Sell the Hayes Mansion

Last week the San Jose City Council discussed the Hayes Mansion, a historic 100-year-old south San Jose estate. The City of San Jose bought this property about 10 years ago. The story of “why” the City purchased the property is long…and depending on whom you ask, the reasoning can change. Therefore, for the sake of brevity, I will skip the reason why the City owns the 214-room hotel with two restaurants and twenty five conference rooms.

Although the Hayes Mansion is a beautiful piece of property, I do not see it is as a core service of the City. Like our golf courses, which were funded by millions of dollars of bond money without a vote of San Jose residents, this facility was funded by bonds, without the approval of voters. In this case the bonded amount was $65 million. And, like the golf courses, the city is paying millions of dollars every year to re-pay the bond monies—the City spends approximately $4 million annually to subsidize this prior council vote. My preference would be to sell it.

If we sell the Hayes Mansion “as is” as a hotel and conference center, we would only recoup about $30 million of the $65 million, which would not be enough for the City to pay off the bonds. The hotel has approximately a 50 percent vacancy rate, so perhaps south San Jose is not the best location for this type of use.

An idea that I think is worthy of consideration, is that the City of San Jose’s Housing Department look into the possibility of converting the Hayes Mansion to affordable senior housing. Either the Housing Department and/or another affordable housing agency could evaluate the potential.

However I believe the best option that would pay off the bonds and stop the $4 million bleeding is a high-end senior housing development known as “assisted living.” Assisted living facilities exist throughout the USA. The Hayes Mansion could provide a place for seniors to live in a resort-style setting with a pool, restaurant, fitness area and adjacent park. This type of use is in high demand and expensive therefore I believe this would be the best alternative.

Doing nothing costs us $4 million each year. With that $4 million we could open every neighborhood branch library in the city on Sundays and change the libraries from being closed half days on Mondays to being opened all day. In addition, the City would be able to double the budget for graffiti removal. The City could also consider putting this money in reserves to balance the budget since our tax receipts will be lower for a few years due to do the economic slowdown.

22 Comments

  1. Nice try Pierluigi. How different your article would read if you told us the most likely destination of any savings from the Hayes Mansion would go to increased salaries and pension benefits for city employees.  While I am no fan of the poorly managed Hayes Mansion, there are signs the city’s spending priorities are wrong.  Your idea to require “self-funding” of $900 of traffic improvements is just another tool for the city bureaucrats to avoid providing the most basic of services.

  2. Why not make it the new entertainment zone.  You and your fellow council members have just about run all the nightlife and restuarant business out of downtown.  Why not move it to haze mansion.

    You could at least stop the bleeding of millions in restuarant and nightlife revenues to other nearby cities.

    clubber lane

  3. I love the assisted living idea. I worked a bit at one such facility in Evergreen during high school and thought it was a fine place for people to live a healthy and social life. Keeping elderly folks here in the valley, close to their families, would be a great benefit to many.

  4. #6- Nam Turk, and Pier,
    I agree, this is a wonderful idea! Hope you can get support from the Mayor and Council on this.

  5. I say City Government moves in to Hayes Mansion, and we sell City Hall. You’ll get a lot more money for that parking deck, office building and rotunda.

  6. Kenny—Absolutely terrific idea! Get the fat ass bureaucrats out of City Hall and move in a business or two that would actually bring some buz and foot traffic to downtown. The Dumb Dome would make a perfect jewelry store—as long as the $750K custom glass ceiling machine was included in the deal. Get the politicos out of sight—but they’d have to fill in the swimming pool or even less work would get done than they do now. I can’t imagine that the Council, led by the Mayor, would EVER fix even one of the roaring mistakes made by previous administrations—especially the airport, but the Haze Mansion would show just a little imagination, and bravery. What would Prof Terry say, though.
    South SJ is beyond his reach. George Green

  7. #1

    Steve0,

    Concur with you that the majority of government revenues go towards wages, benefits and pensions since it is a service business.  Stay on us to help us keep our spending balanced as there are other priorities however whether it is public safety, libraries or parks it typically means more money to pay for increased hours or more bodies unless we change the way we do business.

    Self-funding traffic improvements is new in the traffic calming policy. This has been embraced by the Rosecrest Terrace neighborhood with 23 households contributing money for traffic calming devices.  Also by allowing the option for residents to self-fund traffic calming devices it is a way for residents to show if the majority supports the physical devices.

    #3

    Judy,

    Yes, no fire sale. However I believe that the demand for Assisted Living is so strong that the current economic downturn would have a minor impact on sales price but we will not really know until we do a request for proposal.

  8. Self-funding traffic improvements is an embarrassment. Asking residents to fund basic city services over and above their taxes and other fees is pathetic and nothing to be proud of.
    It’s admirable of the residents who stepped up to do what the city failed to do, but it’s sure not something to boast about.

  9. Pier, you said, “However I believe that the demand for Assisted Living is so strong that the current economic downturn would have a minor impact on sales price but we will not really know until we do a request for proposal.”

    You are 100% correct about that. Christian’s Grandmother signed up for Assisted Living. She sold her house, and put down one hefty piece of change to move in there. Same with his Grandfather.

    I love your idea. It makes good sense all the way around.

  10. T. Calmer

    Neighbors being able to get traffic calming devices sooner rather then later via paying for it is fine by me. Neighbors should be able to put money where there mouth is. Also would not count “speed bumps” as a basic service since it is above and beyond street paving.

    Pierluigi,
    I agree sell the Hayes Mansion.

  11. SteveO #1,

    You’re right. Line their own pockets is precisely what this greedy and incompetent city government will do with ANY extra revenue.
    Then they will moan about the “injustice” of Proposition 13.

    Wake up people. Your City Government is interested in ONE thing. Itself.

  12. Pierluigi,

    Thanks for addressing my comments.  There are ways other than writing a check to support traffic safety improvements.  The city used to have a policy that a petition must be signed by a majority of residents before a photo radar unit was deployed on their street.

    My concern with your new “self-funding” policy is city staff will do nothing until residents show up with a check.  What about neighborhoods that cannot afford to pay?  Are we going see streets in Willow Glen and Almaden with all the latest traffic safety accessories while the rest of the city is ignored?

  13. Steve, Novice, and T. Calmer,
    I too find it outrageous that neighborhoods are having to pay extra for services we are already paying for and not getting. While I feel that it is wrong, I can also understand why they are doing it. It is incredibly frustrating to ask the City over and over again to do something about speeders, people parking illegally and get NO help. Most times you don’t even get a return call or email. (I’m going through that myself and have been for the past year and a half. It is maddening.) If you do get a response it is usually, “Sorry but our Traffic Enforcement Officers have been cut back to the bone and we don’t have anyone who can get out there for three months.” 
    So what do you do? Sit helplessly by watching the inevitability of a child being killed by a speeder, or do you organize your neighborhood to raise money to try and address the problem? It is a tough spot to be in, and the City knows it. So of course they are going to take your money TWICE!  Before our present leaders make a new policy requiring us to pay for traffic calming in our own neighborhoods, we should demand basic services be provided, or make sure they know we will refuse to vote the same people back into ANY office.

  14. The other side to this sad story is we have a Council bent on building as much housing as possible. This is fine if you have the resources to properly provide services, but we don’t. Additional housing further strains limited resources and that’s one reason we don’t have adequate traffic enforcement. When we had a neighborhood meeting this summer with a City rep we were told that as more housing is built the resources simply can’t be provided.
    Do you think we’ll see any housing slowdown (other than what is forced by the disintegrating economic climate)? Too bad common sense is not a requirement to be elected to the Council.

  15. “Also by allowing the option for residents to self-fund traffic calming devices it is a way for residents to show if the majority supports the physical devices.”

    I’m getting the feeling that the city is getting it’s ‘ideas’ from the folks on this board that lampoon and satirize the going’s on at CH.

    What a bunch of zombie robot sheep in Rosecrest Terrace that would pay out of pocket for traffic calming.

    Government should be starved – not supported.  Why pay for services that are never provided?

  16. Sell it, stop the bleeding of city funds. Have the city focus on the few things it originally set up to do (safety, garbage, roads, sidewalks, etc).

  17. I know that I coming very late to this party, and I am not even a San Jose resident, but I cannot help but make one point.  There is no hotel in San Jose more beautiful than the Hayes Mansion and, what is truly embarrasssing, there is no 5 star restaurant or bar, within or without a hotel, that is even close to the quality of the beverage and food offered at the Hayes Mansion.  The Hayes is in a bad and depressing location, but that is simply nature taking its course in San Jose over the centuries where only a few neighborhoods are habitable for a person of any refinement.  It was simply “out there” when the edifice was put up. Even as the city may be losing money at the Hayes, it is certainly doing more than a few things right and what it is doing right is certainly finer if not more profitable than what the private sector is botching outright in the many dreadful local restaurant and saloon offerings.