The Sunnyvale Sun
News
New developer approved for Sunnyvale downtown
By Michael Cronk
In an effort to revive the long-delayed, multi-million dollar redevelopment of downtown Sunnyvale, the city council has unanimously approved transfer of the project to a new developer.
The council, acting as the Sunnyvale Redevelopment Agency, granted permission at its Dec. 12 meeting for Fourth Quarter Properties to continue negotiations to transfer the 34-acre property and development agreements to San Mateo-based Sand Hill Properties and its financial backer, RREEF, a worldwide financial organization.
Council members and city staff agreed that the transfer represented the city's best shot at getting the $400 million renovation of the downtown quickly back on track.
"I think we have a very strong developer here," said council member Melinda Hamilton. "It's a positive step in the right direction.''
The redevelopment plan is a mixed-use project designed to convert the old Sunnyvale Town Center mall into a traditional downtown with more than 1 million square feet of retail space, a quarter million square feet of commercial office space, and almost 300 housing units.
Fourth Quarter Properties began the project in 2005 by demolishing a parking structure adjacent to Mathilda Avenue. However, it missed numerous deadlines and earlier this year the city determined the company was in breach of the development agreement. Fourth Quarter Properties later requested and received permission from the redevelopment agency to negotiate the transfer of the project to another developer.
A "due diligence" review was initiated by the city to determine whether RREEF and Sand Hill Properties, a San Mateo-based company headed by developer Peter Pau, had the experience, construction expertise and financing to complete the large and complex downtown project successfully. Staff determined they did and recommended approval.
"They can move more quickly than any other developer," said Robert Paternoster, Sunnyvale's director of community development. "They bring $150 to $200 million in equity to the table. And they bring a highly-qualified design and construction team."
Pau said he and his development and finance team were committed to getting the project completed.
"I feel confident we have the ability to perform," said Pau. "We can make things happen and make them happen quickly.''
At the meeting, several residents urged city leaders to insist the developer build the project to meet Leadership in Energy and Environmental Design (LEED) standards.
Sand Hill earlier this year purchased Sunnyvale Town and Country, an aging retail complex next to the Sunnyvale Town Center. Pau is planning a $300 million renovation of that center, including 400 homes and 50,000-square-feet of shops and restaurants.
Pau said the two projects in the downtown area are compatible. "They will have a slightly different tenant mix and each will appeal to a different type of market."
Once construction begins, the Sunnyvale Town Center project is expected to take 18 to 24 months to complete. The construction will include demolishing the old mall building while retaining the existing Macy's and Target stores.
"It's going to be a good project for the city," said council member John Howe. "I think we have our best shot at getting this developed with this developer."
