Tuesday, May 10, 2005

As the song goes, "Paranoia runs deep...."

But it may be accurate. Yesterday's Coyote Valley Task Force meeting did nothing to reduce the worries we expressed earlier about eliminating San Jose's triggers that forestall development. The meeting did raise a new worry though.

Developer Steve Speno very briefly mentioned the possibility of some type of creative financing tying residential and commercial development together. That set off alarm bells in my mind, because residential development is where the profit lies in the near term market, but commercial development is the trigger/barrier to residential development.

Some of the San Jose insiders I've talked to have downplayed the threat Coyote Valley plays to development in downtown and North First Street because commercial development in Coyote would be more expensive than in the already-developed areas. Now there's a way to creatively finance a solution to this problem.

It would work like this: developers either singly or jointly use residential development to subsidize commercial development in Coyote Valley that is stolen away from central San Jose. They sell commercial land at a significant discount, making little money or even losing money, but they don't care because that sale ultimately results in residential development rights.

In this scenario, I think even the skeptics could see how Coyote Valley would steal business away from central San Jose. Maybe it's good to be paranoid.


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