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Amazon purchases South Valley farmland

Delivery center proposed for Highway 152 property

Panattoni Development Company is looking to develop this farmland on Highway 152 near Camino Arroyo with a delivery center and warehouse. Photo: Erik Chalhoub

Online retail and web services giant Amazon purchased 60 acres of farmland in Gilroy, documents filed Dec. 22 with the county show.

According to the documents recorded by the Santa Clara County Clerk-Recorder’s Office, Amazon.com LLC purchased the land at the corner of Highway 152 and Camino Arroyo for $31 million from Machado Family Partners, in a sale facilitated by Colliers.

Colliers’ executive vice president John Machado represented Machado Family Partners in the sale. 

“The Machado Family is very pleased with the new ownership’s plans to develop a distribution hub on the property,” he said. “This will not only create jobs for the Gilroy community during the development and construction process but after the project is complete, providing efficient e-commerce solutions for Silicon Valley and beyond.”

A proposal to construct a delivery center and warehouse has been making its way through city approvals in recent months. Plans submitted to the city by Irvine-based Panattoni Development Company show a 143,153-square-foot delivery center building and a 266,220-square-foot warehouse on the site, in addition to more than 650 van parking spaces and various stormwater management basins.

The property runs along Highway 152, between HomeGoods in the Pacheco Pass Center and Recology South Valley’s facility. The proposal leaves a five-acre parcel open for a future commercial project at the intersection.

City officials have said Amazon is the expected tenant for the project, but the company has not confirmed that statement.

An Amazon representative did not return a request for comment as of press time. The company typically does not comment on its future plans.

The Gilroy Planning Commission gave its recommendation for the project in October after expressing concern over traffic.

But when the proposal was slated for City Council consideration in early December, Mayor Marie Blankley announced during the meeting that the applicant requested a postponement.

In a Dec. 9 letter to Senior Planner Kraig Tambornini, Panattoni Senior Development Manager Steve Beauchamp requested a 90-day hold on Project Garlic, as the project is named.

“We will be re-evaluating the project plan and will let you know within 90 days how we would like to proceed,” he wrote.

As of Jan. 7, city spokesperson Rachelle Bedell said no other decisions have been made and no meetings are currently scheduled regarding the project.

The property was originally acquired by John H. Machado and has been in the Machado family for three generations. Over the years, two owners within the ownership group, all members of the Machado family, were bought out by the four remaining co-owners. 

According to a press release from Colliers, the plans for the site have transformed throughout the past 30 years. The current ownership group inherited the property when it was farmland and protected under the Williamson Act, also known as the California Land Conservation Act of 1965. The Williamson Act enables local governments to enter into contracts with private landowners for the purpose of restricting specific parcels of land to agricultural or open space use. 

The ownership group eventually decided to remove the property from the Williamson act, a process that took 10 years, and later annexed it to the City of Gilroy, the press release states. 

The Machados then formed a Mello-Roos tax district with the adjacent property owners to raise funds for off-site improvements. The funds raised for offsite improvements were in the form of a bond district with 25 years of amortization. Final bond payments were made in 2021.

At one point 30 years ago, the ownership group entered a joint venture agreement with Kimball Small Properties to develop the land into “Garlic Country USA,” a concept that they hoped would become a music and entertainment destination similar to Branson, Missouri, according to the press release. Those plans, however, were never realized.

Later, the ownership group was approached about developing the property into a retail destination. They eventually created a subdivision map to divide the property into multiple parcels. 

Two years ago, the remaining owners decided to offer the property for sale to a single user or developer.

The purchase marks Amazon’s second land acquisition in Gilroy. In August 2020, Amazon purchased 66 acres of farmland in Gilroy under its data services subsidiary. The land is located on Camino Arroyo, just south of the Gilroy Premium Outlets and behind See Grins RV and the Gilroy Unified School District offices.