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Palladium and San Jose Redevelopment
Terminate Downtown Negotiations
San Jose, CA ---- The Palladium Company and the San Jose Redevelopment Agency
announced today that they have called off negotiations to redevelop a
five-block area in downtown San Jose.
"Palladium and San Jose together have concluded after careful and
detailed review that the market at this time does not support the large,
mixed-use project we originally envisioned," said Ken Wong, Palladium's
Western Region Partner.
"While we still believe that the vision we advanced would be an
effective way to revitalize San Jose's downtown area, it is unrealistic
until a much stronger market returns. In light of this conclusion, we
agree the appropriate action is to end our negotiations."
Mayor Ron Gonzales said, "Although we are disappointed that the
current economy means we will not move forward with a full-scale project
at this time, we are fortunate to have a great number of other projects
under way that will enhance the downtown and strengthen business."
According to San Jose Redevelopment Director Susan Shick, the negotiation
process clarified both redevelopment challenges and opportunities that
show that downtown San Jose is a strong and attractive market for the
long-term.
"We will continue to pursue the recommendations of the Urban Land
Institute in June 2000 to create a historic mixed-use district. The work
we have done in the last year has positioned downtown San Jose to keep
moving forward with retail revitalization," she said.
Shick noted that the Agency's environmental studies and financial analyses
prepared for the Palladium negotiations will continue to provide practical
guidance for both public and private investment.
"Palladium believes in the long-term fundamentals of downtown San
Jose," Wong said. "I certainly would not rule out future investments
in the downtown area at a later time by Palladium or its affiliate, the
Related Companies."
Wong commended the strong commitment of the San Jose Redevelopment Agency
to work with Palladium toward the revitalization of the downtown area.
"Unfortunately, the efforts by the Agency and our Palladium team
together cannot change economic conditions now affecting the retail development
industry both locally and nationwide," he said.
The Redevelopment Agency issued a request for qualifications in response
to the recommendations of a survey team from the Urban Land Institute.
ULI recommended that the city seek to create new retail, office and residential
space in a catalyst redevelopment project.
San Jose selected the Palladium Company from among more than a dozen
firms that submitted proposals. The Palladium proposal anticipated 500,000
square feet of retail space, a 350-room hotel, 350,000 square feet of
office space and more than 1,000 downtown homes.
Five major anchor sites comprised the project: Mitchell Block bounded
by St. John, West Santa Clara, North First and North Market; Fountain
Alley along First Street; Zanotto's parking lot; a parcel at First and
San Fernando; and Block 3 at South Second and West San Fernando.
Since responding to the Redevelopment Agency RFQ in the fall of 2000,
Palladium has invested more than $3.5 million in the project, including
fees of $375,000 to the Agency. It has been engaged in exclusive negotiations
with the Redevelopment Agency for the past year. The Palladium proposal
would have required approximately $1 billion in private investment.
About Palladium: The Palladium Company is a leading national developer
of mixed-use projects in urban centers, and it remains involved in several
other major developments in various parts of the country. The company's
"Victory" project in Dallas is in an advanced financing stage.
Additional residential development is proceeding at recently opened CityPlace
in West Palm Beach, Florida. The Palladium at AOL Time Warner Center in
New York City is under construction with completion expected in the fall
of 2003 and with major tenants already in place.
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