Willow Glen Resident

News

San Jose OKs $500,000 in city hall upgrades to lure tenants

By Monica Heger

San Jose wants to lure coffee shops and restaurants to city hall to fill the empty retail space along Fourth Street.

To accomplish this, the city council has decided spending $500,000 to improve the vacant space may be the answer.

Council members voted 6-3 on Nov. 14 to allocate the funds and set the wheels in motion.

"The longer it's vacant space, the less desirable it may become," San Jose City Manager Les White said.

But council members Chuck Reed, Ken Yeager and Linda LeZotte voted against the appropriation. They said the timing of the request was inappropriate and the expenditure should be part of the budget cycle.

White said the issue was being presented to the council members at this time so the space could be filled as quickly as possible.

The $500,000 is in addition to the $300,000 the council approved in June 2006 to make improvements to the space.

John Weiss, deputy executive director of the San Jose Redevelopment Agency, said one of the main reasons the city has failed to acquire retail businesses in the space is due to the state of the building.

He said the space was simply a "cold shell," in need of significant improvements before it would be usable. The $800,000 would be applied toward improvements that include upgrades to the electrical utility lines, providing exhaust ducting in the existing exhaust shaft and purchasing and installing air conditioning units. Other improvements such as bringing the floor up to street level, installing walls for multiple tenants and connecting the gas, water and sewer utilities to the space are not included in the current cost and will have to be done by the tenants. These additional improvements are estimated to cost $1 million.

Weiss said the improvements would not only increase the number of businesses interested in the space, but would enable the city to raise the rent.

"It's a sound investment," Weiss said, "because it will go into a structure, and that structure will remain there."

In June 2005, the city council approved Donald F. Imwalle, Imwalle-City Hall LLC as the master tenant of the space, in charge of negotiating lease agreements with restaurants and other interested parties for the space. Starbucks and Flames Coffee Shop both expressed interest in occupying the space, but the council would not approve a lease agreement without a labor peace provision, and neither Starbucks nor Flames would agree to that stipulation.

In July, Imwalle-City Hall said it was no longer interested in pursuing lease agreements for the space. The redevelopment agency has since taken over the negotiation of lease agreements.