Thursday, October 13, 2011

Underwater Mortgage? Water District to Buy Real Estate That is Literally Under Water

Too bad your property is "underwater" and not really underwater like this one is and it might be worth something =) In strange twist San Jose Real Estate that is actually underwater at Anderson Reservoir is being paid a premium for by the water company...Now dont you wish your property was at the bottom of a lake too -)

Oct. 12 (Source: By Paul Rogers, San Jose Mercury News, Calif.) - In an unusual deal that gives New meaning to the real estate adage “location, location, location,” Silicon Valley’s largest drinking water provider is negotiating to buy 225 acres in the hills east of Highway 101 near Morgan Hill.But there isn’t much of a view. The property is under water. At the bottom of Anderson Reservoir.

Like the reservoir itself, some of the details remain unclear. But the proposed purchase by the Santa Clara Valley Water District — which once owned the land and resold it — would close one of Silicon Valley’s most controversial development sagas 50 years after it began.

The submerged land is one of four parcels totaling 1,149 acres that the water district is negotiating to acquire from Los Angeles developer Castle & Cooke. The other three are dry land between the reservoir and Highway 101.

The agency didn’t set out to buy underwater land, said Ann Draper, acting chief operating officer of the water district. It needs the dry parcels to comply with state and federal permits, she said, that require the agency to protect the habitat of endangered species that are disturbed when water district crews perform Flood control work in hundreds of miles of streams every year across Santa Clara County.

And Castle & Cooke wanted to sell all four together, so to get the dry ones, the district has to buy the wet one.

“The value of that is minuscule, small,” Draper said of the underwater piece. “It’s less

than $4,000.”

The district has not yet made public the proposed sale price for all 1,149 acres, but it is expected to be several million dollars.

Details will become public 10 days before the Oct. 25 meeting when the water district’s board is scheduled to vote on the purchase.

Never a ‘New Town’

In a wider sense, the deal symbolizes the end of a five-decade chapter in San Jose’s history, the final breath of an era when developers with horn-rimmed glasses and rolls of blueprints turned miles of farmland into Silicon Valley subdivisions.

“The population was growing. It was an exciting time,” said Susie Wilson, a San Jose City Council member from 1973 to 1979. “This had been a farming community, and suddenly there were all these engineers and their wives who had been educated in colleges coming in. They all needed housing.”

In the early 1960s, Castle & Cooke, urged by former San Jose city manager Anthony P. “Dutch” Hamann, acquired 11,000 acres from Coyote Valley over the ridge to Anderson Reservoir. Under the names of its subsidiaries, Lake Anderson Corporation and Oceanic California, Castle & Cooke planned to build a massive “New Town” with stores,

schools and 100,000 residents.

“City leaders back then thought it was a big plum,” said Wilson. “It would be like Tesla coming in today. But Castle & Cooke tried too late. By the 1970s, the environmentalists had begun to band together. People didn’t want to see development going over those hills.”

The San Jose City Council finally killed the plan in 1978. Castle & Cooke, which had a history dating to 1850s Hawaii, sued San Jose for $30 million — the largest claim ever against the city at the time. The company lost in 1980, and later began selling off pieces of the land.

If the water district buys the 1,149 acres, Castle & Cooke’s ownership in the area would be all but over, at fewer than 100 acres.

“It’s been a long and colorful ride,” said Paul Ireland, a Castle & Cooke consultant who is helping sell the land.

One big question remains: Since the water district already owns the reservoir, why doesn’t it own all the land on the bottom?

Mysterious sale

Property records show that after Santa Clara County voters approved a $3 million bond in 1949 to build Anderson Dam, the water district signed an agreement with O’Connell Brothers, a ranching company, to use the 225-acre piece now underwater. But it wasn’t until 1954 when O’Connell Brothers finally sold the property to the water district, for $175,000.

Mysteriously, in 1956, the water district sold the land to Castle & Cooke subsidiary Lake Anderson, and another company, Gelco Development, even though by then it sat under water. The district kept “inundation rights,” but Draper said nobody at the agency today can find documents showing why it sold the land, or for how much. Was it a planned marina?

“You can speculate as to what those conversations were about,” Draper said, “but we don’t know.”

In years past, the water district went to federal agencies every year to obtain permits for flood control work to clear sediment and brush in stream channels. But in 2002, to cut red tape, it obtained a 10-year permit from the state fish and game department, U.S. Fish and Wildlife Service, Army Corps of Engineers and others.


Baron parker said...

Given nice blog to direct shaw image the contraction and discuss real situation of Underwater Mortgage? Water District to Buy Real Estate That is Literally Under Water.

Rental Management

Simon Rogers said...

I agree, it is really nice blog. So glad I found it. Good luck!