San Jose real estate war at BART site may need jury as mediation fails

By George Avalos | Bay Area News Group (TNS)

SAN JOSE, CALIF. — A battle over a property in a prime downtown San Jose spot needed for a future BART station appears headed to a jury after a mediation attempt failed, court papers show.

The court fight pits a legendary real estate firm that owns the property in downtown San Jose against a powerful regional transportation agency that needs the site for a train station.

The property involved in the Santa Clara County Superior Court battle has addresses of 41-55 West Santa Clara Street, a site located between North First Street and North Market Street.

An affiliate of Swenson, one of the Bay Area’s veteran and savvy real estate and development firms, owns the property and is locked in a court fight with the Santa Clara Valley Transportation Authority over the site’s value.

The property was the long-time site of a now-closed Chase Bank branch. The building totals 22,400 square feet.

At the heart of the dispute is a wide gap between what the VTA hopes to pay for the property and what Swenson believes the site is worth.

A VTA appraiser believes the property is valued at $600 a square foot, or slightly over $8.9 million.

A Swenson appraiser believes the property is worth $1,050 a square foot, or $17.4 million.

The huge difference in estimates sent the case to a mediator. This legal gambit didn’t work.

“The parties have gone through mediation without success,” according to papers filed in Santa Clara County Superior Court by Norman Matteoni and Gerald Houlihan, attorneys with law firm Matteoni, O’Laughlin & Hechtman, which is representing the Swenson firm’s affiliate.

In 2021, the VTA filed a lawsuit that sketched out the transit agency’s intention to grab the site through an eminent domain process.

The site is near an entrance for the proposed Downtown San Jose BART station that is planned for East Santa Clara Street.

The BART project, however, has been haunted by a series of delays and cost overruns that have steadily ratcheted up the estimated price for the BART extension into downtown San Jose.

VTA officials say BART service into downtown San Jose that also reaches the Diridon train station on the western edges of the city’s urban core would spur transit efforts and fuel economic activity in the South Bay and the Bay Area generally.

“Completion of the project will finally ‘ring the Bay’ with frequent rail service,” the VTA said in a web post.

As for the 41 West Santa Clara site, the failure of mediation means the next major step is to send the case to a Santa Clara County jury.

“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.

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