DOWNTOWN S.J. CONDO TOWERS TO LOSE A FLOOR
By Katherine Conrad
Mercury News
Article Launched: 07/27/2007 01:37:07 AM PDT
A logjam that threatened a multimillion-dollar development in downtown San Jose has been cleared with the developer and the city agreeing to a "financial haircut."
Developer Mike Kriozere, principal at Urban West Associates, agreed to lop a floor off each of his two 25-story residential towers as long as the city lowers its price on the land, currently a parking lot on Market Street near the Fairmont Hotel.
Losing a floor on each tower reduces the total number of condominiums from 414 to 400 and the price on the 1.5 acres, known as Block 8, to $27.2 million from $28.6 million, the price agreed to by the city in June 2006.
"Instead of waiting around for God knows how long it will be . . . you break the logjam," Kriozere said. "That's what reasonable people do."
It was not a resolution that made either side happy. But Harry Mavrogenes, head of the city's Redevelopment Agency, said neither side wanted to risk a delay.
"We can lose (14) units now, or wait another year for the studies to be complete and lose the market," he said.
Kriozere's project, City Front Square, has been on hold because of an unresolved conflict that flared up in December between the city, downtown boosters and Mineta San Jose International Airport over the height of downtown buildings. At issue is how to reconcile flight paths over the downtown and the city's proposed high-rises.
Airport officials argue that tall buildings pose a risk to airplanes
when they are forced to change flight paths because of wind conditions. Developers, meanwhile, assert that many projects aren't profitable unless they reach a certain height.
A consultant hired by the San Jose Silicon Valley Chamber of Commerce, the San Jose Downtown Association and the airport is currently studying the conflict. A report is expected at the end of August.
With a decision by the city months and maybe a year away, Kriozere said he worked with Mayor Chuck Reed to figure out how to get the project back on track. The developer noted that he could have lowered the nine-foot ceilings in the units rather than eliminate a floor, but he didn't want to "cheapen" the luxury project that will offer concierge services, spas and 24-hour door staff.
"We want to go ahead a build the building, and the mayor wants it built," Kriozere said. "I make a sacrifice; the Redevelopment Agency makes a sacrifice. It's fair. A delay hurts everybody."
Kriozere said final touches on the drawings will be done soon and he hopes to start construction on the $250 million project sometime after the new year. The first tower should be complete by 2010.
Kriozere also is building One Rincon Hill in San Francisco, a high-rise condominium project at the foot of the Bay Bridge. The units, which sell for about $1,000 a square foot, are almost entirely sold out. New residents can begin moving in later this fall, he said.
He is convinced that luxury condos will be a hit in San Jose, as well, though the price of the units has not yet been decided.
Contact Katherine Conrad at
kconrad@mercurynews.com or (408) 920-5073.
http://www.mercurynews.com/businessheadlines/ci_6476969