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:
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.