Council to review options for center anchored by Albertson
’s
Routes to rejuvenate the aging Morgan Hill Plaza, the location of the Albertson’s grocery store, at Monterey Road and West Dunne Avenue will go before the Redevelopment Agency/City Council Wednesday night.
“We would like to see what direction to take and what recommendations they have,” said Joyce Maskell, manager for the city Business and Housing Services. She said that each option has a different price tag and that will affect recommendations.
The RDA will see four plans to improve the use of this prime real estate site at the edge of downtown, ranging from a total city purchase of the 7.5-acre property and its structures to a minor facelift with façade improvements. In the best possible situation, a new center would attract a high end/niche grocery, such as Whole Foods, Cosentino’s, Lunardi’s or Andronico’s – all of whom are seeking sites in California – expecting other attractive retailers to follow.
At the other end of the probability scale, low-end discount stores might be more likely tenants, according to a report prepared by the Conley Consulting Group, based in Oakland. The cost for the consultant was more than $40,000, according Maskell.
Reacting to a downturn in the center’s appearance and located across from the new community center and at the south entrance to an increasingly vibrant downtown and to the clamor of residents wanting better shopping, the city hired the Conley Group to study what could be done.
The primary stumbling block is that, of the center’s seven owners, only two are open for any change at all, though Albertson’s is working on relocating to the east side of Hwy. 101, which would free up its space for a new, more appealing anchor store. The other barrier is a smaller local population than most stores are looking for before they take a chance on opening.
The center was built in 1972.
CCG’s report includes a chart with specifics required by the high end stores before they would consider locating in a particular area.
Morgan Hill meets and exceeds the income requirement – in 2000 average income was $93,400; by 2005 it will be $99,400, according to ABAG, the Association of Bay Area Governments.
Cosentino’s, Lunardi’s and Andronico’s list average household income of $70,000 as their entry level. Whole Foods lists none; Trader Joe’s wants upper or high.
The three full-service groceries require populations of 100,000; Trader Joe’s 40,000 and Whole Foods lists only “high education levels and high population density.”
Morgan Hill’s population as of Jan. 1, 2003 was 34,900. The report does not say if the stores’ population requirements include only in-town residents, sphere of influence counts (San Martin and unincorporated areas) or if it would consider potential customers those driving through town – or down Hwy. 101 – on their way to Gilroy, Hollister or Salinas.
Gilroy has attracted many “big box” stores to its outskirts with a population of 45,000.
One bit of good news in the CCG grocery report is that a company called Wild Oats is looking for a strip center – which the Plaza is, has no stated population and income levels at only $65,000 – and is targeting markets without a Whole Foods.
Wild Oats is a San Diego-based natural and organic grocery with no location north of Los Angeles. Unlike Whole Foods, they operate full-service stores and sell pet food, household cleaners and paper products but, like Whole Foods, maintains fresh produce, sustainable fish and meats fed without the use of antibiotics.
Wild Oats chickens, its web site proclaims, are raised in spacious houses with natural light and cattle are raised on wide open ranges.
CCG interviewed City Council members, city staff and interested stakeholders that included property owners and tenants in the Plaza, members of the Downtown Association and the Chamber of Commerce. It found that most of the property owners are longtime owners who are satisfied with the rate of return from rents – even though they could earn more if they took part in the city’s renovation plan.
“They are not concerned about tenant quality other than the ability to pay rent,” the report states.
The report said that “several council members” would consider exploring the use of eminent domain – whereby a city can purchase property for the public good, against the property owner’s wishes, at a price set by an outside entity – to gain ownership of the property.
“One council member was strongly opposed,” the report said. Because interviews for the report were done confidentially, the council member could not be identified.
DEVELOP PRIVATELY
Under Plan One the city would buy the property – $7 million to $11 million – and issue a Request for Proposals to the private sector, hoping for an upscale retail center, a retail/commercial mixed-use center – a strategy closely aligned to the new Downtown Plan.
The property would later be sold.
“(This plan) would provide the dramatic change that community leaders would like to see,” the report said. It would collect the properties under one owner, lessening future problems from divergent interests and it would allow the city to recover some of the cost of buying the property.
Eminent domain is not currently a power enjoyed by the RDA.
An alternative of Plan One is for the city to acquire the Albertson’s and Charter School – formerly Thrifty Drug Store – sites, plus the gas station, and effectively control the overall character of the center.
FOR PUBLIC USE
In Plan Two the city buys the property for between $8 million and $11 million, razes the buildings and builds a new City Hall, library, police headquarters or permanent location for the Morgan Hill Charter School. No financial reimbursement would be forthcoming except from the sale of the existing Civic Center property, which could be abandoned, the report said.
However, the city is purchasing a building on Vineyard Avenue for the police department and Charter School has already moved into its new location at the former Encinal Elementary School in Coyote.
FIX UP ONLY PART
Plan Three is actually Plan One Light. The city would remove the gas station and relocate the apartment complex, reconfigure some retail spaces, improve access, parking and landscaping and updating façades. This use might require eminent domain, the report said but would be cost less than plans one and two. Owner reluctance would be a problem but this alternative would only cost between $1.5 and $3.5 million.
Another downside to Plan Three is that it does not cause the desired dramatic changes wanted by the community; nor is it likely to attract the high quality retailers.
FACELIFT
The least ambitious plan would have the RDA provide incentives to property owners to make cosmetic improvements to store façades. This would include awnings, signage and enhanced landscaping. A façade improvement program has already had a positive effect on businesses in the downtown and other areas.
The complete Council agenda in full is available at the City Clerk’s desk in City Hall and on line. City Council and/or the Redevelopment Agency meets at 7 p.m. Wednesdays in City Hall Chambers, 17555 Peak Ave.
