San Jose to receive boost from sale of debt-ridden Hayes Mansion

Two years after the sale of Hayes Mansion, San Jose has finally rid itself of the property’s massive debt—and it’s actually getting some money back.

San Jose bought the historic mansion in 1985 for $2.5 million and turned it into a conference center with a dining room, 214 guest rooms, a pool and a fitness center. These renovations left the city $60 million in debt, and even by 2016, the city hadn’t paid for half of it.

The Spanish Colonial Revival-style manor, which was built in 1905, wound up costing the city $2 million to $6 million every year since 2003.

But after several failed attempts, the city finally sold the property to JMA Venture LLC for $27.8 million in 2019. Now it is expected to receive $2.3 million this year from the sale.

A fund set up in the 1990s to capture revenue and pay the property’s debt, called the Community Facilities Revenue Fund, contains that money from the mansion’s sale. It will be transferred to the city’s general fund this year, said San Jose Budget Director Jim Shannon. It can be used to help pay for city services like parks, public safety and libraries.

“While the original intent was for the Hayes Mansion to generate sufficient revenue to fully pay for its operation and to pay the debt service, this did not happen,” Shannon told San José Spotlight, adding that some “minimal” closeout costs remain.

“The city is in the process of closing out the Community Facilities Revenue Fund,” he added. “There is a relatively long process to finalize all of the transactions associated with the property’s transfer.”

The historic mansion was named after Mary Folsom Hayes Chynoweth, whose family made its fortune mining iron in the Great Lakes area. She settled in San Jose in 1887. The Hayes heirs, who ran newspapers in the Bay Area, sold most of the estate in the mid-1950s.

Since the mansion’s sale two years ago, the new management turned the property into a hotel and adopted the name Hayes Mansion San Jose, Curio Collection by Hilton.

“As business continues to rebound and the state opens up even more, we’re more than ready to welcome more team members, our wonderful guests and event and meeting attendees back,” said hotel spokesperson Susan Choi-Grant.

To reopen safely following the COVID-19 pandemic, Hayes Mansion followed Centers for Disease Control and Prevention guidelines and Hilton’s own safety protocols—which go beyond inspecting cleanliness and rate air and water quality and emergency procedures.

While the exterior of the mansion is intact, the interior underwent full renovations including new carpeting, tiles and wood paneling. The hotel has 33,000 square feet of meeting space, upgraded to cover the needs of hybrid meetings with new meeting tables with power outlets and ergonomic chairs.

The city might no longer own the mansion, but San Jose Councilmember Jimenez, whose district includes the property, wants to ensure the hotel thrives under the new management.

“I’ve actually actively been meeting (with the hotel management) to plan how we can give them a good launch to the new world,” Jimenez told San José Spotlight.

Choi-Grant said some workers lost their jobs during the hotel’s operational suspension, but there may be a chance for them to be rehired.

The San Jose City Council last month unanimously approved an ordinance called “Return Together”—proposed by Jimenez and his colleagues Councilmembers Raul Peralez and David Cohen—that requires hospitality employers to rehire laid-off workers once their businesses reopen. But a recent San José Spotlight report highlighted how the policy requires laid off workers to enforce it themselves by suing their employers—a process that creates a hardship for many.

Jimenez mentioned plans for large events, including a wine festival and a movie night to promote the mansion and increase economic activity in the district.

“We recognize that the hotel, similar to other hotels, needs some assistance and some love,” he said. “So we’re trying to partner with them to get things going.”

Contact Alejandra Arevalo at [email protected] and follow her @alejandrareval_on Twitter.