GILROY
– Seeking a quick cash influx to stave off late property taxes
and anxious bondholders owed $70 million, the Bonfante Gardens
theme park board has signed a non-binding contract to sell 33 acres
of land adjacent to Eagle Ridge.
The property could turn into 100 luxury homes if the City
Council agrees to a wholesale, ground-breaking transfer of building
permits from one parcel to another.
GILROY – Seeking a quick cash influx to stave off late property taxes and anxious bondholders owed $70 million, the Bonfante Gardens theme park board has signed a non-binding contract to sell 33 acres of land adjacent to Eagle Ridge.
The property could turn into 100 luxury homes if the City Council agrees to a wholesale, ground-breaking transfer of building permits from one parcel to another.
Eagle Ridge homeowners, under the housing association’s bylaws, would have to approve the deal between Bonfante Gardens and Shapell Industries, the major developer of Eagle Ridge. But a Shapell representative has confirmed plenty of carrots – such as extra amenities at no extra cost to existing homeowners – would be attached to the stick.
The property is currently being used by the horticulture-based theme park for equipment storage.
If the deal is successful, up to 100 estate homes would be built on the land. Bonfante Gardens Board President Bob Kraemer would not reveal the purchase price. The assessed value is $750,000, but the parcel could generate a lucrative market-rate windfall far beyond that amount for the cash-strapped park.
“We’re excited,” Kraemer said Thursday. “We’re very close to restructuring the park’s debt, and this is one more positive step toward that direction. This will provide an opportunity to reach long-term financial stability.”
But for the deal to go through, Shapell Industries needs to receive housing permits from the city and none are available until 2009.
So Bonfante Gardens officials are lobbying the City Council to transfer the 100 housing permits currently attached to Michael Bonfante’s nursery property to the parcel they want to sell to Shapell. City Council granted those housing permits to Michael Bonfante in 2001 to make the property more valuable when he shopped it as collateral for a $7.5 million loan.
Complicating matters, two Councilmen have conflict-of-interest questions to answer – Mayor Al Pinheiro is a member of the park’s board of directors and newly elected Councilman Russ Valiquette is a park employee. If more than one remaining Council member votes against the housing permit transfer, the deal is dead.
“I don’t think I’d have to step down on this issue, but when it comes to the park it’s best if I recuse myself,” Valiquette said.
Valiquette is employed by the park as an operations supervisor.
Pinheiro, however, said his position on the park’s board of directors is no conflict.
“I don’t have to recuse myself,” Pinheiro said. “I sit on the board as a representative of City Council. I have no financial interest in the park.”
Pinheiro said he had not cleared this particular issue through the city attorney’s office. However, just last month, he voted to amend a bondholders agreement that kept the park from foreclosure after it defaulted on its debt payments.
Valiquette stepped down from voting on that issue.
What about Michael?
Bonfante Gardens needs to transfer the housing permits because they are currently attached to a property – the nursery – owned by Michael Bonfante.
The plan two years ago, according to Kraemer, was for Michael Bonfante to donate the nursery land and its housing permits to the park. Kraemer says that plan met with complications that he declined to elaborate on. Soon after park officials believed it was in the best interest of Bonfante Gardens and the community to sell the 33-acre parcel south of the nursery to Eagle Ridge.
Eagle Ridge homes abut the 33-acre parcel to the south and the east.
It remains unclear what Michael Bonfante would do with the nursery property. With housing permits, its assessed value is $995,000, and it is within a special planning area called the Hecker Pass Specific Plan.
City Council approved nearly 430 housing permits for the Hecker Pass area, not including the 100 Bonfante is ready to off-load. Bonfante could ask Hecker Pass landowners for some of their housing permits, but there’s no guarantee they’d show him much sympathy.
“The housing permits in the area have been pretty well doled out,” said Ernie Filice, one of the landowners in the area. “The ones that were issued were issued for specific spots of property. I don’t see any real flexibility out there.”
So for now, Michael Bonfante is stuck with a roughly 34-acre nursery property that remains as collateral for a $7.5 million loan used to keep the park afloat during its first two dismal seasons.
The carrot and the stick
Before the housing permit transfer comes in front of City Council, Eagle Ridge homeowners – who have a formal homeowners association with bylaws – will flash their trump card.
Homeowners will have to OK the real estate deal, and by all accounts feelings about 100 new homes are mixed.
Ever since the issue was brought up at an Eagle Ridge homeowners association meeting, residents have called the city’s planning department to complain, said Planning Division Manager Bill Faus.
Because building an access road from Hecker Pass to the 33-acre parcel would be difficult, if even possible, vehicles may have to use the existing Eagle Ridge access roads off Santa Teresa Boulevard to reach the new homes.
The additional traffic and other potential impacts are not welcome. And, they would likely trigger California’s environmental laws to force a full review.
“So far, the residents who have called all had serious concerns,” Faus said.
But Shapell has no intention of entering a real estate deal that wouldn’t benefit Eagle Ridge homeowners, company vice president Susan Mineta says.
Mineta said Shapell would almost certainly build things such as play fields, tennis courts, basketball courts and a swimming pool on the 33-acre parcel in addition to the homes.
“All of those things are possibilities, and we would bring those ideas to the homeowners and let them tell us what amenities they want,” Mineta said.
Mineta said determining which amenities could be developed on the parcel and which ones homeowners want are all part of Shapell’s “due diligence.” The extra facilities would likely trigger no extra fees on homeowners’ monthly association dues since the additional homeowners would offset the costs with their dues.
For Eagle Ridge homeowner Chris Ordaz, 100 new homes with a slew of new amenities is a bright prospect. Ordaz says many homeowners in Eagle Ridge thought they would have more community amenities than the lone park on the property.
“It sounds like a great opportunity for Eagle Ridge residents to say ‘Come on Shapell, if you want something it’s time to step up to the plate and give the amenities some of us thought would be here,’ ” Ordaz said.
According to Mineta, Shapell plans to approach the Eagle Ridge homeowners association with more details on the development in March. By late spring, Mineta said Shapell would be ready to make an offer to Bonfante Gardens to buy the land.
