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PLANS: Harker doesn’t expect to expand but would likely relocate operations from other sites to the new location, said Head of School Chris Nikoloff.

MARCH 9, 2012

SILICON VALLEY / SAN JOSE

SAN JOSE — It came down to $50,000.That was the winning all-cash auction

bid for 8.1 acres in San Jose. The winner was The Harker School, offering $25.55 million over Xilinx Inc., which stopped at $25.5 million. But the real winner was Santa Clara County, which put the San Jose property up for sale.

There was a lot of interest in the property, considered prime real estate, at 4525 Union Ave. near Highway 85. It’s not often a large parcel in a dense area of San Jose comes on the market. The site was the former home of the Santa Clara County Children’s Shelter before it was shuttered in October 2010.

Proceeds from the sale will go toward relocating the assessment center, still op-erational on the site, and paying off a $1 million loan to the state. Once those obliga-tions are met, the remaining proceeds will be split between the Silicon Valley Chil-dren’s Fund and the county’s general fund.

When Santa Clara County put out a re-quest for proposals, interest was high from a variety of potential buyers. In addition to Harker and Xilinx, another private school, Almaden Country School, submitted a bid, and at least two residential developers were said to be eyeing the site. The developers, however, did not submit formal bids.

On auction day, March 1, The Harker School and Xilinx – both based in San Jose – battled it out in multiple rounds of bid-ding. The auction had a minimum bid of $19 million.

The school is currently the “apparent high bidder” on the property, according to Bruce Knopf, director of asset and economic de-velopment with Santa Clara County.

Zoning was a factorChris Reid, president of San Jose-based

Commercial Real Estate Associates Inc., had a client that was interested in the parcel but opted not to bid over concerns of hav-ing time to get the necessary entitlements.

Colliers International, is not surprised that the city of San Jose would welcome a buy-er like a private school like Harker, a K-12 college prep school with tuition ranging from $25,000 to $36,000.

“The site should work great for that use,” he said. “I still think this is a great site for residential development, but the due diligence period that the city allowed may not have been long enough for many residential developers.”

The county’s Board of Supervisors must still authorize entering into a purchase agreement with Harker, and will likely be considering the school’s bid within the next 30 to 60 days, Knopf said.

Competitive bidXilinx did not return calls seeking com-

ment. But the company was a logical po-tential buyer for the site. Xilinx owns and occupies a 31-acre business park adjacent to the Union Avenue property on Logic Drive.

For Harker’s part, Chris Nikoloff, Head of School, said the strong interest in the property was expected.

Harker School wins County landby MAry ANN AZEvEdO

The News

The site is zoned for public or quasi-public use, which includes projects such as schools, colleges, churches or community centers. Any entity proposing commercial or residential development would have to go through an entitlement process with the city of San Jose to get the land us-age changed. Because the city is giv-ing buyers a 180-day due diligence period with another 30 days to close escrow, Reid’s client – an undisclosed residential developer out of Southern California – opted not to pursue the site after all.

“We wanted to do an informational bid, but my client wanted to have the time frame to have the general plan changed, and that wasn’t going to happen” in 210 days, he said.

Trumark Companies did actually sub-mit an informational bid with the hopes of adding a contingency for more time to get the land usage changed.

Arden Hearing, senior vice president of acquisitions, Northern California for Tru-mark Companies, said the parcel “looked like it could be a residential site.”

“We pursued it but not to the exact terms they were offering,” Hearing said. “We have had no formal dialogue with the city and don’t know if a use change is possible. But whatever happens, it would take more than a year if the use were to change.”

Overall, Reid believes the county “did very well for themselves” in the auction.

“I know Harker has been scouting around for sites,” he said. “And this does make sense. If they were going to go out and buy the land to build a school, they would probably put this much into it. But this way, they won’t have to start from scratch. Plus, that much available land just doesn’t exist in that area.”

Mike Miller, a senior vice president with

Reprinted with permission from the San Jose Business Journal. ©2012, all rights reserved. Reprinted by Scoop ReprintSource 1-800-767-3263.

“You go into these things with a range of what you think the property is worth,” Nikoloff said. “Our bid was certainly with-in that range. It’s a nice piece of property.”

Founded in 1893 in Palo Alto, The Harker School has 1,791 students on three San Jose campuses. It owns two of those campuses — 500 Saratoga Ave. and 4300 Bucknall Road — and leases the third, 3800 Blackford Ave., from the Campbell Union High School District. This is the former site of Blackford High School.

If Harker does end up with the Union Av-enue site, it will likely relocate operations from other campuses there at an undeter-mined point in the future, Nikoloff said. The school has no expansion plans at this time and has 13 years left on its Blackford lease. The most likely scenario will be that Harker will move its middle-school op-erations from the leased campus on Black-ford to the Bucknall site and then move K-4/5 operations to the Union Avenue site, Nikoloff said.

Owning is more attractive than leasing for a variety of reasons, he added.

Perception of stability is key.“The possibility of losing a lease is very

difficult for a school because it could be very disruptive — families get used to certain traffic patterns. And parents like to know you’re going to be around for a while,” Nikoloff said. “Plus, we want to be able to make capital improvements to a site and would prefer to do that on property we own.”

NEW CAMPUS: The Harker School, a private K-12 college prep school with tuition between $25K-$36K, offered the highest purchase price for the Children’s Shelter property in San Jose.

VICKI THOMPSON

Lower School Campus, Gr. K-5 4300 Bucknall Road, San Jose, CA 95130 • Tel: 408.871.4600

Middle School Campus, Gr. 6-83800 Blackford Avenue, San Jose, CA 95117 • Tel: 408.248.2510

Upper School Campus, Gr. 9-12500 Saratoga Avenue, San Jose, CA 95129• 408.249.2510