Kylli pushes forward on Santa Clara project after losing ‘backup plan’

Chinese developer Kylli Inc. has faced a couple of tough knocks in recent months as it tries to push forward a mixed-use development in Santa Clara on 49 acres once owned by Yahoo, but the company continues to work on making something of the project.

When Santa Clara councilmembers voted Jan. 14 not to extend a development agreement to build offices on the land, the developer was left with expiring project approvals that once buoyed the value of the property and offered a backup plan in case a mixed-use project couldn’t come to fruition.

That backup plan became especially important to Kylli in September after the Federal Aviation Administration said the plans to build 370-foot towers on the land would not work because the tall buildings envisioned for the site could interfere with radar systems.

Despite the setbacks, Kylli will continue to work on a development in Santa Clara, said Randi Gerson, the company’s vice president of real estate development.

“We aren’t looking at selling the property,” Gerson said in a recent interview. “It was more like, ‘What can we get built and how fast can you get something built, so if the mixed-use project doesn’t work, then we can quickly go build the office.’”

Kylli, an American subsidiary of Chinese pharmaceuticals and real estate company Genzon, in 2017 bought the land, which had approvals for an office development dating back to 2010, when Yahoo had planned to plant a corporate campus on the land. That didn’t happen and the property has traded hands several times since Yahoo gave it up.

Despite losing the old Yahoo office development approvals, Kylli is pushing for its preferred mixed-use development that would include offices, apartments, retail, hotel rooms and a school.

But if that project — which is waiting on FAA feedback — can’t come to fruition, losing the office approvals may make redeveloping the land more difficult and time-consuming, Gerson acknowledged.

By letting the entitlements expire, all of the environmental work that had been approved for the old Yahoo project becomes moot. It must all be redone, even though the property’s current zoning only allows for office space, not mixed-use developments.

While that might take away Kylli’s backup plan, some councilmembers say it’s not necessarily bad for the city.

“In 2010 there was little development out there and now you’re looking 10 years later, you’ve got the proposed Related (Santa Clara) project, you’ve got the stadium, you’ve got the convention center,” Councilmember Kathy Watanabe said during the Jan. 14 meeting. “To me, it seems like a totally different development agreement should be written.”

Other councilmembers expressed concerns about traffic mitigation measures, community benefits and fees approved through the old development agreement.

Kylli must get a general plan amendment approved to build any project that isn’t strictly office space.

“I think from our standpoint as staff, we understood that the three years (extension) that was proposed was really just to delay any decision on the Yahoo development agreement while they continued to work through their mixed-use application process,” said Andrew Crabtree, the city’s director of community development.

City staff recommended the council approve the extension while Kylli worked out the issues with FAA.

“We had definitely hoped for a different outcome,” Gerson said. “The Planning Commission supported it, the staff supported it, the community supported it. We thought we were walking in with all the support.”

Residents showed up to the council meeting to support Kylli’s request for an extension, saying the developer has been a good community partner.

“My experience with Kylli has been that they are very engaged with the community and go above and beyond with their outreach,” resident Mary Grizzle told councilmembers.

Despite the council’s decision, Kylli leaders say they’re not deterred from pursuing development in Santa Clara. The most recent diagrams sent to the city and the FAA show Kylli is considering a plan that would cut its potential development by more than half, from more than 10 million square feet down to 4.83 million square feet.

All of the same types of uses would remain on the site, including a potential school, the document shows. Those plans are preliminary, however, and may still change as Kylli works with the FAA and the city.

“We’ve asked to have a study session with the City Council so that we can actually hear from the council what they want,” Gerson said.

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