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Lest you think all my business ventures were successful, let me tell you about one monumental bust, the Morgan Hill Business Park. If you look at the total out-of-pocket money lost on the deal it amounted to about $10.6 million, including the shopping center. But the monumental portion of the loss was the come-down from expectations. To use one of Daddy’s favorite quotes, “The saddest thing e’er writ by pen, the saddest is, what might’ve been.”

We acquired 387 acres or about 16.8 million square feet. If we had made $4 a square foot, which any real estate person at that time would have told you was a cinch, we would have cleared $67.2 million. But instead we wound up with a loss. The main offsetting factor was that we provided a new home for WILTRON, which contributed to WILTRON’s success and to its merger price.

The loss was mainly due to timing; the timing for getting new industrial clients other than WILTRON was delayed by a slow period where Silicon Valley momentarily consolidated without overall expansion. During this period WILTRON had become the largest employer in Morgan Hill so the town with its limited housing initiative was not ready to accommodate more industry at that time anyway. What the town did need was more commercial stores to service the community and provide a sales tax base for the City, plus it needed residential housing in the Business Park for the workers of the Business Park

One individual, David Bischoff, self-made czar of the Morgan Hill Planning Department, killed every initiative we proposed for commercial or residential development. He decreed that such a large park bordering the small Morgan Hill downtown could only be used for industrial development even though that would mean ten times the amount of industry that the small town could absorb. It was perfectly logical to develop some commercial and some residential along with the industrial, but Bischoff had personal ties to other developers and other land owners and was flagrant in his exercise of power against our project. Even when we came up with a commercial plan including Mervyn’s (a department store badly wanted by the city), Bischoff vetoed it. A citizen’s committee had to circulate a petition, call a special election and vote on it to get it permitted. The two-year delay that Bischoff caused this shopping center project was largely responsible for a $3 million dollar loss. The shopping center exists today—attractive buildings beautifully laid out, mature trees and landscaping serviced by convenient boulevards—a huge success for the city.

So it was “timing” that ruined us. One thing Bischoff was a master at was delaying projects, in fact he was condemned for this as well as for corruption by a Grand Jury but somehow survived in his post.

When we started the Business Park, Morgan Hill was a little line of strip stores, which had been bypassed by Highway 101, and had very little future. I provided the economic engine, the planning, the architectural inspiration and vitality to make it into the thriving city it is today. From four different property owners, I amassed 387 acres of land spanning from the entrance of the city to the downtown. I wanted enough land to control all the environs of WILTRON our R&D and manufacturing company, which we were relocating. As a part of the Business Park I planned for a lovely entrance to town with tree-lined boulevards created a beautiful architectural theme for the initial 150,000 square-feet of buildings of WILTRON, solved the city’s water problem by locating water substrata east of town and producing nitrate-free water for the community, built an elegant suburban shopping center bringing Mervyn’s and Target department stores to town.

Being realistic, I never expected reward or praise. I certainly never got it. No more than a few dozen people ever knew that I was responsible for their lovely prosperous city.

I had the idea for an RDA to recapture county tax money for the city infrastructure. After it was put in place a half dozen local property owners and builders made their fortunes on the RDA (one local developer has cleared more than $6 million from the RDA). The local developers and their pals at City Hall stopped my projects in the city core area and took advantage of the economic engine I had created in order to develop their peripheral properties. So the city got developed from the outside in. The City Planning Director and his City Manager partner squandered tens of millions of dollars of RDA money among their local land owner buddies; it was so flagrant the city voted against the second round of RDA extension.

To curb the devious city officials my people worked long and hard to get three reformist people on to the City Council on the platform of cleaning up City Hall. To my astonishment, within three months, they were seduced by David Bischoff, Planning Director, and that was the end of the reformist City Council. That Bischoff was more than a grand chiseler; he was indeed Machiavellian.

Of course, it was an uneven match: I was preoccupied with building an international company and exercised honest concern for the betterment of the city; these local people were 100% involved with their shady schemes. After I sold my interests in Morgan Hill, Bischoff even made an attempt to rename Jarvis Drive, one of the handsome boulevards in the Business Park. (It shows that I didn’t leave Bischoff without scars.) My friend Linda Stuckey aired his scheme and with the help of some friends stopped him.

In their greed and disregard for legality Bischoff and Biggs lost an auto mall and its subsequent revenue for the city. It was all set to go for the Business Park in the south end of Cochrane. Their clumsy attempts to entice dealers to their optioned land on North Cochrane lost the deal altogether.

Overall I feel good about my Morgan Hill experience because I would rather lose money on a very beautiful, successful project than profit on a shoddy project. I really have a feeling of pride in my Morgan Hill legacy, and that is what counts to me, the reality of a beautiful, nicely planned business community where my old company is well ensconced. The company workers for the most part live and work in this suburban setting full of natural beauty; the company is close to the educational and technical resources of Silicon Valley, but without being caught up in its traffic congestion. Proximity to San Jose Airport and San Francisco Airport provides access to our widening international sales and overseas manufacturing affiliate companies.
When it was clear that the Business Park was a financial bust the three major partners, Duane Dunwoodie, Pete Lacy and myself bought the interests of the forty some other smaller partners most all of whom were employees at WILTRON. We paid them their cost so they did not have to share in our loss, something over which they had no control.

We were all three tired of the project so we put the Business Park up for auction. Grubb and Ellis, a very respected real estate firm, handled the auction. We received one seemingly low ball bid of about 20 million dollars which we immediately accepted. The buyer finally reneged on the deal.

The real estate market kept dropping and our enthusiasm for the Business Park dwindled further as we had to keep putting more money to keep it afloat. As a matter of pride I would not let it go bankrupt, so we tried a second auction, no bids at all this time.

Finally Pete and Duane decided not to put any more money in, took their losses as a tax deduction, and gave their interests to me. The business-like thing for me to do at that time was to declare the Business Park entity bankrupt and take no further losses. I couldn’t go that route. I didn’t want such a black mark upon WILTRON or upon me and my children. So I put in several more million and finally, with a bit of luck, found a real estate developer along with a Malaysian investor who paid me 7 million dollars for all my remaining interest.

Two years thereafter the Silicon Valley real estate market turned around. The new developer will likely make a tidy sum for himself and his investors.


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