Saving mansion a costly endeavor
Today I begin with news written in straight fashion. I’ve done the numbers. Over the past three decades, the city of San Jose has poured nearly $60 million into the Hayes Mansion hotel and conference center, the great white elephant in Edenvale that the council voted to sell earlier this month.
The city won’t get that money back. When all is said and done, that’s my best estimate of the cost to the public of owning the impressive and sprawling 1905 mansion that once belonged to the Hayes family, the publishers of the San Jose Mercury-Herald.
Clearly we got something. The city saved one of its signal landmarks. I recently did a piece on Mary Hayes Chynoweth, the matriarch of the family, who should never be forgotten. But for a city that hobbles along in fixing potholes or hiring cops, it came at enormous cost.
Sixty million dollars would generate enough interest to pay for 15 additional cops every year. It’s enough to build and maintain 18 artificial turf soccer fields for two decades. It’s about as much as San Jose residents will be paying in a new quarter-cent sales tax every 18 months.
Once you total it up, you understand why the City Council, saddled with such a money-losing project, really had to approve the sale of the mansion for $47 million to the Asha Companies, a developer that has pledged to keep it as a hotel and meeting center.
In fact, San Jose was lucky to get this good a deal. In many ways, it was like a homeowner who finally sells a house that has been underwater for years. Once the city has paid off the remaining $36.2 million in bonds — the mortgage — it will have almost $11 million remaining.
Lesson learned?
But that hardly makes up financially for the loss. (My figure of $59 million-plus, based on city budget documents, takes that remainder into account.) “This has to be a lesson learned,” says Councilman Johnny Khamis. “Ever since I’ve heard about this, this investment has become the
poster child for government waste.”
Last Thursday morning, I drove down to the Hayes Mansion and walked through the grounds and building. It is still impressive: In the second-floor hallway where coffee and sweet rolls are put out for meeting attendees, you can see fascinating photos of the Hayes family.
One of my favorites shows the entire extended family in an undated photo from the early 1900s. What’s memorable is that every one of the 40 or so people in the shot is named.
After the Hayes family sold the mansion in 1964, it went into a long period of decay, serving as a rooming house before the city bought it for $2.5 million in the early 1980s.
In the 1990s, the city embarked on three phases of renovation, adding more than 210 guest suites and expanding to 133,000 square feet of meeting space. The total bond debt was $59 million. San Jose even added an underground parking garage that was closed when I visited.
Naturally, the city hired economic research firms to justify the expansion. In the dot-com craze of the late 90s, almost anything could be justified. A study completed by a consultant in 1999 concluded that the new guest rooms and meeting space could be financed by the projected revenues of the center.
Falling short
But partly because it was located far from the center of Silicon Valley, the Hayes Center was never as successful as projected.
And even after the city brought in a new operator in 2003, Dolce International, San Jose’s general fund continued to subsidize the center by $2 million to $6 million per year. A $120,000-per-year consultant paid by the city could not reverse that.
I tell myself that it is our Tweed courthouse, minus the flagrant corruption: Finally completed in 1881 for $12 million ($287 million in today’s money), the Tweed Courthouse in lower Manhattan was a symbol for Tammany Hall incompetence and greed.
Yet today the courthouse is one of the loveliest buildings in New York City. Let’s hope that the Hayes Mansion’s new owners preserve its past equally well.