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July 2024 Spotlight:

Economic Development and Sharks Ice Gilroy 

Hello Gilroy!

As you might imagine, taking on the role of mayor in 2020 in the height of a pandemic shutdown was a formidable challenge, and one that consumed the first half of my term as Mayor, but Gilroy has seen in the time since a remarkable amount of economic development progress. With an impressively long list of new businesses that have opened in Gilroy since the shutdown ended (see list at the end of this newsletter), the $32 million expansion of Pulmuone Foods’ manufacturing facility on Rossi Lane, and the current status of Sharks Ice Gilroy with the recreation and entertainment activities it will bring to the Gilroy Sports Park, our progress towards growing commercial opportunities is bright. Read on for details of what’s planned for Sharks Ice Gilroy, and how economic development in general helps our city thrive. 

All are invited to meet me at City Hall on Saturday, August 3rd at 9:30am for Conversation and Coffee with the Mayor on this exciting subject and what’s ahead for commercial development in Gilroy. Please join me! 

Mayor Marie Blankley, CPA 

Sharks Ice Gilroy 

Sharks Ice Gilroy is a project that will bring to the Phase III area of the Gilroy Sports Park (southwest of the main entrance) a single building of two-levels containing two NHL-sized ice rinks and ancillary uses including spectator seating, training rooms and conditioning area, multi-purpose rooms, offices and support areas, as well as a restaurant, snack bar and pro shop. The building will be approximately 100,000 square feet and will also house furnishings, trade fixtures, and equipment, including score boards, dasher boards and netting, lighting and sound equipment. The building, together with the planned parking area of approximately 387 spaces, constitutes the facility that the City of Gilroy will construct and own through the issuance of revenue bonds to finance the costs of the project (“project costs”) and the costs of issuing the revenue bonds (“finance costs”). Both the project costs and the finance costs will be fully covered, with interest, by Sharks Sports & Entertainment (SSE) through annual payments provided in the long-term operating lease agreement for the facility. Thanks to a City Charter amendment passed by the Gilroy voters in 2022 to allow for a single step “design-build” process, we can bid the design, engineering and construction of the Project in a single step and use the same contracting firm for final design and construction. Using a single party not only saves money on the front end by eliminating multiple bidding processes, but it also avoids the all-too-common deflection of liability when using separate parties on a single project that can result in costly efforts to resolve. As the Sharks will be operating the facility and are responsible for both the project and finance costs of the bond, they will advise on the design and operational matters of the facility. Preliminary architectural renderings of the facility are shown below, and we anticipate the Sharks logo or related image to be included somewhere on the exterior. The architectural renderings are part of the Basis of Bid Documents package that is used by the City to bid the structural design and building of the project.  

SSE will have the exclusive right to operate and use the Facility exclusively as an ice rink with ancillary uses. We can expect a balanced and diverse schedule of programs of hockey, figure skating, public skating, ice dancing, other ice-related activities and other event uses. Operating times would generally be between 5:30am and 1:00am year-round, based on demand and economics. As necessary for construction and repairs, the facility may temporarily be closed from time to time. Per the draft operating agreement, SSE will schedule public skating at prime times convenient to the public and at other times as ice surfaces are available. They will operate the facility in such a manner as to encourage its use by all members of the public with interest in recreational programs and activities on ice. SSE will establish public skating periods and operate clinics for the public to learn how to ice skate or to increase ice-skating skills. SSE will offer programs to play ice hockey, figure skating, and speed skating, as well as other ice-oriented recreational activities. In addition, SSE will offer school-based programs for Gilroy youth, including free general admission, skate rental, and group instruction for up to 5,000 at-risk youth per year. 

Delivering such a unique facility will require unique financing and contracting methods. At this stage in the project, the partnership between the City and the Sharks is defined by a non-binding term sheet adopted by the City Council in June of 2022. As described in the term sheet, the City and the Sharks collaborate on the design and construction management of the project, the project is financed through the sale of municipal bonds, and the project is bid as a City project. In addition, the Sharks take over operations of the facility when it is completed and take on the debt service under a separate agreement. Currently, the project will be completed in this manner: 

• Phase 1, Basis of Design - Complete  The basis of design represents the Sharks and the City’s fundamental requirements of the facility. The basis of design calls out the size of the building and critical elements inside the building (i.e., rink size, ice-making infrastructure, programming spaces, and everything needed to make the facility operate the way the partners want it to). The City hired an architectural firm specializing in ice rink facilities to prepare the basis of design documents. The renderings that were shared by the City Administrator at a recent City Council meeting (and shown above) were prepared by that architectural firm.   
• Phase 2, Procurement of Design-Build Contractor   The City intends to complete the Ice Center using the design-build method. A design-build contracting firm is responsible for both the final design and the construction of the project. This means the designers and contractors are on the same team which allows for better and faster communication and more effective resolutions to the issues that often come up during the construction of large, complex facilities.  To ensure the quality of contractors bidding on the project, the City and Sharks team will conduct a pre-qualifying exercise whereby potential design-build firms will be invited to provide qualification packages to demonstrate their competency. Those packages will be carefully and objectively evaluated with the end goal of identifying a handful of qualified firms. Once that is done, the City will then solicit proposals from qualified firms to bid on the project. The firm that is found to provide the best value for the City of Gilroy will be presented to the City Council for their consideration to award a contract. It is now estimated that the award of the design-build contract will happen in the May/June of 2025 timeframe.   
• Phase 2A, Bond Financing As mentioned earlier, the project will be financed through the sale of municipal bonds by the City, for which payments will be the obligation of the Sharks, including finance costs. The financing must be in place prior to the City Council’s award of a design-build contract. Therefore, the anticipated date for issuance of bonds is also in the May/June of 2025 timeframe. 
• Phase 3, Construction  With the design-build method, the final design and the construction happen concurrently with the total construction time taking approximately 14-16 months. The goal of the City and the Sharks is to have Sharks Ice Gilroy open for business by the end of 2026.  

It may still seem like a long way out, but Sharks Ice Gilroy will be a reality before we know it! 

The Benefits of Economic Development 

Economic development brings jobs to our local community and commercial services and product sales that stay local, which ultimately means more sales tax revenue. To that end, businesses with consistently high sales volume, like The Gilroy Premium Outlets and Costco, for example, or with high value sales products, like our car dealers, bring the most revenue to the City. Everyone, residents and visitors alike, pay sales tax on products they purchase, except that food and prescription medications are exempt from sales tax. Of the current 9.125% sales tax rate applicable in Gilroy, only 1% goes to the City of Gilroy, and the rest goes to the County and State. Property tax, too, provides only a fraction to the city of what our residents and businesses pay in total (the City receives 14% of total property taxes paid). Still, sales tax revenue and property tax revenue, in that order, make up the largest sources of our general fund monies.  

Local employment opportunities bring to our residents many advantages, not the least of which is avoiding lengthy commutes. How well jobs pay is a function of the skills required for the types of employment offered in Gilroy. Gilroy’s 8 largest employers, in terms of number of employees, as of the fiscal year ended June 30, 2023 are as follows: 

For added reference, Pulmuone Foods now employs over 250 people at their Gilroy facility; United Natural Foods, Inc (UNFI), the largest distributor of organic and natural food products in the US, employs 230 people in Gilroy; Gavilan College employs 214 personnel in Gilroy; and Performance Food Group employs 200 people at their processing plant on Monterey Road. Sharks Ice Gilroy anticipates about 60 employment positions, including part-time positions. 

Looking ahead, the Gilroy Economic Development Partnership (described in detail at the bold text below) is focusing on next steps to propose initiatives that improve and promote Gilroy’s workforce, including workforce training, and to form a development plan for lands around and near The Outlets to attract businesses and venues that would bring more visitors to The Outlets and increase the volume of sales tax dollars they contribute to the City.  

For years, beginning with the days when Mike Gilroy was Mayor in the 1990s, the City of Gilroy was part of a flourishing partnership for economic development through the then created Economic Development Corporation (EDC). The EDC was a public-private partnership whose function was to represent the mutual interest of the public and private sectors to attract, pursue and assist potential economic developers and companies to locate in Gilroy. Over the years, however, financial support from private interests dwindled and was proving more challenging to secure. By 2019, the public's support of the EDC, through the City of Gilroy's annual financial contribution of $200,000, had become nearly the sole source of funding for the EDC with no existing accountability to the public for these funds. Consequently, the City Council considered bringing economic development services in-house where public accountability and full transparency could be achieved. As the Council representative to the EDC Board at the time, together with then Councilmember Peter Leroe-Munoz, I can attest to the unwavering dedication and commitment within the EDC Board to re-establish the effort of gaining support from businesses and other private interests that would allow the EDC to continue as a public-private partnership. In the end, however, the Board of the once active Economic Development Corporation (EDC) took action in 2019 to wind down, to end their employment contract with their Director/CEO, and to use their remaining cash balances towards functions akin to the Gilroy Chamber of Commerce. Absent a public-private partnership, the City Council voted to re-direct public dollars to in-house economic development services. 

The EDC model is a good one when investment is balanced between public and private interests. Well-functioning EDCs bring an independent means for developers and property owners to collaborate and explore options for addressing project challenges. They also provide a communication avenue that helps to avoid the intervening of individual council members on behalf of the interests of developers/property owners without the knowledge of the Council and without public transparency, potentially compromising the integrity for the public’s interest. The EDC model has been preserved, and it may be revived in the years ahead. Still, success requires significant investment from all those involved, public transparency, and measurable outcomes.  

Today, the City's Economic Development Manager is the go-to for project developers and inquiring businesses seeking assistance with the progress of their projects.  

With the winding down of the EDC, the Gilroy Economic Development Partnership (GEDP) was formed in 2019 with members from the Gilroy Chamber of Commerce, the Gilroy Downtown Business Association, Visit Gilroy, Gilroy Gardens, Gilroy Garlic Festival Association, Gavilan College, and the City of Gilroy. This organization operates entirely with volunteers and exists as a think tank for initiatives to bring before the City Council and the public. It is this organization, the GEDP, that formulated the initiative brought before the City Council in 2019 to declare Gilroy as a Recreation and Tourist Destination with the proposal of three specific missions: to enter into discussions with Sharks Ice to locate an ice facility in our Sports Park; to reinvent Gourmet Alley downtown into a pedestrian-friendly space; and lastly to consider recreation development opportunities for the city-owned acreage around the Gilroy Gardens Theme Park. That initiative was adopted unanimously by the Council, and we have been working toward those three goals ever since.  

Ideas for upcoming initiatives include:  

• Collaboration between the business and education communities for greater focus on workforce training.  
• Creating a more robust image of Gilroy's skilled workforce.  
• Bringing much-needed attention to an aging yet still considerable sales tax generator, The Gilroy Premium Outlets. 

New businesses in Gilroy  

New businesses are opening throughout Gilroy. Take a look below at some of the businesses that opened in Gilroy in the last two years alone, and some that are about to open. Gilroy thrives! Support Local!! 

• 6503 Cameron Blvd – Industrial Shell Buildings: Completed, tenant improvements for portions of buildings are in plan review. Building A: New 183,600 sq.ft. Building B: New 198,965 sq.ft. 
• Plaza Allium – Chestnut and 10th Street  
• Starbucks: New 2,174 sq.ft. building with drive-thru lanes – Open. 
• Chick-fil-A: New 5,148 sq.ft. building with drive-thru restaurant – In construction. 
• Hyatt: New 5-story hotel with 112 guestrooms & 112 bathrooms – In plan review. 
• Circle K: New 3,948 sq.ft. convenience store & a 2,976 sq.ft. fuel canopy with 5 fuel pumps. – In plan review. 
• Blue Wave Carwash: Construction of a 3,960 sq.ft. car wash. – In plan review. 
• Nordstrom Rack: New retailer 24,516 sq.ft - located at Gilroy Crossing - Open. 
• Gilroy Gardens: Expansion of the water attraction - Open. 
• Dutch Bro’s: Located Alexander and 10th St – finalizing entitlements, waiting on plan submittal. 
• Gilroy Noodle: New restaurant Noodle House located at 280 E 10th Street – In plan review. 
• Pizza My Heart: Located at 1425 First Street in The Patio – Open. 
• Floor & Décor: TI -58,623 sq.ft located at the old Walmart Specialty retailer of hard surface flooring & accessories – In plan review. 
• Birrieria Coalcoman: Located at the old Chevy’s restaurant on Murray Ave - In construction. 
• StorQuest Self-Storage Facility: Located at1000 Gilman - in plan review. 
• Pop’s Public House: Located at 1300 1st St - Open. 
• Bottles & More: Located at 7901 Westwood Dr – Open 
• Mod MOVERS: Located at 8880 Forest St - Open 
• Macaco Spicy Chicken Sandwiches: Located at 1280 1st St - Open. 
• AnNam Bistro & Cafe: Located at 1295 First St – Open. 
• Satellite Health Care Dialysis: Located at the San Ysidro Center, San Ysidro St - Open 
• Pulmuone Foods Co: $32 million reinvestment at manufacturing facility – located at 5755 Rossi Ln -Completed 
• Chama Nativa Brazilian Steakhouse: Located at 6935 Camino Arroyo – Open. 
• Eggs & Waffles: Located at 741 First St – Open 

And Sharks Ice Gilroy, Coming soon!! 

Downtown 

• Gilroy Bowl: Open – 7554 Monterey St. 
• Savvy Sweets: Permit issued – 7357 Monterey St. 
• Aldo’s Italian Restaurant: In construction – 7423 Monterey St. 
• Covale: Open – 7534 Gourmet Alley. 
• Camino Coffee: Open – 7300 Monterey St. 
• Rosie’s Protein Bar: Open – 7432 Monterey St. 
• Overflow Tap House: Open – 7529 Monterey St. 
• Vines and Pints: Open – 7511 Monterey St. 
• Pour Me Taproom: Open - 7499 Monterey St. 
• Promised Land Pizza: In construction - 7661 Monterey St. 
• Psycho Donuts/Pizza Box: Tenant Improvement – In Plan review – 7463 Monterey St. 
• Lonely Oak Brewery: Permit finaled, waiting to open – 7373 Monterey St. 
• Construction of 4 separate commercial kitchens with a single food court eating area and 1 separate complete restaurant next door – In construction – 7320 Monterey St. 
• Moya Art Studio: Grand opening 7/27/24 – 7445 Monterey St. 
• Royal Lash Society: Open - 7528 Eigleberry St.  
• CAFE MOTIF: Open – 7397 Monterey St. 
• Workingman’s Emporium: Open – 7495 Monterey St. 
• 4th Street Parking Lot: Open – 7601 Monterey St. 
• Petiscos by Adega: Michelin star Portuguese dining, in construction – 7574 Monterey St. 

Our progress shared here is something to celebrate. Whenever possible, support our local businesses!