Granada Ballot Initiative Frequently Asked Questions

Q: Who owns the Granada?
A: Currently the Morgan Hill Redevelopment Agency (RDA) owns the Granada.  In Morgan Hill the RDA is comprised of our City Council, but technically the RDA is a separate legal entity.  It is funded via property tax “increments”, the difference between property tax on a home when it is re-sold for a higher value, creating a higher tax basis.   

Q: Why does the City want to tear it down? 
A: The City Council and City Managers seem to feel the key to revitalizing downtown is housing.  They are convinced that a mixed use project (retail on the ground floor and high density housing on floors 2-4) is required to make the downtown area self-sustaining.  The thought is that population density will support the retail and retail will be a draw for the housing.  The plan is to put 500 housing units downtown, all between 700 and 1,300 sq ft.  These are planned to be sold as condos, but if unsold could become rentals.  The Granada’s architecture does not lend itself to having 2nd-4th stories built above it.  Therefore, to retain the Granada, 60 housing units currently planned for that parcel would have to be foregone or relocated within the planned development area. 

It is important to note that housing centric developments in other communities have has met with mixed results.  Gilroy enacted a housing centric plan for their downtown which was a disaster.  Many of those units remain unsold after years.  Only a portion of the planned homes were built when the developer ran out of money and the City refused to subsidize further units.  Santana Row in San Jose has done well, but was developed in better economic times.  Axis downtown San Jose (also a Barry Swenson Builder project) has completely fallen apart, with vacancies in excess of 50% and several law suits pending. 

Q: What will happen if the Granada is torn down?
A: The majority of the block will be torn down (the Cigar Shop, the Granada, the Music Tree, and the Downtown Mall).  The parcel that includes the Granada will include new retail on the ground floor (tenants TBD) and sixty 700-1,300 sq ft condos will be built on floors 2-4 above.  A new cinema only 4-plex theater will be built on the corner of 2nd St. and Monterey, where Royal Clothiers is currently. 

Q: Will my taxes go up if the Granada is renovated?
A: No.  The Morgan Hill Redevelopment Agency (RDA) is planning on gifting the $10.4-$12M worth of property it owns in the downtown corridor to Barry Swenson Builders.  BSB will then reimburse the RDA out of a currently not publicly disclosed profit-share on the project.  The City can mandate what is developed in this scenario.  All renovation costs will be born by the developer and will have no impact on your taxes either way.  The RDA, incidentally is funded from existing property taxes and will not increase either way (with or without the Granada renovation). 

Q: How much will it cost to renovate the Granada? 
A: Last year, the City Staff estimated it would take $310,000 to re-open the Granada on a temporary basis, and the City council authorized the funds to do so.  June 2010, the City Staff and Barry Swenson Builder issued a report to the RDA stating renovation of the Granada would cost $5.1 million.  This however was for a greatly expanded theater including take over of the entire adjoining Cigar Store for back stage area, dressing rooms with showers, new offices back stage, expanded stage, etc.  The truth undoubtedly lies somewhere between these two numbers ($310k, or $5.1M)  Further, Save the Granada has offered to privately fundraise for key elements of tenant improvements like digital projection systems, new sound systems, etc. which were part of these estimates.  The City did not estimate publicly the cost of the new theater on 2nd St. but using cost per sq ft estimates they stated in public hearings, the new theater would likely cost $2.5-$3M to build.  In the end, the cost difference is negligible.  The cost difference to the City is zero, as the RDA is contributing the land in this project and redevelopment costs are born by BSB. 

Q: How long has the Granada been closed?
A: It closed in 2003, but the last public event there were the Poppy Jasper Film Festival in 2007. 

Q: Why was the Granada closed in the first place? 
A: Ed Enderson owned the Granada.  He bought it from Jack and Lillian Hillman, the original owners since 1952.  He was the projection operator for Jack and Lillian on opening night.  He retired in 2003 and closed the theater.  He found a buyer in 2005, Manou Mobedshahi.  He had agreed to re-open the theater, as this was important to Mr. Enderson.  However, once the deal closed, Mr Mobedshahi did not re-open it, but began negotiations with the City to sell the property.  Initially the City said it planned on getting the theater re-opened but those plans changed when they began to pursue a housing centric downtown plan.