City of Milpitas is connected to a complex commercial real estate transaction that officials here hope will one day pay off with further economic development along the city”s western edge.
Milpitas City Council voted unanimously on consent March 17 to approve an assignment and assumption agreement between the city, BRE/Milpitas LLC and Hudson Campus Center LLC relating to 65 acres along the 200 block of North McCarthy Boulevard, near Ranch Drive.
Emma Karlen, Milpitas” assistant city manager, said after the meeting that Los Angeles-based Hudson Campus is in the process of purchasing a real estate portfolio from BRE/Milpitas consisting of approximately 6 million square feet of commercial-industrial-retail space.
The 65-acre parcel in question was originally a McCarthy family property.
In early 2000, the city entered into a development agreement with Muriel M. Harris and Joseph A. McCarthy, each as trustee of the MGM Revocable Trust, dated December 1982, as amended, and of the RIM Revocable Trust, dated February of the same year, city reports state.
The McCarthy development agreement involved approximately 139 acres owned by the farming turned land development family on North McCarthy Boulevard between Ranch Drive at McCarthy Ranch, behind the existing Best Buy and Walmart stores, city reports state.
The development agreement vested certain permitted uses, maximum height and size of buildings, location of public improvements, taxes, fees and exactions, and guidelines, rules, and ordinances in effect at that time.
Additionally, under the agreement, McCarthy may sell McCarthy Ranch or any portions thereof and assign the rights and obligations under the development agreement to a successor-in-interest with written consent of the city. The city approved three prior assignments.
Shortly after executing the development agreement in 2000, McCarthy sold 65 acres of McCarthy Ranch to Mountain View-based Veritas Operating Corp. and with the city”s consent, assigned its rights and obligations relating to the Veritas parcel under the development agreement to the company.
Veritas in conjunction with its lender constructed the first phase of the development consisting of three office buildings of approximately 469,464 square feet in size, which is occupied by Cisco Systems Inc. at the south end of North McCarthy Boulevard and Ranch Drive, reports state.
The remaining part of the Veritas parcel is vacant.
In 2006, Veritas sold its 65-acre parcel to BRE/Milpitas LLC, also known as Blackstone, and with the city”s consent, Veritas assigned its rights and obligations relating to the Veritas parcel to Blackstone.
Blackstone is currently in escrow to sell the 65-acre Veritas Parcel to Hudson Campus Center LLC.
The council”s vote means Blackstone has gained the city”s written consent to assign the rights and obligations under the development agreement to Hudson — a company city staff describe as a full service, real estate investment-company founded in 2006.
The company, which had an initial public offering in 2009, currently owns 27 commercial/retail/office properties on the West Coast totaling more than 6.4 million square feet.
City staffers say they reviewed Hudson”s background and believe it is a growing and reputable company, which they believe will further develop the Veritas parcel pursuant to the development agreement.
The term of the Veritas development agreement relating to the 65-acre Veritas parcel expires in 2025.
The agreement vested certain rights for the development of up to 1.4 million square feet of industrial space of which approximately 469,464 square feet have been constructed to date.
Hudson informed staff the company has no plans in the near future to develop the vacant Veritas parcel. However, Hudson is conducting market studies to determine viability of future development.
“The hope is that as the market continues improve, Hudson will develop the remaining 1 million square feet of industrial space as entitled under the existing development agreement,” Karlen said. “This would provide a significant economic benefit to the city in terms of property taxes, sales and use taxes, and indirectly hotel taxes and other revenues to the city.”
Karlen, who stated Hudson owns no other commercial properties in this city, further clarified the 65-acre parcel is not the same piece of land located west of McCarthy Ranch Shopping Center where proponents of the unsuccessful Measure E campaign in Milpitas” November election hoped to see San Jose”s Bay 101 Casino relocate. The council did not discuss this item prior to its March 17 vote.
