Developer: We need more time for funding
MILPITAS >> The developer planning to build two 23-story residential/commercial towers is seeking a two-year extension from the city while it continues to seek adequate financing.
The city’s Planning Commission unanimously endorsed the extension request by Southern California-based developer BDK Capital earlier this month and the City Council agreed last week to consider approving it on June 5.
The so-called Milpitas Landmark Towers would become the city’s tallest structures, surpassing the 129foot, 12-story Crowne Plaza San Jose-Silicon Valley hotel by more than 100 feet.
The developer said in a letter to the city “the original planned funding methods” for the Towers, including money from Chinese investors, “are becoming increasingly challenging” to secure.
Project manager Robert Ritner told the Planning Commission that BDK has begun to seek funding from investment banks.
Commissioner Rajeev Madnawat asked Ritner if the company will be able to get enough funding.
“If we approve this thing and you’re not able to execute, then it will delay the development in the city,” Madnawat said. “If we don’t approve it, you will be forced to give it to someone who has the financing capacity.”
Ritner said he is confident the project will happen. “Since we had to change gears, we had to start all over and that takes time,” he added.
The Towers, planned for a roughly three-acre parcel at 600 Barber Lane west of Interstate 880, was approved by the council as an 18-story residential and commercial building in 2008.
The plans and land were purchased in 2014 from the original developer, TP Pham of San Francisco, by Arcadia-based developer Singpoli — the parent company of BDK Capital — for $21 million.
BDK added a second highrise tower and more residential units and reduced the total commercial space.
The council approved the updated project in April 2016. Although the project’s website lists the massive development is set to open in 2018, a shovel has yet to hit the ground.
According to city staff, the developer has made some minor changes and current plans show the two 23-story towers will stand about 250 feet tall. Nineteen floors will be residential, with enough space for 450 condominiums. The lower levels will have 50,000 square feet of office and retail space.
In 2016, the project was estimated to cost $330 million; a current estimate was not immediately available.
One of the managing partners of BDK had planned to move “a substantial amount of capital out of China to finance the project, however, the Chinese government has since made it extremely difficult to transfer capital out of the country,” the developer wrote in its letter.
It also claims other Chinese investor money can’t be counted on because the federal EB-5 immigrant investor program — which allows foreign entrepreneurs to apply for a green card if they invest in commercial ventures and create jobs for U.S. workers — has become “unworkable.” The letter asserts there has been a “sub- stantially increased length of time” of late for the U.S. government to issue green cards.
Commissioner Madnawat expressed concern that if the developer can’t secure funding, the vacant land will languish and the project will join the ranks of other failed development attempts in Milpitas, such as a planned revamp of a portion of McCarthy Ranch. Toronto-based developer The Torgan Group purchased McCarthy Ranch Marketplace for $38 million in early 2012 with plans to build a hotel and an enclosed massive mall. The approvals for the project lapsed last year.
In its letter to the city, BDK said if the City Council approves the extension, the needed money should be secured within 120 days and construction could start by early 2019; the Towers then could be complete by early 2021.