GILROY
– As highway and infrastructure projects for Gilroy’s
controversial
”
power
”
shopping centers continue to take shape, a leading city official
said Thursday that at least one of the anticipated tenants will not
be coming to town.
GILROY – As highway and infrastructure projects for Gilroy’s controversial “power” shopping centers continue to take shape, a leading city official said Thursday that at least one of the anticipated tenants will not be coming to town.
Last August, Newman Development Group, developer of the nearly one-million-square-foot Pacheco Pass retail center, submitted to City Council a letter of intent from Maya Cinemas. The letter outlined plans to bring a 14-screen movie theater to the new Pacheco Pass Center northeast of state Highway 152 and U.S. 101.
On Thursday, Bill Lindsteadt, executive director of the Gilroy Economic Development Corporation, said the Maya Cinemas will not be open its doors in Gilroy.
“It doesn’t look like it will be coming,” said Lindsteadt, who has been the driving force in attracting the Newman Development Group and Regency Corporation, developer of the 450,000-square-foot Gilroy Crossings Center located just south of the Pacheco Pass Center, to Gilroy. “Somewhere along the line it didn’t work out, but you’ll have to talk to (Newman developer George Akel) about the specifics.”
Akel did not immediately return phone calls for this story.
Although disappointed a deal could not be reached to bring a state-of-the-art movie theater to Gilroy, Lindsteadt is full of optimism regarding recent retailer commitments to occupy the developing centers and new highway construction that started Monday.
Recent lease commitments from Mimi’s Cafe, Fuddruckers restaurant, Krispy Kreme donut bakery and sporting goods retailer Sports Mart have solidified high occupancy rates for the neighboring centers on the east side of U.S. 101, Lindsteadt said.
Monday also marked the groundbreaking of a major construction project believed to be crucial to improving the U.S. 101/Highway 152 interchange.
The Valley Transportation Agency project will widen the southbound U.S. 101 offramp to the Pacheco Pass Highway – which runs east from 10th Street – and construct a loop onramp for westbound 152 to southbound U.S. 101.
The upgrades will cost approximately $1.6 million and are scheduled to be complete by early 2004. The interchange improvements are planned to be followed by an additional $15 million in safety improvements for Highway 152 toward Gilroy Foods, but due to declining county tax revenue those improvements are currently on a county “hold” list.
The City of Gilroy will pay for one-third of the cost for all construction, with the remainder funded from the 1996 Measure B half-cent sales tax program, according to VTA spokeswoman Lupe Solis.
“The interchange is already signed and paid for,” Solis said. “But no one can say when the other plans will go forward.”
The full development of local surface streets Renz Lane and Camino Arroyo will be paid for by the two new centers’ developers, Lindsteadt said.
Both Regency and Newman were given large and controversial economic incentives from the city to bring retail – and sales tax dollars – to Gilroy.
Under the incentive program, certain retailers, developers and industries can receive credits for the development impact fees the city usually collects from newcomers to pay for infrastructure such as roads, sewer and water. Instead of paying the fees up front, the fees are repaid through sales tax generated from new developments’ first few years of operations.
Regency and Newman companies have received a combined $10.5 million in waived fee incentives from the city, while Lowe’s Home Improvement Warehouse and Costco combined to receive more than $2 million in incentives. Lindsteadt has said the $12.5 million will be paid back to the city in four years, allowing the city to pocket all sale’s tax revenue produced from the retailers thereafter.
Combined, the new retail in east Gilroy is expected increase the city’s sale’s tax revenue by one-third. The centers are projected to generate $400 million in annual taxable sales and create 2,000 news jobs.
One percent of the taxable sales – $4 million – would go to Gilroy’s general fund, the city’s general pot that pays for fire and police, among other services. Last year the city’s retailers combined to produced $11 million toward the general fund in sales tax revenue.
The “regional” centers are expected to draw customers from a 20-mile radius of Gilroy.
“This compares to (the Great Mall) in Milpitas,” Lindsteadt said. “We’re going to draw people to Gilroy from San Jose, Hollister, Salinas, Los Banos …”
Costco and Lowe’s were the first stores to open in the area this spring, and Target is expected to open its doors by October. Nearly 20 other national retailers will open at the shopping centers within the next two years. Some of the stores included will be Kohl’s, Barnes and Noble, Ross and possibly a Super Wal-Mart.
Future on “hold” improvements planned for Highway 152 include the widening Llagas Creek Bridgefrom two lanes to four; adding a traffic signal at the northbound U.S. 101 offramp; aligning the Westside Transport Inc. entrance with the Gilroy Foods east entrance and installing a light at the new intersection; and improving the intersection at Ferguson Road, according to VTA plans.
