Bullet train or housing? San Jose project begs question

San Jose has approved its second large multifamily development in as many weeks. Yet unlike the last approved project, this one may not be built if the California High-Speed Rail Authority has its way.

Robert Manford, the city’s deputy planning director, this week unilaterally approved Urban Catalyst’s 471-unit apartment project spanning just over an acre at 32 and 60 Stockton Avenue. The San Jose-based developer’s plans call for demolishing the site’s 16,000 square feet of commercial structures, occupied by an auto body shop and a car wash, to construct a 20-story building with apartments ranging from studios to three bedrooms. The project, called Apollo, includes 7,600 square feet of ground-floor retail and about 350 underground parking spaces.

Urban Catalyst hasn’t decided whether it will build Apollo — which would cost north of $100 million — or list the project for sale, founder Erik Hayden said in an interview. The developer doesn’t have a dedicated funding source for it, and it doesn’t plan to start drafting its construction documents anytime soon, according to Hayden. Apollo isn’t being financed by Urban Catalyst’s two Qualified Opportunity Zone Funds, which compose its seven other downtown developments, because it sits outside those Census-designated tracts.

The California High-Speed Rail Authority designated the Apollo site among the right-of-way parcels it needs for the first phase of the state’s “bullet train” project. The phase would link Silicon Valley with the Central Valley, running through Santa Clara, San Jose’s Diridon Station — a five-minute walk from the Apollo site — Gilroy, Merced and Fresno.

Urban Catalyst knew about the rail authority’s plans for 32 and 60 Stockton Avenue before it partnered with the late architect Thang Do, Apollo’s chief designer, to acquire both parcels, Hayden said. Grace Liu, the widow of Do, who died in May, remains a partner in Apollo’s development, Hayden noted. The authority seeks to put a 61-space parking lot for Amtrak and Capitol Corridor rail service riders on the site, which Hayden said seemed under-utilized to potentially benefit the city.

“We thought that housing would have a much greater benefit, and the planning director agreed with us,” Hayden said. “If you’re going to do density in San Jose, this is the spot. You’re next to Diridon Station. You’re across the street from Whole Foods. This is where density belongs.”

A rail authority spokesperson wrote in an email that Apollo conflicts with the agency’s planned use of the site. It’s specifically at odds with the authority’s footprint around Diridon Station and a multi-agency plan that includes it, the city, the Santa Clara Valley Transportation Authority and Caltrain to expand and redesign Diridon Station, San Jose’s main transit hub, the spokesperson said.

The authority notified the city of those impacts and asked that additional study be done to better understand Apollo’s effect on planned transit infrastructure, the spokesperson said. He didn’t disclose the city’s response to that request in his email statement.

A rendering of Apollo’s plaza area (Urban Catalyst)

If Urban Catalyst chooses to build Apollo, the specter of eminent domain shouldn’t impact the project’s construction timeline, according to Hayden. And even if it did, the way eminent domain usually works is a landowner gets an appraisal for the value of the property in question, and the government agency taking eminent domain action pays 120 percent of the appraisal, Hayden said.

“No matter what we do, we would always assume that if they did ‘buy us out,’ it would be for fair value,” he said. “That wouldn’t necessarily be our number-one plan. But as far as a worst-case scenario, it’s not so bad.”

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