A popular and colorful part of San Jose’s history — a historic basement once known as Manny’s Cellar — is set to get a new life under a plan by a prominent local developer.

Tom McEnery, onetime San Jose mayor and the developer behind the bustling San Pedro Square Market food hall, is working out a contract to regularly operate out of the lower level of the Fallon House, where a popular bar and restaurant called Manny’s Cellar sat until 1990. He also wants to revamp the yard around the historic home and more often open up the Peralta Adobe, an even older structure across the street.

“It’s a colorful, historic part of the city’s culture of how business used to be done, and a bar that used to be frequented by the powerful and the elites,” said Bob Staedler, principal at land use consultancy, Silicon Valley Synergy. “That is what makes this interesting.”

Though the two structures, which sit nearly adjacent to San Pedro Square Market, are owned by the city of San Jose, they’re operated and maintained by local nonprofit, History San Jose. Today the buildings are primarily used for school tours or the occasional special event.

But McEnery wants to see the buildings filled with visitors regularly, starting with one day a week on Saturdays or Sundays, he said. The question, of course, is whether the space will evoke the old Manny’s Cellar, for which many longtime San Joseans still wax nostalgic. The answer is uncertain.

A memorandum of understanding, known as an MOU, for the Fallon House obtained by San José Spotlight specifically mentions the old mainstay: “The intent would be to recreate a bar and café reminiscent of Manny’s Cellar with the original history and other period appropriate pieces and environment,” states the MOU, which generally serves as a precursor to a formal contract.

But McEnery downplayed the Manny’s Cellar connection in an interview this week, instead leaning on the historic nature of the buildings and their original owners.

He’s working with historians to create “what we think will be a pretty good introduction to what San Jose is, how it started and kind of the remarkable people that really aren’t too much figured in a lot of parts of our history,” he said.

But as news of the deal swirled through the downtown community, some business leaders, who asked to remain anonymous for fear of retribution, quietly questioned whether McEnery will pay market value for the historic property — especially since there was no public bidding process.

Details of the MOU show that McEnery is expected to pay History San Jose up to $20,000 annually to fund a docent program for the historic structures. The agreement is also meant to generate savings for operating costs, but the document doesn’t state a dollar amount.

History San Jose is set to get 10 percent of the net profit of sales at the Fallon House, the MOU notes. That part of the agreement may not generate much — if any — income to History San Jose, said Staedler, who once worked on real estate projects for the now-defunct San Jose Redevelopment Agency.

“The city and the redevelopment agency have always had issues with net [profit] deals because managing what is an allowable cost takes a lot of oversight,” he said.

McEnery acknowledged last week that it’s “impossible” to know how much income the 10 percent net profit sharing agreement with History San Jose will generate, but said the deal is still a boon for the buildings and residents.

“I’ll tell you one thing I know: 100 percent of nothing is nothing and the Fallon House has sat there for about 25 years unused,” he said. “We’re going to change that.”

The Fallon House reimagined

The vision for the property is still in the conceptual phase, History San Jose Executive Director Alida Bray told San José Spotlight. She hasn’t yet seen plans for the properties, but noted any improvements would need several approvals before forging ahead.

“It could be a bar, it could be a cafe, it could be whatever,” Bray said. “They are just working on seeing what the community would be interested in having there, and that is really their business expertise.”

Notably, the ground level and second floor of the Fallon House, which has been restored to its original condition, would continue to be operated exclusively by History San Jose, according to the MOU.

Bray sees the deal as a positive for History San Jose and the Fallon House, in part because McEnery is slated to pay for the cost of revamping the old Manny’s Cellar and the yard, which he describes as “pretty much a shell,” though the rest of the house has been restored to its original condition. Plus, the Fallon House doesn’t have a robust kitchen space for food preparation, Bray added, making a partnership with San Pedro Square a logical step.

Though the Fallon House and the Peralta Adobe are city-owned, the contracts to operate inside don’t need to go out for bid publicly because the city already has a long-term contract with History San Jose to manage the properties, according to Elisabeth Handler, a spokesperson for the city.

“The arrangement is comparable to a museum getting a cafe or restaurant partner, and it will comply with necessary requirements for plans, permits, etc…,” she said. “The operator of the facility determines its partners and vendors.”

The Fallon House costs around $14,000 to maintain annually, Bray said.

In its current form, the arrangement may not generate a lot of extra money for History San Jose, Staedler said, but it is likely to get more people passing through the doors of the historic structures. And if that comes with little or no cost to taxpayers, all the better. “There’s no right or wrong answers, it’s just what’s the overall goal?” he said.

McEnery said his aim is to get people experiencing what he calls “one of one of the most historically significant buildings in California.”

“Our goal is to open it up and not charge any admission into either the Fallon House or the Adobe,” he said. “It’s not absolutely certain, but I’m pretty sure we can do it without charging admission because we want people to see it.”

Contact Janice Bitters at [email protected] or follow @JaniceBitters on Twitter.