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Downtown San Jose's Google village takes major step forward with government property deals

George Avalos, The Mercury News on

Published in Home and Consumer News

SAN JOSE, Calif. -- Google's village in downtown San Jose cleared a major hurdle on Wednesday with an agreement involving proposed prices for the sale of government-owned properties to a development venture led by the search titan.

"This is an important step forward. It is one step, but a vital step," San Jose Mayor Sam Liccardo said Wednesday. "We are moving forward collaboratively with Google on this process."

The combined proposed price for the property sales to Google: $67 million for nine parcels at six addresses in downtown San Jose, according to a city staff memo. The properties are all owned by a government agency that was created to unwind the assets and operations of the now-defunct San Jose Redevelopment Agency, which once owned the properties.

"It's very helpful to get the negotiations over these parcels resolved," Mayor Liccardo said. "It sets a clear path for us."

The next major step is to craft a similar agreement with Google over purchase prices for the parking lots next to the SAP sports and entertainment center and a property now being used for a San Jose Fire Department training center. Both of these properties are owned by the city of San Jose.

In the agreement for a proposed purchase of the redevelopment agency's successor, the most expensive parcel is a parking lot at 8 S. Montgomery St. at Santa Clara Street, due south of the sports arena. That 1.6-acre site, known as Lot D, has a proposed purchase price of $17 million.

"The remaining Successor Agency to the Redevelopment Agency properties were determined to have a value of $50 million dollars," the city memo stated. The rest of the successor agency parcels are located at 105 S. Montgomery St., 510 W. San Fernando St., 102 S. Montgomery St., 645 Park Ave. and 150 S. Montgomery St. Notably, Patty's Inn, a long-time cocktail bar, is on one of the government properties that Google is slated to buy.

"Google has agreed to the price" for the government properties in this proposed agreement, said Kim Walesh, San Jose's director of economic development.

For slightly over a year, Google and its development ally, Trammell Crow, have been purchasing an array of properties, including vacant lots, industrial properties, retail sites, commercial buildings and residences, as part of the tech titan's plans to create a transit-oriented community in downtown San Jose.

Mayor Liccardo noted that San Jose is taking a path that diverges sharply from the approach taken by numerous cities that hope to coax Amazon to establish a second headquarters in their communities.

"Twenty American cities are falling over themselves to woo Amazon," Liccardo said. "In contrast, we are selling land to Google for 2.5 times the price that the city of San Jose paid for it. The taxpayers of San Jose are clearly getting their money's worth on this."

 

From December 2016 to early January of this year, the tech titan and the developer together have spent at least $150.1 million buying 23 properties in downtown San Jose.

The most expensive of these acquisitions, as of Jan. 3, was a Google affiliate's purchase in late December 2016 of an old telephone company building for $55 million.

That deal, however, was just the start of an array of purchases. The property deals have occurred primarily on Autumn and Montgomery streets, but deals also have emerged on West Julian and West San Carlos streets, as well as on Cinnabar Street. And multiple property owners say they are on contract to sell their sites to a Trammell or a Google affiliate, indications that the deals are far from over.

"Tax breaks, subsidies, giveaways to corporations, none of that is happening here," Mayor Liccardo said. "Google didn't demand any of that, and we didn't offer it."

Mountain View-based Google intends to build 6 million to 8 million square feet of offices near San Jose's Diridon Station and the SAP Center. Those office towers could accommodate 15,000 to 20,000 Google employees.

"We are moving forward to realizing the vision for the Diridon Station area," Walesh said. "This is a first step to create a phenomenal place."

(c)2018 The Mercury News (San Jose, Calif.)

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