email.

As for now, the city has received the revised plans from Core and intends to hold another community meeting sometime later this spring.

This article has been updated. Due to an editor’s mistake, the printed version of this article raised the possibility of a  California Government Code Section 84308 violation by Sen. Wieckowski. Legislators, however, are exempt from the pay-to-play restriction, and this digital version has been corrected. —Editor

5 Comments

  1. The NIMBY attitude of the neighbors is why this project has been the poster-child for CEQA reform for the past decade. The neighbors literally claim 1) the property was heavily polluted by UC, 2) then they want a community garden in that soil, 3) no retail on the site, only housing, 4) no affordable housing, and now, 5) why has this taken the City so long?!?!

    • During the Core meetings I went to a lot of the neighbors seemed ok with the plan and the work that was done to incorporate the community asks. You will always have the NIMBY and YIMBYs but overall I didn’t get the impression that neighbors were delaying things once they were given the details. Just concerned folks asking directed questions.

  2. Ted, your timelines are off, as are your conclusions/bullet points. This is not a ceqa issue, it is a best use of public land issue.

    A denser mixed-use project is something that has not been visualized or explored in detail with the community. No need to discuss delays, how about we discuss ways to move forward. Why can’t another floor be added? Why are townhouses still part of the project design? What is stopping all portions of the ground floor from being activated (not residential or private uses)?

    To me, these are the questions to ask.

  3. Congratulations Kirk and all others behind this visionary concept! I was doubtful at first but the new renderings really show how unique and fun the “agrihood” will be. I especially love that you’ll be able to see the farmland from Winchester Blvd, and I agree that density should be higher and ground floors should be activated with retail and non-profit uses. Cant wait to come to the farmers market!

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