The Garlic Festival Association has not sold any of its downtown
condos after four months on the market and has begun paying
interest on its construction loan, but festival officials who are
tasting the sour housing market for the first time continue to calm
themselves with foresight.
GILROY
The Garlic Festival Association has not sold any of its downtown condos after four months on the market and has begun paying interest on its construction loan, but festival officials who are tasting the sour housing market for the first time continue to calm themselves with foresight.
The terra-cotta stucco building at 7600 Monterey St. – and the visionary promise of a bustling city center that it embodies – will be there when the downtown renaissance occurs. Until then, the festival will work with its “cooperative” lender, who recently began charging interest on the festival’s construction loan, according to Brian Bowe, the association’s executive director.
“I don’t have to tell you how hard it is in this market, but we’re still as excited about this project as we’ve always been, and we’re pleased and proud to have made such an investment in the community,” Bowe said. “This project will pay dividends, just not immediately, and this is not the first thing the Garlic Festival has invested in without immediate dividends. We put $250,000 into the arts and cultural center, which one day will pay off” in the form of a more vibrant, commercially a-buzz downtown.
To soften the blow, Bowe said the association has been able to re-negotiate its repayment period with the project’s lender, and because it split the project’s costs 50-50 with Tanglewood Construction, the festival is not carrying the whole load. The money for the festival’s $800,000 investment in the project came from the sale of its space in its old building across the street and the parking lot behind it and also from the festival’s main account.
Once the condos sell, the association will split any profits evenly with Tanglewood and then reinvest the money back into the festival and donate the rest to local charities. Members of the association’s board of directors have also stressed – before and after this year’s festival that earned $1.72 million – the security of post-festival donations set to occur next month. Last year, 169 nonprofits received $275,000.
“We have made a conscious decision to set this up so the festival is separate from building, and we have made sure to protect the volunteer’s equity share, as well,” said Kirsten Carr, the board’s outgoing vice president and incoming president for next year’s festival. The new board will convene Nov. 1, and as the 30th anniversary board takes a bow, fewer and fewer meetings occur – there are two left before Oct. 31, according to Bowe – and the body has not voted to direct Bowe or anyone when it comes to the condos. That leaves mostly him to deal with the real estate venture on the garlic side; the Ryness Company handles marketing, so having the board vote on everyday decisions would not help anything, Carr said.
“We put on a world renown festival. That’s our mission statement, so I don’t think anyone wants the expertise of the Garlic Festival trying to move condos in this market,” Carr said. Bowe regularly updates the board about the condo project, Carr said, but the body has not voted on anything condo-related since they went on the market in May. does not have “sinking ship syndrome” and “believes deeply in the future of the downtown and its future activity and livelihood.”
A banner draping a second-floor balcony facing Monterey Street advertises the 24 condos beginning in the upper $200,000 range, down from the low $300,000s the units debuted at. The retail space on the corner of Monterey and Lewis streets also sits vacant: “We’re still looking for a prime business,” Bowe said.
Bowe came on board in February 2006, six months after the association’s nine-member board of directors voted 6-0 – with one abstention and two members absent – to approve the construction of a new office with residential and retail components. Then-Director Jeff Martin abstained because he represented the festival and Tanglewood in his pursuit to fulfill former Executive Director Richard Nicholls’ vision for the new building. After 20 years on the job, Nicholls died of cancer in June 2005, a month before the festival occurred.
Throughout all this time, the festival’s board of directors, led by then-President Jennifer Speno, spent months debating whether the residential element was a good idea. There were some slight skeptics who initially called for more prudence, but then the group studied the idea, consulted with lawyers and took pains to make sure the funds for the condominium venture would not take any away from the charities, said Speno and several former board members.
All this risk has been much appreciated by the city and people like Mayor Al Pinheiro, who have tried for the past several years to see downtown into a new era.
“People developing these days are feeling the pressure, no matter if it’s downtown or anywhere, so I’m sorry to see this happen, especially to these downtown units because we count on all this development to help steer the revitalization,” Pinheiro said. “It’s unfortunate, but the festival has a very capable board.”
