Swenson and transit agency battle over value of San Jose site

Swenson and the Santa Clara Valley Transportation Authority will duke it out in court over the price of a former bank building in Downtown San Jose.

After months of failed mediation, the locally based development firm and the transit agency will go to court over the value of the closed Chase bank branch, which the VTA wants to bulldoze for a future BART station at 41-55 West Santa Clara Street, the San Jose Mercury News reported.

The VTA sued Swenson in 2021 to seize the bank building through eminent domain. Different reports by the newspaper pegged its size at either 16,500 square feet or 22,400 square feet. 

After both parties failed to strike a deal during mediation, they’re back in court, with the final decision to be made by a Santa Clara County jury. A trial date was not disclosed.

An affiliate of Swenson, which owns the building, claims it’s worth $17.4 million, or $1,054 per square foot, according to the Mercury News.

A VTA appraiser believes the property is valued at around $8.9 million or $539 per square foot, with earlier court papers putting its value at $9.5 million, or $576 per square foot.

“The parties have gone through mediation without success,” according to papers filed in Santa Clara County Superior Court by attorneys representing the Swenson affiliate.

The site is near the entrance for the proposed Downtown San Jose BART station planned for East Santa Clara Street. The project has suffered delays and cost overruns that have ratcheted up the cost for the BART extension into Downtown San Jose.

VTA officials say BART service into the Diridon train station on the west side of Downtown would encourage public transit and boost the Bay Area economy. “Completion of the project will finally ‘ring the Bay’ with frequent rail service,” the VTA said in a web post.

As for the bank building on West Santa Clara between North First and North Market streets, the failure of mediation means the next step is adjudication by a jury of 12.

“The role of the jury, in this case, is to determine the fair market value of the property, as if this was a sale on the open market where neither party is compelled to buy or sell, and each party has full knowledge of all the uses to which the land can be put,” the court filing states.

The VTA has engaged in a property-seizing blitz in Downtown San Jose since 2021, when it filed an eminent domain lawsuit to seize a two-story commercial building at 29-31 East Santa Clara Street.

A year later, the transit agency sued to acquire a torched adult sex store eyed for a 200-unit housing development at 17-25 East Santa Clara Street. 

They were among a swath of properties to be taken by eminent domain to build a heavy rail line into the largest Bay Area city.

In May 2022, the VTA awarded a $235-million contract to build the $9.1 billion San Jose BART extension, while also launching a new analysis of its controversial “single bore” tunnel plan.

Swenson, a family-owned firm whose roots date back more than a century in San Jose, has built four generations of apartments, condominiums, industrial parks, hotels and shopping centers across the South Bay, according to its website.

— Dana Bartholomew

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