07 November 2005

Diridon South site cost = $80-100 million

A new report in the San Jose Business Journal estimates that the cost to acquire the 14-acre, 12-parcel site could reach the $80-100 million range, based on a value of $125-130 per square foot. And for the first time, at least one property owner has expressed reluctance to sell his property.

The city has budgeted $60.5 million to acquire the land, which makes it well short of $70.8 million in pure real estate value and doesn't include relocation costs for the affected businesses. The businesses include:
  • A PG&E substation (northwest corner next to the railroad tracks)
  • A SBC work center and storage facility
  • One residence
  • A small bar at the corner of W. San Fernando and S. Montgomery
  • A welding supply company south of the bar
  • An imports wholesaler/retailer at the Autumn/Montgomery "fork"
  • A storage facility for Amtrak/Caltrain (northeast corner of the site)
The currently vacant parcels include the former Stephens Meat plant and the former KNTV (NBC-11) studio. The site is in green in the picture below:

All of the parcels are important, and it is unlikely that ballpark could be situated on the site without acquiring every parcel. It might be doable without the PG&E substation, but that would require reconfiguring the street grid by moving Autumn St to the east and acquiring additional land to compensate. Since the plan would eliminate Montgomery Street, Autumn Street would have to be reconfigured as a two-way thoroughfare. That reconfiguration is already in the Diridon/Arena General Plan because of a need to connect the area with the development occurring north of the Arena. That change could take up as much as 1/3 acre from the ballpark site.

Fortunately for the San Jose Redevelopment Agency, there's no talk of eminent domain, which proved to be an extremely divisive issue when the Arena (now HP Pavilion) was built. The parcels will be bought at market rate or at some negotiable rate, which should prevent any lengthy legal trouble. There would only be a problem if one of the owners refused to sell.

One way for the city to bridge that $10-20 million gap is to figure out a way for PG&E to reconfigure the substation. I don't have any knowledge of how this can be done, but when looking just at space, it would make sense to move the substation to the southwest corner of the site and realign it to run parallel with the railroad tracks. That should minimize the impact on available ballpark area. There would undoubtedly be safety and clearance/setback regulations that would have to be addressed, but it would be a way to give PG&E nearly 2 acres of land at the site without forcing them to move power lines. By doing this, the city would save money since it wouldn't have to purchase land from PG&E, only exchange it. That could cut some $5-10 million off the final price tag, depending on how much it costs to move the existing equipment. The $25,000 the city approved last week for PG&E is being used to study this option.

As for SBC/AT&T, they're sitting on some valuable land there, though I'm pretty sure the facility is strictly a work center with no line services coming from it. It has a small maintenance garage and building for storage, but the local central office is downtown on Market and San Fernando, not at this site. The big issue there is vehicle parking, which is scarce downtown. My guess is that in selling the land, SBC will try to work in some deal for parking in the downtown area.

If I were a real estate speculator, I'd look into buying land east of Autumn St next to the ballpark site. Why? Someone could build some nice, expensive condos there, complete with views into the ballpark a la Wrigley Field.

One thing is fairly certain: Diridon South is the most feasible, best-situated ballpark site in San Jose. All others have either been acquired for other development (Del Monte, Coleman Ave) or have infrastructure issues (Spartan/Muni, Reed & Graham).


Maury Brown said...

The parcels will be bought at market rate or at some negotiable rate, which should prevent any lengthy legal trouble. There would only be a problem if one of the owners refused to sell.

I'm with you in principle on this.

If property owners see the sale as "housing" then there may be less incentive to hold out and ask for more. If the word gets to property owners that housing is the backup to stadium, then you could run into the issues we are seeing in DC. In that instance, all but one property owner held out for more than what was offered, which in many instances was almost double the assessed value before stadium discussions came to light.

The property owners have the hammer in this scenario. They can hold out for well over fair market value because the threat of eminent domain is out of play.

Tony D. said...

$100 million for 14 acres? Makes you wonder how much the Coliseum north/Ballpark Village would cost at 90 acres...I'd imagine property values at Diridon/Arena are slightly higher than in Oakland. I don't think we should get all hung up on the acquisition of the 14 acres at Diridon South. As you well know Marinelayer, "Strategy 2000" by the SJRA proposes mix-use developments in the area, as well as an expanded/Modernized Diridon Station (BART, High Speed Rail, Caltrain)...the city was going to have to acquire this land anyway, ballpark or no ballpark. As a supporter of MLB in San Jose, I would love to see a beautiful downtown ballpark at Diridon South. Baseball downtown would be good for San Jose and good for MLB. But even without a ballpark downtown, Diridon/Arena has great promise and will one day be a sought out location. Let me guess will be without a ballpark.

Marine Layer said...

The cat's pretty much out of the bag when it comes to the city's intent, so the city is already at the mercy of the landowners. The city is going about this properly by extending offers to all affected landowners simultaneously, while explain the intent. The only real complaining party is the anti-stadium group, but they don't have any say over redevelopment money.

murg said...

ML, I know of the anti-city-money-for-acquiring-property-without-vote group. Is the anti-stadium group you mention one in the same? If so, have they actually come out as anti-stadium?

Marine Layer said...

The group has come out against the land acquisition, saying that it's against the city charter. The city's legal counsel has cleared the acquisition, so it's all subject to interpretation.

murf said...

Right, they are againt the land aquisition without a vote, but to my knowledge, that's all they've taken a position on. They haven't claimed to be pro or anti stadium or baseball outrightly. If the land aquisition was put to a vote and passed, would they still be against it? I don't think they've said.

Marine Layer said...

No official position yet, but there was this quote from Kathy Chavez Napoli a few days ago:

``They keep concentrating on baseball stadiums rather than making sure we get the services we need,'' said Kathy Chavez Napoli, who led the campaign against a failed 1992 ballot measure to raise utility taxes for a proposed ballpark for the Giants.

Interpret that as you wish.

Kevin said...

Seems like there's been a lot of talk recently about this ballpark deal. Any of you guys in the South Bay get a feel of how people in SJ are viewing this?

There are many hurdles in the way of this ballpark happening. Perhaps the biggest may be getting voter approval to fund the ballpark. After all, there have been failed attempts in the past. Add to that the fact that many South Bay Giants fans probably won't want to see the A's setting up shop where they live. I don't know, money will get you the land, it may even get you the territorial rights, but money doesn't always get you the votes.

tony d. said...

Being a San Jose native, and working with many South Bay natives, I can tell you by impromptu polls that the vast majority of citizens (especially sports fans) favor San Jose getting a Major League Franchise. This also includes many Giants fans, believe it or not! There are a few hard core naysayers (haters)down in San Jose, but they are truly in the minority. Most people, especially those who don't keep track of the news/developments regarding a new A's ballpark, are appalled to find out the Giants have territorial rights to San Jose/Santa Clara County. Again, this includes Giants fans as well. The Giants fans I know state that their love will always be with the "G Men," but that they would love to see San Jose get a team. In closing, it appears most Giants fans in San Jose/Santa Clara County won't abandon their team just because one exists in the hometown.

Kevin said...


That's interesting (and encouraging) to hear that even Giants' fans are willing to back a ballpark. I'm puzzled as to why the ballpark vote failed back in 1992(?).

Marine Layer said...

Public financing. The ballpark was to be funded with a utility tax. San Jose politicos are proceeding with the idea the that the ballpark will be mostly (if not completely) funded using private means. To make it work for Wolff, San Jose would have to make some amount of land available for a ballpark village concept. It appears that some land is available just for this purpose.

tony d. said...

Marine Layer,
And just to think...the utility tax of 1992 would have cost the average citizen a measley $35 a year! Thanks Kathy Chavez Napoli for saving my family $35 a year and destroying San Jose's first chance at landing MLB! Hopefully, this time around, Chavez Napoli won't play spoiler for the rest of us.