ALBANY -- The city and UC Berkeley are trying to figure out their next move after Whole Foods Market pulled out as a tenant from the proposed University Village development last week.

The retail grocery chain cited delays to the project and said the terms of its lease with the University of California have not been met.

The decision, announced on Sept. 21, means there is no longer an anchor tenant for the project, which was finally approved by the City Council in July, only to have two lawsuits filed against it and a referendum petition circulated among Albany residents.

The decision to pull out of the project came four days after the referendum was certified.

"While we regret the loss of the project's anchor retail tenant, we understand the firm's frustration over further delays that come on the heels of five long years of extensive community meetings related to development of the vacant parcel on the corner of San Pablo Avenue and Monroe Street," said Robert Hatheway, UC Berkeley vice chancellor, real estate, in a statement released by the university. "The end result of that engagement process was a carefully considered plan and development agreement that reflected and supported the expressed interests of the community."

Officially, the City Council approved a grocery store, so if UC can replace Whole Foods with another tenant, it's possible that the project can still move forward.

Dan Mogulof, executive director of UC Berkeley's Office of Public Affairs, said the university is beginning the process of looking for another anchor tenant.

"We remain completely committed to the project for all of the same reasons that led us to initiate it many years ago," he said. "We believe that it holds out the opportunity for a significant win-win, in terms of bringing a quality grocery store to an area that needs it as has been made clear by the community. We remain undeterred. And we feel very, very optimistic about the prospects for bringing in a new tenant."

Tarina Larsen of Keep Albany Local, the group that circulated petitions calling for the referendum, said the pullout of Whole Foods is no victory for those who want a smaller development than the 57,000-square-foot market called for in the university's plan.

"It doesn't change anything," Larsen said. "The development agreement still stands. The UC is still in search of a big block tenant and one that would compete with our local business community. In light of the referendum, our view is the City Council should rescind the agreement."

Added Larsen, "They're going to need a tenant and it's up in the air. They're looking for a grocery store of 57,000 square feet. It could be a Safeway or a Lucky. Such a grocery store would directly compete with our local businesses."

The City Council is to take up the referendum when it meets Oct. 1 and must either rescind its approval of the project or call a special election so residents can vote on whether to approve the proposal.

The project includes a market and assisted-living housing for senior citizens. Approval came in July at a six-hour special meeting of the City Council after much back-and-forth between the university and the city and several meetings of the council and the Planning and Zoning Commission.

It's unknown how long the Whole Foods decision to pull out will delay any construction.