VTA quests to seize properties jolt downtown San Jose entrepreneurs

Two downtown San Jose entrepreneurs say a powerful transit agency's real estate seizure odysseys have harmed their businesses.

SAN JOSE — Two downtown San Jose entrepreneurs say a powerful transit agency’s to-seize-or-not-to-seize real estate odyssey has harmed their respective businesses and left them in tough binds.

The Santa Clara Valley Transportation Authority has been attempting to grab ownership of two parcels on East Santa Clara Street between North First Street and North Second Street, claiming it required the sites for components of the Downtown San Jose BART station.

The VTA had filed separate lawsuits in a push to seize two properties. One was at 17 East Santa Clara Street and the other was at 29-31 East Santa Clara.

At 17 East Santa Clara, a housing tower was planned but is now in limbo due to the VTA’s shifting priorities.

At the 29 East Santa Clara site, a mini-market may have to close its doors because the store’s owner, Amanuel Keleta, has been forced to find a new site a block or two away for his grocery business.

“The VTA has harmed me with the way they have acted,” Keleta said this week after a Santa Clara County Superior Court hearing in San Jose to consider issues arising from the VTA’s efforts to grab his property.

In both of the real estate cases, the VTA in November disclosed in court papers that would abandon its efforts to seize the respective properties through an eminent domain proceeding.

“Plaintiff Santa Clara Valley Transportation Authority hereby abandons the above-entitled proceeding for the acquisition of the property,” the VTA stated in court papers filed in November 2023 in the two separate cases.

That means the VTA had decided to ditch its separate attempts to grab the properties.

The VTA used the same rationale in the two separate cases involving the properties at 17 East Santa Clara Street and 29-31 East Santa Clara Street, court filings disclosed.

“The design innovations for the project indicate that construction of a secondary headhouse of the project’s Downtown San Jose Station would not be required, thus removing the need to acquire the property,” the VTA stated in the court papers for the respective eminent domain proceedings.

This news organization has requested a comment from the VTA regarding the respective properties.

“VTA does not comment on issues involved in active litigation,” a VTA spokesperson said in prior responses to separate requests for comments regarding the two properties. Both cases remain active in the county court.

Both owners of the respective properties say the VTA has impeded economic opportunities and business prospects for their separate ventures.

Case in point: Fresh problems confront the proposed housing development as a result of the VTA’s legal threats, according to John Domingue, an attorney for Loida Kirkley, a real estate entrepreneur who had proposed a 26-story, 200-unit housing high-rise at 17 East Santa Clara.

“This development process started a long time ago,” Domingue said in an interview with this news organization. “Loida (Kirkley) was in full-steam-ahead mode to try to develop this. What happened, which shouldn’t have happened, was that things came to a full stop with the city development permit process.”

On multiple occasions, when Kirkley attempted to make progress in the development process with San Jose city planners, the municipal staffers pushed back and advised Kirkley that the VTA was controlling the situation. As a result, Domingue stated, the city impeded the development efforts.

“The VTA disrupted the development process,” Domingue said. “Things ground to a halt because of the VTA.”

Regarding the 29-31 East Santa Clara site, Keleta’s property includes his AK’s Square grocery store and other street-level retail as well as upper-floor residences.

“The VTA told Mr. Keleta for several years that it wanted his property, so he had to find a new location for his market,” Norm Matteoni, an attorney for Keleta, told this news organization following the Feb. 22 court hearing.

Keleta eventually found a location and signed a five-year lease for a retail site at 33 South First Street, around the corner and down the block from the current spot for AK’s Square market. He’s bought furniture and other fixtures for the new grocery store.

The existing AK market continues to operate on East Santa Clara Street — at least for now.

Keleta though, makes it clear that he can’t operate both stores once the South First Street market opens, and maybe even before that occurs.

The transit agency now wants to simply return to the status quo on the adjacent properties before the eminent domain proceedings began.

Matteoni, Keleta’s attorney, argues that his client has lost economic opportunities due to the VTA’s now-abandoned quest.

Similarly, Kirkley’s attorney, Domingue, believes that his client has missed out on a window to develop the residential tower, even at a time when housing is badly needed in San Jose. Interest rates and construction costs are far higher now than was the case before the VTA’s eminent domain quest began.

Plus, Keleta said that Kirkley had at one point approached him to buy his parcel so that both properties could be used for the housing tower development. Now, that purchase and endeavor have murky outlooks at best, Kirkley and Keleta believe.

At the 29-31 East Santa Clara site, on at least one occasion, Keleta had found a tenant for one of the residential units.

Before the potential resident could move in, the VTA chased away the tenant from signing a lease, threatening the prospective renter with eviction due to the then-active eminent domain proceeding, according to Keleta.

Keleta said the VTA also constantly pressured him to decamp from his East Santa Clara Street property and business.

“VTA was rushing me to move out,” Keleta said. “It was hurry up, hurry up, get out, all the time.”