In the Silicon Valley Business Journal, Bryce Druzin (my new best friend, now that Nathan Donato-Weinstein went to the City of San Jose and is therefore dead to me) reports that the Sunnyvale Town Center has closed escrow. Wells Fargo no longer owns the property, and the new development team of Sares Regis, Hunter Storm, and JP Morgan has taken possession of the property.
This is a huge deal, and I’ll explain some of what’s happening and what it means. Escrow started back in December, when the Redevelopment Successor Agency (us) approved of the proposed new buyer of the property. It’s more complicated than that – there were a couple of separate transactions and a couple of separate escrows, since the parties wanted to separate out the finished office buildings from the rest of the project. Regardless, there were a lot of legal hurdles that had to be overcome, and this is my best understanding of everything. The new developer wasn’t going to buy the new property without an updated development agreement with the Successor Agency. We approved that back in, oh, June or so. And any new development agreement and resolution of property tax issues involved the redevelopment successor agency. So that required further approval. The first approval had to come from the redevelopment successor agency oversight board, a board comprised of City, County, and school districts representatives. That wasn’t a given, because everything we do with the town center has property tax implications that impact those other bodies.
Then, once all of that was approved, the CA Department of Finance had to give sign-off on the deal. The state’s elimination of redevelopment agencies gave the DOF the final sign-off on all such issues. And working with them over the past few years has… been a challenge. But the DOF signed off on this on September 2nd. And that apparently cleared the way for the property to close escrow.
With those legal hurdles out of the way, work can begin on the Town Center pretty quickly. Now that title has been transferred, the new owner owns the entire project, and they didn’t need massive debt financing, the way the previous developer did. They’re their own masters on this project, save for the development agreement and the need to work closely with us to fulfill the requirements of our development agreement. We’re looking at having a ceremonial groundbreaking on October 19th, and I know the development team is off doing their thing already.
It took a whole lot to get us to this point. Our City Manager, City Attorney, and other senior staff has been working on this, pretty much daily, to get us to this point. First, the City, the development team, and the bank needed to get on the same page. Then the Successor Agengy had to reach an agreement on the updated development agreement (and this was after the Successor Agency had the rather difficult job of reviewing and approving the new development team in the first place). Getting the approval of the oversight board and DOF were huge and difficult accomplishments by our City Manager and City Attorney. Our staff deserves a whole lot of credit for working through everything and getting us to this point.
But we’re here, and this should be the start of good things for the Town Center.