9/28/11

Purpose

To understand why some of the prime commercial property in Vallejo remains vacant for years.

Background

At the first Vallejo Planning Commission meeting for the application by WinCo Supermarkets, several people questioned why WinCo had chosen the former Elks Lodge site (Redwood Parkway and Admiral Callaghan Lane) over some of the vacant sites that appeared to be more desirable such as those on Sonoma Boulevard.

Findings

1) There a six commercial locations in Vallejo that are currently subject to deed restrictions. A deed restriction is a clause in a commercial lease agreement that prohibits the use of a property for purposes specified in the restriction. Deed restrictions are commonly applied to block the use of a location for the sale of grocery, pharmacy or other purposes depending on the wording of the restriction. Restrictions also often limit the number of square feet that can be used for a specific type of business. In the case of WinCo, deed restrictions on properties that would otherwise be suitable are rendered off limits.

 

The following commercial properties in Vallejo are prevented from containing a full sized grocery store by deed restrictions:

Click location to view image of property:

• One Rancho Square (Off Mini drive)

• Old Wal-Mart site on Sonoma Blv

• 5180 Sonoma Boulevard (Triangular vacant lot between Sonoma Blvd and Broadway, just South of Mini Drive)

• Old K Mart site 3684 Sonoma Blv

• 401 Marin Street ( near 201 Maine apartments)

• 141 Plaza Drive ( Marshall Department Store in Northgate shopping) 

  
  

2) Typically a deed restriction runs for at least 15 to 20 years. (see two examples).

Several of the properties mentioned above are either owned or rented by the Safeway Food

Chain.

3) In some cases it is more profitable to pay the rent on the property rather than let a

competitor use the site.

Comments

While the use of restrictive deeds may be good for the land owner and corporations, Vallejo pays a high price for these anti-competitive business deals.

For example, part of Sonoma Boulevard is now blighted due to all of the large vacant commercial properties. Homeless encampments are a continuing and current problem at both the old Wal-Mart and K-Mart locations.

For these sites to be viable they need an anchor store which is often a large food store. Yet these restrictive deeds insure that most of the sites will remain rundown and a blight on the neighborhood.

The City Attorney and the Planning Commissioners need to determine if the use of restricted deeds to keep out competitors can be stopped. Clearly it is a restraint of trade that is limiting the City's ability to generate significant taxes, hurting Vallejo's image and desirability for commercial tenants and stalling development and improvement, specifically along the Sonoma Boulevard corridor.

Comments

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Read the Staff Report   |October.02.2011 To Joe Feller The staff Report mentioned the 6 sites that were unavailible

Anonymous   |October.02.2011 The urban decay thats experienced on the west side of Vallejo did not just happen overnight. A true indicator of population movements in the city are traffic studies done over a period of time. If these studies were put on a graph along side grocery store consolidations and closures, this would answer many questions. It is true WinCo would never open at the Kmart site but is this because desirable population density and demographics died a natural death or was the west side of Vallejo strangled by corporate power and deed restrictions.

Joe Feller   |October.02.2011 Well, I wish that I had the power to tell the biggest corporation on the planet what to do. So in the real world, Wal-Mart did not build on the old K-Mart site because they did not want to disclose the economic impact of a 400k sq ft super store on the neighboring businesses. (Twice the size of the American Canyon store). Although I don't know the situation of the other locations, I am totally unaware of any deed restrictions on the K-Mart property. To the best of my knowledge, it is zoned for a 72k sq ft building as part of the White Slough site specific plan. It is also zoned mixed use which means that both housing and retail can be located there. I also believe that Wal-Mart refuses to sell to competitors. This is not a zone restriction but a corporate decision. I would ask Bob where he is getting his facts. Winco has claimed that the other possible locations in Vallejo are not available for them. So I would say, if the City desires a new location for the Winco, they would need to use eminent domain as was done in Hercules. They could condemn a certain site (although I would hesitate to do anything north of Redwood St.), and then offer it to Winco. Winco would never go for such a deal for a lot of reasons. But that would be the best for Vallejo. Which rarely happens.

Gabriele   |October.02.2011 I believe the issue is that certain strategic properties throughout Vallejo are vacant and not used for commerce. May they be deed restricted or simply kept empty because the owners can. The old K-Mart site is now WalMart property and the way I see it will remain empty until Wallie is good and ready to either sell it to a developer or keep it bare until the cows come home. IMO, the photo of 3684 Sonoma is NOT the SaveMart location in the shopping center across the street.

Anonymous   |October.01.2011 How do Joe Feller and Vicky Gray figure into all of this? They were out at the Kmart site with picket signs when the land was going to be developed. I suppose this is what their vision of "success" looks like.

Not So   |October.01.2011 @get a clue, the label for 3684 Sonoma Blvd is not the Kmart location. It's the old SaveMart location across the street in the shopping center.

Get a Clue   |October.01.2011 Your information regarding the old Kmart site is incorrect. It is not a question of a deed restriction, it is who owns the site -- Walmart. When Vallejo refused to work with Walmart to build a store there, Walmart said "ok, we will sit tight and do nothing. We won't sell it to someone that will compete with us and we will see how Vallejo likes an empty lot on a prime commercial corner." Walmart has the resources to wait Vallejo out and that is what they are doing. If they wanted to build a super store with grocery there, no restriction would prevent them, other than the anti-business environment of Vallejo.

Gabriele   |September.29.2011 Sorry, should read: 401 Marin Street

Gabriele   |September.29.2011 Look at the 401 Maine Street photo and the seriously raised *public* sidewalk. Who will receive the fix-it notification? How long will it take before the city/taxpayer will pay off on a lawsuit arising out of this tripping hazard, tax free of course to the *injured for life* party! Hmm, I could think of all kinds of things I was going to be able to accomplish before that sidewalk reared up on me and ruined my life!

wharf rat   |September.29.2011 i wonder if a purchaser of one of these properties found that the deed restriction was a hinderance to leasing or otherwise enjoying the benefits of owner - ship and went before a judge with a complaint of adverse condemnation due to the covenant's restriction on property that would meet city reg's for certain retail operation would be nice to see this challenged is there a lawyer out there who could comment ??..

Gabriele   |September.29.2011 Some further thoughts: The Turner/Adm.Callaghan property, partly owned by our city and a gent from Napa, the one that is providing drive by employment opportunities as well as the off roader/dust/dirt on the roadway paradise, would be great for an anchor store as well as entertainment center. Maybe those residents should be polled and asked what they would prefer. But heck that property may may not be available, the "For Sale sign pobably has been utilized as a sun porch! ...and Target has groceries.... How about having choices? WinCo will have followers just as Safeway, Costco, Grocery Outlet, Food4Less, etc. has their loyal shoppers. Btw, all those concerned about the demise of the mom&pop stores, that story has played out a long time ago because the consumer wanted larger facilities as well as a better selection of goods... Obviously very few cared when they went out of business

Gabriele   |September.29.2011 Let's see.... Sonoma/Mini, we have the long awaited Vargas Market, along with a few other small businesses, yet you would like to have another (larger) store come in at the old Safeway site? (Never mind the close proximity of the Safeway AC) ...and about putting a (any) grocer of considerable size next to Food4Less at Sonoma/Meadows? Yes, that would work! I could see Food4Less leaving and using the Nuggett excuse "if they (whomever) would come in we are gone". In their defense, I would not blame them, I do however blame Nuggett using this poor excuse and ringelspiel on us as an excuse for someone wishing to open a store clear across town. About putting WinCo at the Redwood/Sonoma old and vacant K-Mart (or is it WalMart now??) site. There is a market across the street at that location. Oh, I am sure they would just love having WinCo set up shop there. NOT! There does not seem to exist a proper thought process by those who wish to place WinCo up on Ascot/Turner smack dab in the middle of fairly dense housing ...and the cherry on the cake, COSTCO! Obviously those areas that would benefit from a grocery store can not be considered because the properties are not for sale. ...or are they? Sonoma/Lemon would come to mind. ...and why is Marshall's mentioned? Have they or will they vacate the property? How would Costco feel about a new arrival in close proximity? Quick

tramky   |September.29.2011 While it appears there could be some limitations to placement of deed restrictions on private properties of this kind, be careful about it--this kind of thing is full of the potential for unintended consequences. For the most part, private property rights should be maintained & defended against almost any assault.

Bigger Picture   |September.29.2011 Why do you think that Safeway would allow another store to open up down the street from their American Canyon store. I am sure they are getting good rents from all the tenants and the grocery store sees a lot of Vallejo residents to the benefit of American Canyon. They have done a good job of isolating them selves from competition. Safeway has located all of their operations next to highways and bought up or ran out any competitor. More tax base and jobs out sourced to another city and Vallejo gets decaying shopping centers with churches. Lord help us.

Peanut Gallery   |September.29.2011 Question from the Peanut Gallery, can any amount of money buy out the deed restriction? For instance, say Winco wanted to open on Mini Dr at the old Safeway site, could they ask Safeway if there is a price to remove or revoke the deed restriction? Is the deed restriction "set in stone" once it becomes part of the Title? Dr. Bob, do you have any background info on the laws regarding deed restrictions?

Held Hostage...   |September.29.2011 Thanks for the insite "produce manager." The City needs to have it's own "restrictions" on "deed restrictions." It would be great if the City could place requirements on the seller of a piece of commerical property that is using a deed restriction if they are "abandoning" an area. What if all large corporations had deed restrictions, a city could end up looking like a ghost town... I say add a "blight" tax for using the "anti-competition" deed restriction... Isnt this a bit "anti-trust?" Perhaps Dr. Bob could interview Safeway Corp. to see what they have to say about "disallowing" grocery stores in certain areas. In real estate we call this "red lining" and it is illegal. Both Safeways were located in social-economically challenged areas of Vallejo, perhaps we need to look closer in depth??? Perhaps this could even be illegal "block busting" and "steering." Afterall Safeway is imposing a "no build" of grocery stores in two areas that are economically challenged and are two areas with concentrations of people of "color." When you sway or try to prevent folks from moving to a certain area of a city its called "steering" and is also related to "block busting" in real estate. Both are illegal. This is exactly what Safeway is doing, preventing grocery stores from moving to certain areas of the city... Dr. Bob, would you like to contact Safeway and inquire if they know they are "steering" and "block busting" in two areas know to have higher concentrations of people of color?

Produce Manager   |September.29.2011 Held Hostage: Check this out, not only did Safeway own and place the two deed restrictions in downtown and Mini Drive but I think they had something to do with the Grocery Store in the shopping center where the Straw Hat Pizza is.

restrictive covenants   |September.29.2011 The original owners/developers are the parties that typically create a restrictive covenant as a part of the property deed. Unless there is a provision in the restrictive covenant on how to "get around" the restrictions or how to remove the covenant, the covenant runs with the property. The city cannot remove a restrictive covenant in a private property deed.

Held Hostage...   |September.29.2011 So both the old Safeway building downtown and the old grocery store building on Mini drive are restricted until 2015 and 2020 from having a grocery store, even though Safeway choose to abandon the sites and removed their grocery store. Perhaps this could be a restriction to the deed restriction of by the City of Vallejo. How about this: Sellers may only place a deed restriction relating to prevention of a competitive/like business moving to the site, if they themselves/i.e. the "Seller" provide their same store in close proxmation to the site that has been abandoned by the seller. This "law" would prevent a seller from removing their business from a neighborhood district and leaving a an area without a grocery store or similar business.

VallejoGuy   |September.28.2011 It would be REALLY helpful to know who approved these Deed Restrictions.

Anonymous   |September.28.2011 "At the first Vallejo Planning Commission meeting for the application by WinCo Supermarkets, several people questioned why WinCo had chosen the former Elks Lodge site (Redwood Parkway and Admiral Callaghan Lane) over some of the vacant sites that appeared to be more desirable such as those on Sonoma Boulevard. " Lets take a wild stab at this one. 1.) Perhaps the people with more disposable income live over on the East side. 2.) Perhaps the people over on the Sonoma blvd. side are poor and have $0 disposable income. Just guessing.

Marti Brown   |September.28.2011 Bob, Are there any resolution/ordinances out there that the city council could pass to stop this from happening in the future?

Hypocrisy   |September.28.2011 This report is a little light. For all those concerned, we need more info like who owned the property that put the deed restrictions in place prior to the sale. From what i can gather from the report, one can understand why the west side of Vallejo has just died. I am not just talking about shopping centers becoming blighted, what about the car dealerships and every other retailer from tire shops to clothing stores. If Vallejo's has had a natural migration to the east side that is one thing. But this does not sound too natural at all. I would imagine that this has had a negative impact on home values in this area. Robert Schussel just scratched the surface I am hoping to see more on this.

sparrow   |September.28.2011 wow thanks for the info, i've always wondered about this. This city's best interest need to be a priority, how awful

Salty Dog   |September.28.2011 The landlords/landowners may not be evil but they are self serving and not in the public interest, IMO. By the way, isn't there a committee looking at ways to beauty Sonama Blvd? How dies that fit into this ....does it?

Mr :)   |September.28.2011 Thank you for showing that there are reasons for properties being abandoned beyond some conspiracy of evil landlords.

wharf rat   |September.28.2011 this makes food deserts in areas of town some dont drive and have a hard time buying healthy food near home this is a unaceptable land use policy as well as a job killer .. property owners have the right to sell or not but to encumber commercial property with such broad restrictions on the deed is a disservice to the community.. an ordinance should be created to over power these possibly ileagal deed restrictions .. redlining has been a hot issue with inner city neibourhoods and the demise of the mom & pop stores mostly replaced by liquor and junk food stores.. safeway is trying to monopolize a chunk of retail grocery market in town to the loss of the neibourhoods that supported them for all those years this could be a bad P-R headake for them if it went to network news ..

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