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Council Unanimously Approves ENA for New Entertainment District

It didn’t draw as big an audience as Joe Montana’s star appearance at a City Council meeting last year, but last week’s Council meeting could be a momentous one in city history.

The Council unanimously approved an Exclusive Negotiating Agreement (ENA) with Related Companies to develop a proposal for a 220-acre mixed use development on the Northside of Santa Clara. The idea was first brought forward to the city by Rudolph & Sletton VP John Elwood, “one of our greatest boosters,” noted Council Member Lisa Gillmor.

An ad-hoc Council committee – Pat Mahan, Jerry Marsalli, and Debi Davis – was assigned to provide ongoing oversight of the proposal.

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“The site has tremendous potential for development,” Related California President Bill Witte told the Council. “What really struck us is the amount of infrastructure the city had the foresight to put in place, especially the transit connections. That’s really unique.

“One thing we’ve continuously heard [in Santa Clara] is the need for a ‘town center’ where the community can gather,” he continued.

“We try to approach every opportunity not by the particular ‘silo,’ but what the situation calls for, and learn as much as we can about local needs and priorities. And that’s how we would approach the process under this excusive negotiating agreement. Most of our California projects have been public-private projects. The hallmark of what we do is working with community. These ventures require a lot of collaboration.

“At the end of the day, this is really about place-making,” Witte concluded. “The raw materials are there…you’ve created the opportunity. Now is the time to realize that opportunity.”

ENA Offers City Opportunity At Little Cost

Council Member Teresa O’Neill brought up the question of the need for an exclusive agreement. Last year the Council discussed at great length the pros and cons of an ENA with the Montana Group for a project on Tasman.

An ENA makes sense for this project for two reasons, explained city staff. First, there is no project defined for developers to bid on. Second, the city doesn’t currently have the resources to undertake the studies needed for a development of this magnitude.

“It provides a tremendous economic opportunity for the city and we have a partner willing to help us walk through the steps,” Santa Clara Economic Development Director Ruth Shikada explained Tuesday night. “The ENA gives the city an opportunity to do the feasibility analysis for the site that would be needed for any future development at no city cost.”

“The ENA gives us an ability to approach a proposed opportunity,” added City Manager Julio Fuentes. “With the analysis required – especially the issues of building over landfill [the site was formerly the city dump] – we have to do an extensive analysis of those uses. There’s cost involved and research to find suitable alternatives.

“This gives us the opportunity to work with developer and identify all the issues involved,” he continued. “The City Council has been very successful in developing the area. This project will give us the opportunity to pull all of that together.”

A Long Road Ahead, Nonetheless

“It can be a great opportunity for our city,” observed Mahan, “but it’s not as reported in the press: a clear slate. It has significant developments on the site. They will have to be replaced onsite or elsewhere – these are essential services that our citizens wouldn’t want to see go away. The site is largely on landfill, so there’s going to be environmental issues.”

In fact, the most significant obstacles to be overcome may be the environmental, structural, and operational problems posed by building over a former garbage dump – something that could end up being prohibitively costly.

Mahan also voiced concern that the proposal will stall revitalization of Santa Clara’s Old Quad. “It’s not a replacement for our downtown,” she said. “It’s something new, an entertainment district. We want to make sure that we don’t so exclusively focus on the North of Bayshore that we forget about the Old Quad, our missing downtown.”

Given the size of the potential challenge, Mahan asked for the ad-hoc committee that was later approved, as well as significant public involvement, “not just at council meetings when you get two minutes to talk.”

It’s About the Economics

Ultimately, however, if the development is feasible, it’s likely economics will make the decision.

Golf course revenues are down. One speaker Tuesday night estimated that the city subsidizes $24 for each round of golf. The proposed development would bring the City new land lease, property and sales tax, and utility revenues.

“The golf course was not intended to be the final use for the property,” said Marsalli. “This is exactly what Council Members 30 years ago had in mind for [the future of] our city. Now is the time for new development.”

Another critical factor is the additional financial burden presented by the shutdown of Santa Clara’s redevelopment agency; making it imperative that the city finds new sources of revenue to support city services.

Related’s proposal is for a market rate lease with no subsidy, noted Gillmor. “We’re looking at severe cuts from the state. We have to find ways to generate income to sustain us for the next generation.”

All of this “is a balancing act,” observed O’Neill. “I believe that Related will work with us to make sure that this is a great project for us and everyone in our community.”

Noting that Related’s proposal is exactly the type of development the city hoped for when it approved the new 49ers stadium, Gillmor called it “an excellent start for us.”

“When I first heard about this,” Gillmor said, “I was struck by the fact that Related didn’t come in and say ‘This is what we want to see.’ Instead, they said, ‘Here’s an opportunity. We want to hear what your community wants to see on that property.’ This is the type of developer we want to work with – they are looking to invest in our community. What we’ve learned from the stadium, is that there’s no dream that’s too big for the city of Santa Clara.”

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