HERCULES -- A revised purchase-and-sale deal with Safeway for the vacant tract known as Sycamore Crossing comes before the City Council on Tuesday as substantially the same one the council rejected four weeks ago.
The price is unchanged, at $5 million. The only substantive difference is a $3 million cap on the cost of removing stockpiled dirt and undergrounding utilities, down from $4 million in the earlier draft. The remaining proceeds would go not to the city but toward bond debt service of the Hercules Redevelopment Successor Agency.
On Sept. 10, several council members expressed misgivings that the deal was too favorable to Safeway and its development subsidiary PDC.
The 11.44-acre site consists of an 8.2-acre and a 3.2-acre parcel. The parties initially had agreed to a $16-per-square-foot price in January 2012; the $5 million comes out to about $10 a square foot. But a deed restriction on the 8.2-acre portion bars the establishment of a grocery store, so Safeway now plans a grocery store with rooftop parking on the unrestricted smaller portion as the anchor of a surrounding shopping center.
The price drop reflects the added cost of construction, City Manager Steve Duran explained.
Councilman Bill Kelly had urged approval of the deal, arguing that price was secondary because none of the proceeds would go to the city and that Hercules would benefit from sales tax that a consultant pegged at $14 million to $26 million over 30 years. The council eventually voted 3-2, with Councilwomen Myrna de Vera and Sherry McCoy dissenting, to instruct Duran to negotiate a better deal with Safeway and bring it back to the council Tuesday.
De Vera also had complained of the absence of other competitive buyers, contending that Safeway had been given an exclusive right. But references to a Request for Qualifications by three city managers in weekly reports between November 2010 and March 2011 suggest a more complex reality.
A Dec. 1, 2010, RFQ anticipated "a Safeway Lifestyle Store" with a minimum of 55,000 square feet as anchor tenant.
The Dec. 23, 2010, weekly report by then-City Manager Nelson Oliva said the city had received three responses: from Safeway/PDC; Sargent Town Planning/Studio One Eleven; and Shea Properties.
Oliva's successor, interim City Manager Fred Deltorchio, said in two later reports that the city was reviewing the responses and in a March 2011 report said Safeway was interested in the site.
City officials last week did not provide details of what the two other respondents envisioned at the site.
De Vera, one of two members of the current council who were also on the council at the time of the responses to the RFQ, said in an email late Friday she never read the responses from Sargeant Town Planning and Shea Properties, adding: "Staff did not share this with the City Council."
Current Mayor John Delgado, who also was on the council at the time, did not immediately respond to a request for comment.
According to city documents, Hercules' discussions with Safeway over Sycamore Crossing date back at least as far as February 2007.
Contact Tom Lochner at 510-262-2760. Follow him at Twitter.com/tomlochner.
What: Hercules City Council
Where: City Hall, 111 Civic Drive
When: 7 p.m. Tuesday