A downtown business owner recently purchased the former site of South Valley Bikes, and has big plans for the property that has sat empty for about five years.
Dan McCranie, a Gilroy resident and co-owner of Ladera Grill just down Monterey Road in downtown Morgan Hill, said it’s “too early” to publicize his detailed plans for the property as he is only in the early stages of the planning process.
But he plans to demolish the existing building and replace it with a new project that is “in line with” the city’s downtown specific plan, a long-term blueprint to improve the downtown area with focused land-use and zoning regulations.
“I want it to be representative of the style and essence of Morgan Hill,” McCranie said. “We have intentions of replacing it with a building that Morgan Hill can be proud of.”
The building is located on the southwest corner of Monterey Road and Second Street, across from Royal Clothier and on the same block as Ricatoni’s restaurant and M & H Tavern.
McCranie, who is a downtown business owner as well as the board chair of ON Semiconductor Corporation, said he bought the site with his wife and son.
They paid about $700,000 for the property.
McCranie’s Ladera Grill is down the street, on the same side of Monterey Road at Third Street. The upscale contemporary American restaurant opened about 16 months ago, and regularly enjoys large lunchtime and evening crowds.
“As far as I’m concerned, that’s one of the most important pieces of property downtown,” as it sits at an important downtown “crossroads,” said Brad Jones, co-owner of BookSmart at the corner of Second and Depot streets.
The “old mill house,” a two-story building housing ground-floor retail boutiques and an upper-level restaurant and offices, sits across Second Street. Kitty-cornered is the Votaw building, which is also two stories and houses the GVA Cafe on the ground floor.
Across Monterey Road, on the southeast corner of Second Street, is Royal Clothier in a building formerly owned by the city’s redevelopment agency, and now owned by the Morgan Hill Economic Development Corporation.
“So far, from what we’ve seen from (McCranie) is that he has good ideas, and seems to be wanting to improve the downtown, and the community,” Jones added.
South Valley Bikes has been closed for “at least four or five years,” according to Jones, and has sat empty for most of that time with the exception of temporary uses by political candidates during campaign seasons.
All of these properties are envisioned for big improvements by the city’s downtown specific plan, which was initially approved in 2008 and has been amended several times since. The downtown plan calls for ground-floor retail uses on the site’s Monterey Road frontage, and a mix of office, residential and parking uses on the back of the property, and on upper floors if any are developed.
The South Valley Bikes property, as well as its entire block between Second and Third streets, would be developed between 2015 and 2030, according to the city planning document.
Jones added he would like to see McCranie somehow preserve and continue to use the mural on the north side of the building, facing Second Street, which depicts a pastoral, small-town residential scene.
“That mural has been a big part of downtown for a long time,” Jones said.
The downtown plan relied on the availability of redevelopment agency funds to assist private developers with parking and other facilities that would benefit all visitors and residents of downtown, and not just the patrons of a single enterprise. In 2010, the RDA enlisted Barry Swenson Builder of San Jose to redevelop the Granada Theater and Downtown Mall properties, on the east side of Monterey Road north of Second Street, but the two parties never reached an agreement.
Now it’s going to be even more difficult for a public or publicly driven entity to partner with private developers downtown because the RDA was shut down as of Feb. 1, with most of its remaining resources reserved for projects, contracts and debts that were in progress.
Even the properties formerly owned by the RDA, and now owned by the EDC – including the Granada Theater and Downtown Mall – are in jeopardy because the state controller’s office last month ordered them returned to the city’s redevelopment successor entity. The EDC, fearing a “fire sale” of the properties, is considering taking legal action against the state to keep them for future redevelopment.
The city still retains about $19 million in bond proceeds acquired by the RDA in 2008, but the future of those funds is even more uncertain. In March, the city earmarked the money for downtown improvements, including about $3 million to assist potential private developers like McCranie, depending on the exact specs of their proposals.
McCranie did not say if he will seek any of those funds for whatever he plans to build on top of the South Valley Bikes building.
Assistant City Manager Leslie Little said the $3 million could be used for demolition, parking, and sewer or water line upgrades, for example. However, city staff won’t even know for several months if they can still use the $19 million chunk of bond proceeds for its desired purposes downtown, as the complicated and seemingly self-contradicting state law regulating the wind-down of the RDA requires a series of steps and conditions for the money’s use.
All uses of former RDA assets proposed by the city rely on approval by the state Department of Finance.
Perhaps the best thing the city can do now for McCranie is “get out of the way to make it easier for him,” Little said.
“He’s done a fabulous job investing on the other part of the block, and people have liked it enough for him to continue to want to invest,” Little said.