The approaching demolition of a popular downtown shopping and restaurant center and its conversion to a $10-million, multi-level parking structure is creeping up on the owners of eight establishments currently housed on the property, many who hope the City honors their desire to stay in downtown Morgan Hill through the relocation process.
The property on Depot Street, between Second and Third streets, is the City’s preferred future site of a parking garage up to three stories high, with retail space on the ground floor street frontage, according to Assistant City Manager Leslie Little.
Current tenants on the property are BookSmart, a Chinese restaurant, Mexican restaurant, a public television studio, a youth martial arts academy, a hair salon and two more retail stores - Continental Stitch and Marco Polo’s Eastern Treasures (which also offers acupuncture services). The tenants are scheduled to meet with City staff this morning, Sept. 27, to discuss their concerns over the plan to relocate them, which could be before the end of next year.
Collectively, the eight businesses have been open at the center for more than 100 years, and bring more than 100,000 customer visits annually to the downtown, according to a letter from the Morgan Hill Downtown Association to the City. The letter was sent to the Morgan Hill Economic Development Corporation, which represents the City in its efforts to revitalize downtown properties formerly owned by the Redevelopment Agency and now owned by the City.
The City does not own the BookSmart shopping center property, but the RDA purchased an option on the site for $1.7 million in May 2010, giving the City an exclusive right to purchase the site. The option and eventual outright purchase has been a part of the RDA’s long-standing plans to revitalize the downtown using bond proceeds.
City Hall now plans to complete that purchase for another $2 million, which will be funded by bond proceeds remaining from a 2008 RDA loan after the state shut the agency down last year.
The property, which has frontage on Depot, Second and Third streets, is currently owned by Llagas Valley Investments.
The City is required to relocate the tenants of the property before demolition and construction starts for a parking structure, but the business owners are skeptical that they will be able to remain within the downtown corridor, which is where they want to be.
“It is our position that replacing these businesses would likely be as costly as building a parking structure, hoping some retail space is eventually built in the downtown and then trying to get businesses to move back,” reads part of the MHDA’s letter to the EDC.
The MHDA’s letter was prompted by recent news that the City is on a tight deadline to spend about $25 million in remaining RDA bond proceeds. The Redevelopment Oversight Board - which is tasked with disbursing the RDA’s remaining assets - just approved the $2 million Depot Street property purchase last week. The plan still requires state approval.
The City has to spend $9 million of the bond proceeds by the end 2014, and the rest by the end of 2015, according to City staff. The parking structure, slated to provide up to 381 parking spaces, is near the top of the City’s list of priorities for the money.
The structure will replace the parking lot directly across the railroad tracks in the Santa Clara Valley Transportation Authority commuter lot, according to Little. The VTA lot is partially owned by the City, and the two owners are in talks to transform the VTA lot into a residential housing development.
The plan also consists of moving the Caltrain platform to the west side of the tracks - the same side as the proposed parking structure.
“Location is key because we want a structure that will benefit the downtown the most,” Little said.
When it’s time for the tenants on the Depot Street property to move out for construction, the City will work with an agent to develop a “relocation plan,” Little said. The City is required to find the tenants a new suitable site, pack and move their belongings and make sure everything is up to code at the new locations - and other moving expenses.
An exception is BookSmart, which, as a partner in Llagas Valley Investments, waived its right to relocation reimbursement when the RDA purchased the option in 2010, Little said.
Brad Jones, co-owner of BookSmart, which employs 14 people including him, said he understands the need for downtown parking, especially during evenings and weekends. But he doesn’t think “displacing” existing businesses to accommodate the parking need is the best strategy.
“For us to displace eight businesses without a plan in place to keep them downtown is really the heart of the issue,” said Jones, who doesn’t think there is enough vacant space downtown - or not the right kind of space - for the eight Depot Street tenants.
While the other tenants are glad the City is eager to work with them, they like their current spots and some are anxious over the whole idea of moving.
Peking Chinese Restaurant has been in operation at the site for more than 33 years - the last 10 of which have been under the ownership of the same family, according to manager Cheng Yu.
“For a restaurant, it’s more difficult,” Yu said. “We have custom equipment that’s not moveable.”
Jesus Mexican Restaurant, on the south side of the shopping center, has been in operation at that location for about 24 years.
Fronting Depot Street at the shopping center is the United Academy for Martial Arts, which has been open there for 21 years, according to co-owner Mollie Clampitt. UAMA employs 15 part-time instructors, and has about 300 students per year.
UAMA sent a letter to its young students and families recently, letting them know of the approaching move to an undetermined location. While the owners enjoy their current location, they said they are looking at the coming relocation as an “opportunity” for a "new and improved version" of the martial arts academy.
Cherisse’s Hair Salon, which employs seven people including owner Cherisse White, has been in the Depot Street location for almost five years.
“The biggest concern is to make sure we stay downtown, and finding the next ‘right home’ for us,” White said.
Councilman Rich Constantine met with some of the tenants Tuesday at the shopping center to hear out their concerns about the impending relocation. The City does not have a geographical obligation in the relocation effort, but Constantine agrees the businesses have become an integral part of the City’s downtown, and they belong downtown.
“The goal of the parking structure is not to get rid of our businesses, but to help the businesses that are downtown and want to stay downtown,” Constantine said. “We’re going to do everything we can to (help them) remain downtown, and we’re going to do everything we can to help flourish.”
The owner of Continental Stitch, a knitting supplies store which fronts Third Street, didn’t even know about the proposed parking structure and its timeline - on which construction could start by the end of next year - until she read about it in the newspaper earlier this month.
Shirley Todd, the owner of the store on the south side of the building behind BookSmart, moved to the shopping center in October 2012 from her previous longtime location on Monterey Road, also in the downtown.
“I like where I am,” Todd said. “No one told me this building was going to be torn down.”