Deals are believed one of the largest in city’s history
MORGAN HILL
The city’s Redevelopment Agency approved spending $10.6 million to buy the Granada Theater, the Downtown Mall and several other properties and parking lots from private owners.
The purchases are part of the city’s ongoing strategy to redevelop downtown Morgan Hill, with the Granada seen as a centerpiece in that process, expected to occur over a five-year period that began in July, according to City Manager Ed Tewes.
Wednesday’s transaction was one of the biggest real estate deals the city has participated in its history, several RDA board members said.
The RDA, comprised of the five city council members, agreed to pay Sherman House Associates $8.6 million for the Granada Theater. SHA, a company owned by Manou Mobedshahi, also owned the Downtown Mall and parking lot. Through separate agreements, the city will also buy two adjacent properties and a pocket park on Monterey Road for $1.35 million and $650,000, respectively, from the John F. Hencken Living Trust. Escrow is expected to close in late February on all properties. The city council has been negotiating to buy the real estate for the past several months as one of its strategies to spur redevelopment in Morgan Hill’s downtown. The RDA is due to receive more than $100 million through tax-allocated funds in February, which will bring its coffers to nearly $195 million, reported Garrett Toy, the director of the Morgan Hill Business and Housing Assistance Department.
The Granada Theater opened at its present location in 1952 after a fire gutted its original location between Second and Third streets. Mobedshahi purchased the building, which includes the Morgan Hill Tobacco Company, from Ed and Irene Enderson more than a year ago for $2 million as a long-term investment.
The theater has been closed since 2003 and Mobedshahi hasn’t been able to attract a tenant, whether as a theater or for another use.
The council set out in earnest in July to begin taking steps toward “downtown revitalization,” its term for the five-year plan redevelopment efforts. Their next step is to attract a master developer to redevelop the downtown, an area which stretches along Monterey Road from Main Street in the north to Dunne Avenue in the south.
The council glowed about the agreements at Wednesday’s regularly scheduled meeting, ultimately voting 5-0 to authorize the purchases.
“This is at the top of the list as far as the most significant items I voted for,” Councilman Greg Sellers said before the vote. “If we piecemealed it, we couldn’t put it together effectively.”
Councilman Larry Carr called the properties “the heart and soul of our community” and added, “this is an opportunity that I don’t think we’ll see again.” Carr encouraged the private sector to step up and help the council in its goals.
Councilwoman Marby Lee acknowledged “there are some risks” associated with real estate purchases, but added that ultimately, “I think it’s going to be worth it.”
Before the roll call vote, Mayor Steve Tate chimed in to say the city was taking redevelopment efforts “to the next level” with the purchases.
After the meeting concluded, Theresa Kiernan, the president of the Morgan Hill Downtown Association, said the council did the right thing, calling the purchases a “shot in the arm that we need to get things moving in the right direction.”
Rocke Garcia, a developer who is planning to build a mixed-use development called SunSuite on the south side of Third Street between Monterey and Depot streets, was pleased as well.
“Downtown has supported the city for 100 years – and now it’s time for the city to support downtown,” he said.
