VTA scuttles seizure of San Jose tower site — delay may hurt project

VTA scuttles seizure of San Jose tower site — delay may hurt project

SAN JOSE — A transit agency has scuttled plans to seize a prime site near a future BART station in downtown San Jose where a housing highrise is being eyed — but the delays and uncertainty may torpedo the tower proposal.

The Santa Clara Valley Transportation Authority filed a lawsuit in 2022 against the owner of a downtown San Jose site with addresses of 17 through 31 East Santa Clara Street, seeking to take ownership of the property through eminent domain.

In November 2023, however, the VTA, the plaintiff in the lawsuit, filed papers stating it had dumped its plans to wrest ownership of the property away from the current property owner, a group operating as Downtown San Jose Towers, which is headed up by Bay Area real estate executive Loida Kirkley.

“Plaintiff Santa Clara Valley Transportation Authority hereby abandons the above-entitled proceeding for the acquisition of the property…located at 17 East Santa Clara Street,” the VTA stated in the filing posted by its attorneys from BDG Law Group.

Kirkely’s group is seeking to develop a housing highrise called Eterna Tower, a 26-story structure that would produce 200 residences if it is built.

The VTA stated that had come to realize that it did not need the property to build a component of the train station whose proposed main entrance would be built near the parcel’s site, according to the papers filed in Santa Clara County Superior Court.

The train stop that would be nearby would be the Downtown San Jose BART station, one of four potential BART stations located within San Jose.

“The design innovations for the project indicate that construction of a secondary headhouse of the project’s Downtown San Jose Station would not be required, thus removing the need to acquire the property,” the VTA stated in the court papers.

Yet while the prospect of seizure by the VTA has faded, fresh problems face the property as a result of the VTA’s legal threats, in the view of John Domingue, Kirkley’s attorney.

“This development process started a long time ago,” Domingue said in an interview with this news organization. “Loida (Kirkley) was in full-steam-ahead mode to try to develop this. What happened, which shouldn’t have happened, was that things came to a full stop with the city development permit process.”

On multiple occasions, when Kirkley attempted to make progress in the development process with San Jose city planners, the municipal staffers pushed back and advised Kirkley that the VTA was controlling the situation. As a result, Domingue stated, the city impeded the development efforts.

“The VTA disrupted the development process,” Domingue said. “Things ground to a halt because of the VTA.”

The Kirkley-led group might seek compensation from the VTA due to the interference with the development process, which has been shoved into limbo.

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“We are going to be saying to the VTA that we have all of these damages because of how they handled this,” Domingue said.

This news organization requested a comment from the VTA regarding the situation.

“The VTA is being clumsy about this,” Domingue said. “And because of that, the city is probably going to lose what would have been a great project.”

Why might the proposed tower be jeopardized? The landscape for new construction — even new housing towers — is greatly changed from how the terrain appeared even a year ago, in the view of both Kirkley and Domingue.

Interest rates have skyrocketed as the Federal Reserve attempts to choke off economic activity as a way to corral runaway inflation. The rising interest rates, however, have caused the costs of borrowing money to balloon, including for construction, nationwide. Plus, labor and materials costs also have hopped higher.

“The capital markets are still problematic,” Kirkley said.