Putting the "There" Back: Downtown Revitalization
By Carolyn Schuk
The idea of "downtown" is an essential part of our sense of community. We're drawn to "downtown" – whether it's a true downtown like Palo Alto's University Avenue or a "Main Street, Disneyland" like Santana Row. If you tell people you're going to downtown San Francisco, they have an immediate picture of where you're going.
Half a century ago, Santa Clara inaugurated an urban development program that failed to accomplish its purpose of revitalizing the city center. Instead, it eviscerated the City's downtown core and left newcomers wondering, "why isn't there any there, there?"
Now the City is moving forward with a proposal to give Santa Clara back its downtown. To help residents understand the current proposal and what's happening, we've put together this Q&A about the plan under consideration.
Why should we recreate a downtown?
Santa Clara grew historically around the "old quad" area as the town's commercial, administrative and historical center. It's the core of Santa Clara's sense of place. In 2003, the City Council established the revitalization of downtown as one of its top priorities. The goal is to create a central place for people to meet, shop, work and gather that will foster economic revitalization by supporting existing area businesses and encourage the growth of new ones.
What's under consideration?
The current proposal calls for high density, pedestrian-friendly, mixed use development in a 7.3 acre area bounded by Lafayette and Jackson Streets, between Homestead and Benton. Franklin Street will be extended across Lafayette (i.e. from SCU) through the area, with a large plaza at the intersection with Washington St. The City's plan calls for a single Master Developer to undertake the entire project.
What are the specifics?
The plan calls for both vertically integrated -- retail downstairs, residential upstairs -- development with at least 125,000 square feet of commercial space in a range of sizes. At least one large space (25,000 to 35,000 s.f.) is to be provided for a large retail business like a bookstore. (By comparison, Santana Row has 558,000 s.f. of retail space.)
About 350 to 400 residential units will also be built, about 10 percent of which will be set aside for low- and moderate-income households. (Santana Row has 255 apartments). The City preference is for-sale housing rather than rentals. Housing is a "supporting use" for the area, however, and the project won't proceed without the minimum retail space.
Buildings will generally be no taller than five stories, with the exception of two eight-story buildings allowed at the plaza.
Who owns the property now? Does the City plan to use eminent domain to acquire it? The City owns three of the four parcels that make up the site. However, two of the parcels fronting Lafayette Street are under 50 year ground leases with 16 years remaining on those leases. The remaining parcel is owned by SCI, which has indicated its willingness to sell. The Master Builder will be required to negotiate with owners and leaseholders to assemble the development site.
The two leaseholders are Steve Lundeen/Creekside Property Management of Los Gatos, which holds the lease on the office building at the corner of Lafayette and Homestead (this will stay) and the Lim family, which holds the lease on the adjacent strip mall (which will be demolished).
The City receives $30,000/year from the 1973 leases, which do not have escalation clauses (something which people familiar with real estate leasing call "unusual" for a lease over such an extended period). At some point, the City will need to transfer ownership of property used for residential building because buyers can't get home mortgages for property on a ground lease.
As established City Council policy, the City will not use eminent domain. In addition, redevelopment agency rules do not permit it.
What will this cost and what's the economic impact on the City? The anticipated total cost of the project is $250 million, which is to be borne entirely by the developer. (Santana Row cost $539 million to develop).
No project funding will come the City's General Fund. However, the City has stated that additional property tax revenue generated by the project could be a source of funding if it can be economically justified.
Will City offices move back downtown? There are no plans to move City offices back to the area.
Isn't this just trying to duplicate Santana Row? Santana Row is home to predominantly high-end, large chain businesses. You can find the same stores in any high-end shopping venue across the U.S. The vision for Santa Clara would be as a center for local and small businesses catering to a broader range of shoppers.
What are the risks? First, higher interest rates or a cooling residential market can slow sales and reduce prices. Second, continued escalation in the cost of building materials could drive development costs up beyond the estimate. However, the most challenging is likely to be the general market risk inherent in developing and leasing retail space.
What's the timetable? It will take about six months to evaluate the proposals and select a developer. After that it will take another six months to a year to hammer out a contract. There's no set date for groundbreaking – within a five-year period is about as close as anyone will get at this point -- and it's possible that the project will be developed in phases.
As a point of comparison, Santana Row began construction in 1999, two years after Federal Realty bought the Town & Country Village property. The project was completed in 2002.
Will the public have a chance to review the plan? Yes, there will be public hearings on the project as it moves forward.
What are the objections to the redevelopment proposal? Some say that Santa Clara can't recreate the downtown the City had 50 years ago because the civic services that were in the downtown area have been moved away. Others have concerns that the area is sufficiently accessible from major highways and that the El Camino or Stevens Creek.
Another factor that could change the picture is the possible 49ers stadium in Santa Clara and the proposed retail development that is part of that plan. Some have questioned whether it makes sense to develop two new retail centers.
Finally, some have suggested that what the development we should be looking at in the long term is El Camino Real or Stevens Creek. These streets are already regional transportation corridors. Further, making El Camino or Steven's Creek the focus of redevelopment would allow high-density growth without affecting the City's low-density residential neighborhoods.
