Glen Loma Group asks GUSD to pay $14.4 million for land they
purchased for $3 million
By Kelly Savio and Serdar Tumgoren Staff Writers
Gilroy – Developers behind the biggest housing project in Gilroy history are asking the school district to buy back land for an elementary school in their development for $14.4 million – five times the price the developers paid for the land a few years ago.
In February 2002, the Gilroy Unified School District sold 10 acres at the end of W. Luchessa Avenue for about $3 million to Glen Loma Group, a development company planning to build 1,700 homes on 360 acres in southwest Gilroy.
Just three years later, GUSD decided that it made more sense to build an elementary school in southwest Gilroy. The price of redeveloping a school in north Gilroy was prohibitive, explained GUSD Assistant Superintendent Steve Brinkman, and the southwest clearly was going to need a new elementary school to serve the new homes rising in the next decade.
The 100-plus members of the Filice family who are equity partners in Glen Loma considered a district request to donate the land, but the idea fizzled because the partners couldn’t agree on the matter, according to Brinkman.
Following a series of lower appraisals, the school district last month offered $4 million for the land, where a new elementary school has already started to rise.
The Filice family countered with a demand for five times that amount.
“Glen Loma appraised the land at its highest and best use,” Brinkman explained. “They’re appraising it as urban development, as if they’re going to put houses on it immediately.”
The school district based its appraisal on the land uses allowed in August 2005, when a court allowed them to take legal possession of the property. At that time, the land was zoned for use as a public facility, Brinkman said, as outlined in preliminary drafts of plans for the 360-acre development slated for southwest Gilroy. Planning for Glen Loma began in the late ’90s and went through a number of revisions before final approval in Nov. 2005.
“In every version there was an elementary school and a middle school,” Brinkman said. “It always said where. The only time it left it in doubt was in the final version where there were four sites for an elementary school.”
The district will meet with developers Wednesday at a settlement hearing in a last-ditch effort to agree on a purchase price. If no agreement is made, the game of tug-of-war will end up in a San Jose courtroom where a jury will decide the final price.
Tim Filice, the project representative for Glen Loma, declined to comment since the matter is in litigation.
Denise Apuzzo, a newly elected member of the GUSD board of directors, said she didn’t know all the details of the matter, but said it sounded like “a huge assumption on the part of Glen Loma to think that they definitely would be developing homes on that land.”
As a Realtor, Apuzzo is familiar with fluctuating land values, but she said the Glen Loma developers could have done a better job of working with the school district.
“Glen Loma is doing a huge project in the city and I think they need to have some buy-in from the community and some good-will from the people of Gilroy Unified who will live in that development,” she said. “For me, a good partner in the community would want to work with the school district and be as accommodating as they could.”
The school district plans to offer an olive branch by slightly raising its offer for the land, though that figure will not be disclosed until the settlement conference. A new offer is not required and it remains to be seen if the Filice family will budge on their price.
The outcome of the legal process could determine how much money remains for the new Christopher High School in northwest Gilroy. The more the school district has to pay for the elementary school, the less money it will have for the high school, estimated to cost $110 million. At the moment, the school district is $12 million shy the money it needs for the project.
“Either you find more money or you do something to scale back,” Brinkman said.
Even if GUSD wins in court, it will lose money on the elementary school because of Glen Loma’s repeated delays in construction. Typically, developers pay “impact fees” on a per-square-foot basis as they pull construction permits. Under the current fee structure, Brinkman predicted the Glen Loma project would have provided roughly $10 million in impact fees – half the cost of the elementary school, excluding land costs.
“It’s very likely we won’t get any impact fees until after the school is finished because (the Filices) haven’t broken ground yet,” Brinkman said. “We were anticipating them breaking ground in the summer of 2006, so we started building the school to be prepared. At the rate we’re going, the school will be finished before any houses are completed.”
The new school, slated to open in fall 2007, sits on 8.93 acres at the end W. Luchessa. Two buildings have already been built and a third is being framed. The school district plans to apply for $30 million from Proposition 1D, a ballot measure passed Tuesday by voters. Brinkman said at least part of any money received will likely go toward the new school.
The Glen Loma project will transform 354 acres between Santa Teresa Boulevard and Uvas Creek into a miniature city, complete with 1,693 homes, a new fire station, a park, walking trails and a new elementary school.
