HERCULES -- After seven years of effort, Safeway on Tuesday got an OK from the City Council to build a grocery supermarket near the city's busiest intersection -- provided the project makes it through the Hercules Planning Commission, the California Environmental Quality Act, the city's form-based design code and possible zoning restrictions, among other hurdles that lie ahead.
The 5-0 vote came after some hand-wringing by Councilwomen Sherry McCoy and Myrna de Vera; both had dissented in a 3-2 council vote Sept. 10 to postpone for a month a decision whether to sell the so-called Sycamore Crossing tract to Safeway for $5 million, minus costs then capped at $4 million, and give City Manager Steve Duran time to negotiate a better deal. The 11.44-acre, bullet-shaped tract is bounded by Sycamore Avenue, San Pablo Avenue and Tsushima Street.
Earlier in the meeting, a battery of Safeway officials, consultants, brokers and lawyers made PowerPoint presentations and answered questions; speakers from the public mostly lauded Safeway and urged approval, while a handful said they would not shop at Safeway in Hercules or anywhere else.
The revised deal the council approved Tuesday was virtually the same as the one it balked at four weeks earlier, when McCoy, de Vera, Councilman Dan Romero and, to a lesser degree, Mayor John Delgado voiced misgivings that it was too generous to Safeway. The revised deal puts a $3 million cap on the costs, to be deducted from the $5 million purchase price, of undergrounding utilities and removing more than 100,000 cubic feet of dirt stockpiled on the property.
Councilman Bill Kelly had argued that the purchase price was secondary and that the most important aspect of the deal was the projected sales tax that a Safeway store with a gas station would generate for the city, estimated by a consultant at $13.7 million to $26.7 million over 30 years, even assuming current temporary tax measures are not extended beyond their sunset dates.
The sale proceeds -- at minimum $2 million under the revised deal, up from $1 million -- will not go to the city's general fund but instead toward paying off its vast redevelopment debt, more than $300 million.
Christine Firstenberg, a real estate broker working for Safeway and its development subsidiary, Property Development Centers LLC, said Safeway had been negotiating with the previous owner of the property, the family company of Robert and Richard Poe, as far back as 2006 and that Hercules stepped in around 2007 to buy the property from the Poes.
On-again-off-again negotiations between Safeway and the city ensued for several years, culminating in a January 2012 purchase-and-sale agreement for $16 a square foot, which would come out to $8 million, with the proviso that the city would take responsibility to remove a deed restriction imposed by a predecessor to the Poes that barred a large grocery store, pharmacy and alcohol sales, among other restrictions, on part of the site.
But a lawsuit brought by the city against the holder of the restriction, American Stores Properties Inc., went nowhere, and Safeway eventually proposed a store with rooftop parking, a much more expensive construction than a conventional, single-story store with ground-level parking, on the unrestricted, 3.2-acre portion of the site.
The revised purchase price of $5 million, which comes out to $10 a square foot, takes into account the reduced value of the restricted property and the extra cost of constructing a two-level store.
Deborah Karbo, vice president of development for PDC, said that taking into account community outreach and the application process, she hoped Safeway could open the Hercules store "much sooner than 2017."
There is only one other large grocery supermarket in Hercules, Lucky Food Center on Sycamore Avenue east of Interstate 80.
Contact Tom Lochner at 510-262-2760. Follow him at Twitter.com/tomlochner.