Key downtown San Jose housing towers head for new developers amid stumbles

SAN JOSE — The downtown San Jose sites where key residential towers have been proposed are headed for new owners and developers that would take over the projects from Z & L Properties.

China-based Z & L Properties, whose Bay Area offices are in Foster City, is working with San Jose city officials to bring new developers on board to buy the project sites and then develop the towers, which together would produce 526 residential units, once they are complete.

The projects involved are a 305-unit housing tower in the North San Pedro Square area and a 221-unit residential and retail complex near St. James Park that’s known as Park View Towers.

“Z & L Properties is working with the city to secure new local developers to start the projects,” Z & L stated in comments emailed to this news organization.

City officials confirmed that efforts are underway to land a new developer for each project.

The primary focus at the moment is to bring in a new developer for the North San Pedro project, located near the northwest corner of West Julian and Terraine streets.

“All signs are pointing to an agreement with a new developer,” said Nanci Klein, director of real estate with the city of San Jose. “We are very hopeful that a new developer can be secured in a very short time frame.”

That new company would take over the development effort and begin construction on the stalled project.

Z & L Properties failed to meet the terms of a development agreement it had previously reached with the city on the North San Pedro residential tower, according to Klein. That failure enabled the city to take steps to remove Z & L from the agreement.

To speed up the process, the city hopes to transfer the development agreement to the new owner as part of a sale of the North San Pedro property.

Z & L executives believe the purchase of the North San Pedro site can be accomplished within 60 days, according to information released by the company’s public relations representative, Gary Pike.

Similarly, the Park View Towers project, slated to rise at 252 N. First St., a development that would incorporate a historic church, also has been hobbled.

“Park View also is not complying with its development agreement,” Klein said. “We hope a developer can also be found for Park View Towers.”

The city and Z & L Properties didn’t identify the buyer that is seeking to buy the North San Pedro site.

The Park View Towers property has been burdened with at least two mechanic’s liens that have been lodged by contractors that claim Z & L Properties hasn’t paid them for work they did on that project.

The largest of the liens was filed by DLR Group Kwan Henmi, an architecture and design firm, according to Santa Clara County public records. Kwan Henmi DLR claims it is owed $847,000 by Z & L Properties.

“Z & L agreed to a payment plan,” said Denis Henmi, a principal executive with DLR Group Kwan Henmi. “They have been good to us. They have been making prompt payments. We had to file the lien to protect our interests.”

Kwan Henmi DLR’s work on Park View Towers has included preparing concepts for the project. However, it wasn’t clear whether those images were part of the unpaid work alleged by the architectural firm

Separately, Civil Engineering Associates claims it is owed $4,900, county property records show.

Z & L Properties took on in recent years a quartet of major projects to build residential towers in downtown San Jose.

Only one of the four has begun construction: 188 West St. James, a 640-unit complex that once was known as Silvery Towers. Property experts believe 188 West St. James hasn’t proceeded as swiftly as one would expect. The project isn’t ready for tenants to move in yet.

Both of the residential towers that are headed for new ownership are deemed to be key pieces of the city’s quest to revive downtown San Jose as well as to bolster the municipality’s ongoing housing development efforts.

“We want to create as many housing units as possible,” Klein said.

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