Borelli Investment Company - 50 years of Commerical Property Experience - Buying and Selling Land

HIGHLIGHTS

Three parties involved in the transaction
County land had to be annexed by the City of Milpitas
Significant entitlement work was required
County converted vacant land to produce well over $150 million in revenue for taxpayers
Long-term value to Milpitas will be $2.4 billion

When Santa Clara County constructed its Elmwood correctional facilities in Milpitas in the 1960s for low- to medium-security men and women, the county kept approximately 30 acres for future expansion. No expansion ever took place.

Santa Clara County purchased the original parcel of more than 100 acres of farmland surrounding a 20-room Victorian mansion in 1884. The Elmwood jail took its name from the stately American Elm trees planted in the 1870s.

In 2002, facing a significant budget shortfall, the county made a decision to sell most of the surplus land. The decision to sell was the easy part.

The vacant parcel of nearly 50 acres just east of I-880 near Great Mall Parkway had been used for many years as a golf driving range. The challenge in selling the land was that there were three parties to the transaction:

Each of these parties had to be satisfied or else there would be no transaction. As the broker, Borelli Investment Company's objective was to get everyone on the same page, so the deal could be completed.

Creative options were devised for the property. On the parcel fronting I-880, KB Home will create pads and make infrastructure improvements necessary to support three large automobile dealerships. Santa Clara County is retaining a long-term ground lease on those sites to produce an on-going revenue stream.

On the remainder of the 30 acres east of the freeway, KB Home will build a community consisting of 800 single-family homes, townhomes, and condominiums worth approximately $500 million at build-out. The attached housing will be built within two 4-story podium structures, which will include ample below-ground parking.

To complete the deal, KB Home and Borelli Investment Company had to work diligently with the Milpitas Redevelopment Agency to annex the land to the City of Milpitas. KB Home managed the rest of the entitlement process, including the production of a comprehensive Environmental Impact Report (EIR).

Borelli Investment Company was able to bring the parties together in a timely manner, helping KB Home acquire a prime piece of residential land in a close-in location. The county was able to liquidate a surplus asset quickly and cost-effectively, generating $150 million from the sale and the commercial ground lease.

At the same time, the City of Milpitas is ensured of a steady stream of income from the property, in the form of sales taxes from the automobile dealerships and increased property tax revenues. In fact, a study put the value to the City of Milpitas over 30 years at up to $2.4 billion. Finally, the addition of the valuable property has enabled the Milpitas Redevelopment Agency to extend and expand its holdings as part of its charter to serve the Milpitas community.