The importance of keeping the public benefit issues alive when redevelopment is dead
By Anna Daniels
“[William] Jones said he did not follow the usual rules of commercial development and passed up other business opportunities to make the City Heights development work.
‘It was a labor of love and part of the original dream I had of putting my arms around an existing neighborhood and working with the residents and the government sector to create a catalyst for change.'” City Heights retail center changes hands, Roger Showley, UT San Diego 12/8/12
On January 15 Councilmember Marti Emerald released a statement about the imminent closure of the Albertsons store and pharmacy in the City Heights Retail Village. This announcement took the community by complete surprise. While it is true that “This planned closure of a major retailer is unfortunately a common story in older, low income neighborhoods…,” this particular Albertsons is part of a unique, extensive redevelopment effort in City Heights.
Albertsons opened in 2001, has a large footprint, carries fresh produce, is clean and well lit and includes the kinds of onsite services within the store that one associates with its more suburban (read successful) counterparts– Starbucks, deli, bakery as well as services tailored to City Heights tastes and needs.
It is frankly difficult to perceive how this particular store fits into the “common story” narrative. A more nuanced and perhaps more illuminating explanation is that consumers found Albertsons prices too expensive and shopped elsewhere; this particular store underperformed; and the Albertsons stores in general and parent company Supervalu were beset with poor management practices that resulted in private equity firm Cerberus and its real estate partners taking control of separate chunks of the Albertsons chain, including the Albertsons in the City Heights Retail Village.
The February 20 closure of Albertsons has ignited endless speculation about what should, could, and shouldn’t open on that site. What this speculation isn’t addressing is to what degree the original redevelopment vision expressed by William Jones of working with residents and government entities in conjunction with private interests is legally relevant in the form of DDAs (Disposition and Development Agreement) with owners or major tenants, or in the form of restrictive covenants when the property transferred to Kimco Realty.
This speculation reflects an assumption that Kimco Realty, the publicly held REIT (real estate investment trust) which bought the Retail Village from Jones in 2012, will incorporate input from the City Heights community, elected representatives/government sector, and other parties of interest, including non-profits and labor, as part of a holistic leasing strategy. There is absolutely no public indication at this time that this is indeed the case.
It should be noted that Kimco is in partnership with Cerberus Capital Management, which bought the Albertsons, even if the relevancy, if any, is unclear at this time.
As for Cerberus, the 2006 deal has been a runaway winner both for the private-equity firm and its four real-estate partners in the investment, publicly traded Kimco Realty Corp., Chicago’s Klaff Realty LP, Philadelphia’s Lubert-Adler Partners LP and Schottenstein Real Estate Group of Columbus, Ohio. They bought what some considered the dregs of the Albertsons chain at a steeply discounted price that was essentially the value of the underlying real estate.
When the City Heights Retail Village opened in 2001, it completed redevelopment efforts that began in the 1990’s when the City of San Diego utilized eminent domain to clear eight city blocks south of University Avenue and relocate residents. The next redevelopment phases were undertaken in partnership with the non-profit Price Charities. These phases focused on much needed and long ignored public infrastructure — the construction of a police station and municipal gymnasium, two new schools, an adult education center, a park and a library/performance annex.
The final phases, which included the City Heights Retail Village, were accomplished by the for-profit CityLink Investment Corp, headed by former City Councilman William Jones. Jones commented about this process:
“We got in the car when the old Vons shut down,” Jones recalled. “We began zeroing in on City Heights as one of the possible areas where we would work together to invest in a holistic way both in the for-profit and nonprofit activities.”
Neither the significant public investment nor the equally significant public benefits arising from this public/private redevelopment mix should be overlooked going forward. Ongoing public benefits are the essence of the redevelopment promise to the residents of City Heights. But in looking forward it is essential to look back, to determine if redevelopment documents and contracts formalize that promise. What city of San Diego department or agency actually has these documents?
What role does Civic San Diego, the city owned non-profit empowered to oversee active projects of the former Redevelopment Agency, play in this issue?
Civic San Diego operates under California Redevelopment Law which “defines the financial tools, legal authority and citizen participation necessary to successfully implement adopted plans.” Does this legal authority extend to the enforcement of DDAs or restrictive covenants, if any, that apply to City Heights’ redevelopment plan?
The property manager of Kimco Realty is currently in discussion with potential tenants, including a grocery store operator. It is reasonable to assume that Kimco is motivated to find another grocery store. Their own press release described the purchase of the City Heights Retail Village as a “notable transaction” in specific terms.
City Heights Retail Village, as previously announced, a grocery-anchored acquisition in San Diego, purchased for $35.6 million, including the assumption of $20 million of mortgage debt. The fully occupied 109,000-square-foot center is well-located in a densely populated infill location three miles northeast of downtown San Diego, and enjoys a strong tenant base of national and regional retailers with long-term leases.
While Kimco may be motivated to find another grocery store, it cannot be assumed that some very specific public benefit issues are operative in their leasing plan. These benefits are not necessarily obvious to residents themselves when they debate the virtues of a Sprouts over a North Park Produce or People’s Organic Food Market.
Plain speak about public benefits For better or for worse, City Heights residents live within the redevelopment process. That lived experience has little to do with DDAs and much to do with where to buy a transit pass and how to stretch a limited income to cover the necessities of life.
It would be a grave injustice to the people who live here to in any way diminish or gloss over the outside forces which shape their lives. This is not a complete list, but rather a starting point, that respects the lives of the people who live here and acknowledges the challenges that they face.
City Heights as food desert The most obvious critique of the closure is that City Heights will lose a much needed retail grocery. In a recent Speak City Heights column, Megan Burks explains why the term food desert is applied to City Heights. This public benefit should not be underestimated:
Many call City Heights a food desert because it falls short on grocery retail space. Its seven full-service grocery stores offer just 1.64 square feet of retail space per resident, compared to the industry standard of 3 feet, according to a 2011 study by Social Compact, a nonprofit that encourages private investment in low-income communities.
At-risk populations– WIC and SNAP The general lack of grocery retailers impacts those low income residents who depend on WIC (Women Infant Child) and SNAP (food stamp) subsidies provided by the County of San Diego. It is unclear how the use of these subsidies at Albertsons compares to other grocers in the area and to Albertsons in other parts of the city. What is clear is that the County– specifically District 4 Supervisor Ron Roberts– should be a party of interest in assessing the public benefit of these subsidies and to what degree the community can meaningfully (or not) absorb these individuals at other locations.
Transit Pass Sales City Heights is a transit dependent community. The local Route 7 is the most heavily used bus route in the city, yet it wasn’t until a few years ago that transit users could buy their passes in City Heights–at Albertsons–the only point of sales in City Heights.
Prior to that, residents had to find a Vons or other sales point outside of the community. MTS (Metropolitan Transit System) is a party of interest and must immediately enter into an agreement with another City Heights entity to provide this service so that there is a smooth transition when Albertsons stops issuing them.
The loss of 90 unionized jobs City Heights is a low income community in large part because so many residents are employed in low wage jobs. In 2002 the City Heights Retail Village provided 300 jobs. Over a third of those jobs were well paying, benefited jobs at Albertsons– the other retail jobs not so much.
When Albertsons closes, those employees are gone. Albertsons management has publicly stated that it is committed to absorbing those employees in other locations. An anonymous source contradicted that statement, saying that layoffs are imminent. Labor is a clearly a party of interest.
The issue of raising the minimum wage and advocacy for a living wage is a national topic and a subject of debate between Mayoral candidates David Alvarez and Kevin Faulconer. Alvarez has come out strongly in support of raising the minimum wage, while Faulconer has come out against it. They too should be parties of interest.
Local hiring in limbo The Redevelopment Agency released a City Heights Urban Village fact sheet in 2002 that described the Retail Village component in noteworthy ways (emphasis mine) :
City Heights Retail Center – By emphasizing crime prevention, infrastructure maintenance, and spending habits among San Diego’s diverse urban sector, developer CityLink Investment Corp. was able to draw a number of large retailers to the center. Now the City Heights Retail Center is 100 percent occupied and provides 300 jobs to people living in the surrounding neighborhood, as well as quality goods and services. The Redevelopment Agency issued tax allocation bonds of$16 million to support site acquisition, relocation assistance and site clearance costs.
City Heights residents need jobs. They need livable wage jobs. The non-profit City Heights Community Development Corporation (CHCDC) received CDBG (Community Development Block Grant) funds during the redevelopment process to establish a local hiring program. It was this kind of partnership that resulted in the opportunity for 300 City Heights residents to become employed in the Retail Village. The CHCDC is a party of interest.
The melting pot inside of the melting pot City Heights is well known for its diverse shopping and dining experiences. You can buy durian and jackfruit in the Asian markets on El Cajon Boulevard, sop up kitfo with a piece of injera in an Ethiopian restaurant and purchase bolillos, straight from the oven, in a local Mexican panadería.
These places present small slices of the City Heights experience. You enter a different culture, with a different language and as a result communication can often be reduced to pointing and smiling. City Heights is a melting pot of ethnicities and languages.
Albertsons has played the important role of the melting pot within the melting pot, a place where most of us can find familiarity by virtue of the products and the diverse ethnicities of the employees themselves. The clerk who checks out your order of matzo ball soup and flank steak may be a Spanish speaker as well as English speaker and the clerk bagging your order may be from Somalia. This does not occur in the monoculture of an Asian or East African market or a bodega and that makes the Albertsons shopping experience important. All of us in City Heights are parties of interest.
Councilmember Marti Emerald has clearly taken the lead as a party of interest. San Diego Free Press encourages voices within the community and other parties of interest to participate in this discussion. It is an important one and it is just beginning.
Update to original post:
San Diego, California News Station – KFMB Channel 8 – cbs8.com
Author’s note: I have resided in the home which my husband and I have owned for twenty-seven years in City Heights, a few blocks from Albertsons. I was completely dependent on public transit for all the years that I worked at the Central library downtown; was a past president and board member of the CHCDC, and will miss the clerks at Albertsons who shared bits of their lives with me over the past decade. This is the only way I know to let them know how much I appreciate them.
Anna Daniels
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If anyone needed a roadmap on the questions that need answering, they don’t any longer. That property is valuable. It will be filled, for sure.
I wonder if it isn’t just right for a kind of bazaar, an indoor version of a farmer’s market. Open it and they will come? Maybe have food and government programs on some days, and garage sales on others. Flu shots and clinics on still others? It would take some serious government coordination, but then, that’s what government is supposed to do.
“It would take some serious government coordination, but then, that’s what government is supposed to do.” True but how confident are you in SD to do that?
Or like the Zion asian market in the old K-Mart space on Clairemont Mesa Blvd (near Convoy, naturally :-) That’s a completely private enterprise, too.
The only thing is, if a Sprouts type of store goes in there won’t that be a bit on the pricey side for the neighborhood. Hopefully a Vons for Ralph’s or at least an IGA store will go in. I like the bazaar idea though.
Actually, as far as produce goes, Sprouts is quite a bit less expensive than the big chains. There are other items that you’ll find that are less expensive at Vons or Ralphs, and the selection is an obvious advantage for the big boys, but when we’re talking about produce, you can’t get any better than Sprouts.
I’d like to see an Aldi myself, it’d fit far better in the neighborhood than any of the alternatives.
Sprouts stores tend to dedicate a lot of real estate to vitamins and other health products, and their packaged goods are usually of a quite pricey specialty variety, but I’ve always found their staples to be competitive (butcher and deli sections) or to blow the union grocers out of the water on both price and quality (produce).
Case in point: I happened to be working up in Encinitas a week or so ago and stopped in at a Sprouts (haven’t been to my local Midway location in several months, many here will know why), and found trimmed chicken breast for $1.69/lb (best sales I’ve ever seen elsewhere are around $2), broccoli at $1 for 3 lb, blackberries for 88 cents a tub, apples for 88 cents a pound…bottom line is I saved about $15 on a week’s worth of produce for my family (plus got treats like “expensiveberries” that I’d never pay $4 a clamshell for) and my wife is stoked because we’re going to be eating a ton of chicken for the next month, as the freezer is loaded.
Back on topic, I like the bazaar idea but don’t know how much traction it would gain – best bet for the community would be if an IGA-type individual investor could find the upside that corporate executives can’t see from their Idaho headquarters.
Anna: this seems to imply that there is ambiguity about the terms of all prior redevelopment projects being enforced by the current “successor agency” at the City or their contracted agent, Civic San Diego. That goes far beyond just this project and City Heights. The $16 Millions in redevelopment bonds means somebody is paying on those and who holds what part of the $20 Millions in “mortgages” that went with the sale in Dec 2012? You have raised excellent issues that I hope our elected reps and other “parties of interest” you have identified will look into as soon as possible. We want to know who has benefitted from the public investments and what can we all do to ensure that the new tenant at the “Retail Village” is a step up and forward for City Heights, not a socio economic slippery slope slide backwards.
Jay- there is a need moving forward to track in a comprehensive waythe responses of what I have identified as parties of interest.
Some of the public benefit issues are much simpler to address than others. Identifying a site in City Heights to disburse bus passes is not rocket science. The redevelopment issues are much more complex and have relevancy beyond City Heights. Determining who actually has the redevelopment documents is also important. There are a lot of moving parts.
In 2007, Cerberus purchased an 80% stake in Chrysler for $7.4 billion. They own a whole host of other companies and trade them around like so many cards on a Monopoly board. In January 2013, it announced a deal to acquire 877 stores in the Albertson’s, Acme, Shaw’s and Star Market chains from SuperValu for $100 million and acquisition of $3.2 billion of SuperValu debt. It’s probably an understatement to say that Cerberus is in it for the money. That’s their only consideration.
Cerberus is named after the mythological three-headed dog that guarded the gates of Hades. Cerberus has more than US $20 billion under management in funds and accounts. Investors include government and private sector pension and retirement funds, charitable foundations, university endowments, insurance companies, family savings and sovereign wealth funds.
Unless there are restrictions to the contrary, Cerberus will probably sell out the City Heights Albertson’s location to the highest bidder. I don’t think Ralphs will buy it as they are getting out of locations that are less profitable like the one on Second Street in El Cajon. A Wal-Mart is taking over that location. That might also be the fate of the City Heights Albertson’s location since Wal-Mart is happy to invest in less affluent areas.
Good insight John and excellent researched and written article Anna. Curious that KIMCO and Cerberus are partners in this deal (if I read your article correctly). There seems that there might be the potential for a conflict of purpose between the two since KIMCO (Kimcorealty.com) prides itself on being in the business of owning and managing shopping centers with a major food retail tenant intact while Cererbus is in the business of dismantling stores like Albertson’s and their union employees. Surely the SEC, which has over sight over both, since they are publicly traded, would wonder who is protecting the intersts of the shareholders in this deal.
Jim- The conflict of purpose that you point out between Cerberus and Kimko is very interesting. Their partnership needs to be mutually beneficial or they wouldn’t be partners. So is there a mutual benefit in what appears as a conflict of purpose?
The SEC oversight would only apply to Kimco– Cerberus is a private equity firm.
Consider this: would everyone start screaming if Wal-Mart (with groceries) was interested?
I’d call that a conflict of progressive interests :-)
Dorothy- that’s an important question. There is a larger question that needs to be answered to provide more context.
Has any entity done a survey of wages in City Heights? Any survey specifically about wages in grocery stores/markets? Or restaurants, including fast food?
If we don’t address the issue of wages in a broader sense, the conversation reflexively devolves into “poor people and poor working class people need somewhere cheap to shop.” The necessary question is “why are there so many poor and struggling families in communities like City Heights?”
The bottom line is this: The city has to do whatever it has to in order to ensure that another grocer takes over that space, and do so ASAP. The city pushed the development project in the first place, and now it’s their duty to continue to see it through for the residents of City Heights. They deserve the same access to services that the rest of us do.
That being said, I’m not sure that the loss of Albertson’s is such a huge one, particularly if they can get an adequate replacement. City Heights may actually be better off. I live less than a block away from an Alberton’s, and I won’t shop there anymore. Their prices are ridiculously high in comparison to Ralphs and other brands. And the chain has had some big problems.
Ultimately, this could turn out to be a blessing in disguise.
Again, agreed. I used to shop Albertson’s when I lived in El Cajon (a few blocks from the aforementioned Ralph’s property that was horribly mismanaged before becoming a Tesco/Fresh & Easy and failing again) and before that at the chain’s previous Lucky’s incarnation in Spring Valley, but the last time I went in one I was appalled at the pricing compared to the Kroger/Safeway (Ralph’s/Vons in San Diego-speak) properties I’m used to, since we don’t have an Albertson’s near my apartment.
Northgate-Gonzalez – you guys listening?
I am very sad to hear that the Albertson’s in City Heights is going to close. It is a great store and it has great people working there. What are the people in City Heights going to do it is the only big grocery store in the area. It is very sad..
It may not be so doom and gloom. Did you read some other the other comments? More likely than not, another grocery type still will end up taking over the space and who knows? It may be better. As Andy pointed out, the Albertson’s chain has had a lot of problems lately. The chain has been struggling in the past few years and aside from this store, 26 more across the country are going to close. Just about every Alberson’s in SD is performing far behind the other two major chains we have here. The one in North Park near the corner of University and Park is a ghost town. The one in Mission HIlls on Washington is pretty much the same way (tho it’s across the street from a newly renovated Vons) . Just maybe the one in City Height is under performing because the residents themselves are using other options, despite mobility problems. Read what Kyle said below. No one has a crystal ball but again like Andy said this may end up being a blessing in disguise.
Oh god. Enough with the making of Albertsons as some kind of martyr for being “willing to do business in city heights”. They inflated ALL their prices at least by 33% charging *STUPIDLY HIGH* for household food staples, including fresh produce. Residents can shop down the street at Murphy’s and get fresh produce and meat for a fraction of Albertsons ridiculously inflated prices. Residents can also get their medications at the Walgreen’s *ACROSS THE STREET* (or the LA Meistra community pharmacy, or the CVS) at pretty much the same competitive prices (if not better)
I’m so tired of reading “Oh, poor City Heights” from people who clearly never shopped this albertsons. Good bye and good riddance to their exploitation.
How do we introduce the need for raising the minimum wage and the issue of living wages into this discussion? There have been comments from consumers debating the advantages of different grocery stores; important questions have been raised about the city’s role and authority as the successor agency to redevelopment; there has been analysis of the corporate context (Cerberus/Kimco).
The fact remains that we have low-income communities such as City Heights because so many people in these communities work in low wage jobs. Will Albertsons replacement ameliorate this situation or continue it?
I’m kind of with Kyle on this. Having lived in San Diego for over 14 years most recently – and over 20 years as a kid, City Heights isn’t going down the tubes. My own thought is that most of the community just doesn’t “chart” or manifest it’s shopping habits like stereotypical suburban shoppers. There are plenty of smaller grocers and markets. Granted, these are not union places. But then, since when has San Diego been a leading union town? And as for busting out some overhyped grocery store, please don’t. Maybe it’s better to see if these spaces can be filled without self serving developers, especially those working the system and asking for their government handout. Oh, the humanity.
On the topic of “government handouts”, in this article I think the issue being raised is not what new public incentives are appropriate, but rather, given the fact that the development that has already taken place was done with public support conditioned upon certain agreements (DDAs, etc.) what is the status of those pre-existing agreements. To the degree that any already established agreements exist, we need to know what entity has that information, what those DDAs are and what leverage (if any) they can provide us in shaping the eventual outcome.
Wow, where do I begin? So much to say on this issue, but not enough time to write it all. So I will make it brief and a call to action. First, thank you to Anna Daniels for all of the information she provided. Unfortunately, most of it is over my head. I guess that’s why bureaucracies were created to keep the little guy disenfranchised. It doesn’t need to be that complicated, I think we could figure out a better plan for City Heights, let’s start with getting a grocery store that we want.,
With that said, we should still know how we got to where we are today and for that I would need to sit down for at least an hour to have someone do a presentation on what the hell happened over the past 13 years when Albertsons first went into the current location. (I would support a public forum to inform people as to who the players are and how they benefited financially from all this), but more importantly what we are going to do next? If we organize quickly we can have an impact on what happens in this neighborhood and what business goes in there.
I’m for talking about getting a cooperative worker owned grocery store. Similar to People’s Grocery, but I’m not too familiar with their structure, so I’m not sure how much worker owned it actually is.
I remember when shopping at Albertsons when it was still across the street behind the Jack and the Box, those were the days. Who’s down to organize a community wide movement to dictate what type of business opens in our community? I want union jobs or better yet worker owned with ethnic food and healthy affordable options and no I’m not talking about Sprouts, Wholefoods, Trader Joe’s or any other corporate owned overpriced anti-union business. (this includes Northgate, IGA and many of the other “family” owned businesses. Let’s be a model of what is possible and dream big. I’m thinking environmentally friendly renovations and locally grown and raised foods as well.
Abel
East San Diego
Abel- you are quite right about the layered significance of the Albertsons closure. It was essential to cover as many aspects of it as possible in the hope that a broad group of individuals and entities would become involved in a solution. As you point out, some of the concerns are couched in the dense language of redevelopment. Even if you or I don’t approach the closure from that perspective, it is essential that someone does.
You raise the issues that are on the mind of many residents in City Heights who want to be able to shop for food that reflects their preferences and affordable prices. And many people are realizing that this decision should strengthen the sustainability of CH through liveable wages and job opportunities. You have also asked whether there is a way for residents to become direct stakeholders in the endeavor that replaces Albertsons. These are all important concerns and we shouldn’t lose sight of any of them.
Whatever happened to the SD Vegan Coop at the Pearson gas station?
They failed to gain enough public support on their Kickstarter to open
Hey that’s awesome Don K. We should try to get a hold of that guy in the video and find out if he is still interested in opening up a coop in East San Diego (aka city heights).
feel free to contact me directly abel.macias@yahoo.com to organize.