City Staff Fails at Sherwin Williams Project to Provide Required Retail Agreement

City Fails to Get Sherwin Williams Retail Agreement in Writing

City Council Comes Up as Empty as 
All the Storefronts in Town

Senior planning staff at City Hall revealed last week the retail component of the Sherwin Williams project mixed use residential development in Emeryville's Park Avenue neighborhood has no written protections that would keep storefronts from sitting perpetually empty despite the City Council expressly garnering a guarantee against that made in 2016.  The Council also directed the staff to protect against the developer renting to chain stores, another condition of approval from November 1st, 2016 that was ignored by the staff and now impossible to enforce.  Time has run out for Emeryville to ensure its retail plan at Sherwin Williams is brought forward; the developer cannot at this point be held to providing for non-formula retail at the site or providing against letting the stores sit empty as was established by unanimous Council vote.  "There are no such protections for either condition" a staff member told the Tattler, "nothing is in writing".

Councilman Scott Donahue
He told voters in October 2014:
"We should require developers to structure
rental agreements that provide for subsidies
and other support to help smaller,
locally serving businesses to succeed."

 

And so goes the Sherwin Williams project down the same path as virtually every other development with retail over the last 25 years; vague promises made by the developers to providing wonderful neighborhood serving non-formula stores in a timely manner, a paradigm that has spectacularly failed.  City Councilman Scott Donahue  summed it up best at the November 1st 2016 meeting, "It has been difficult for our city he said, The chains have more money, but we have a desire for retail expressed by our community, he added.

The loss of a written retail agreement so adamantly expressed by the Council is especially egregious for the Sherwin Williams project, watched so closely as it has been by community activists including by the Park Avenue Resident Committee (PARC).  Indeed, PARC's entire raison d'être is to make sure this kind of thing doesn't happen, specifically at Sherwin Williams.  Emeryville residents would be excused thinking if we can't get a retail agreement that addresses these issues here, we likely can't get one anywhere.

It's been a problem for years here.  Many residential developers in town build associated retail as required by the City but they aren't interested in the commercial rental business and so because the City has never required them to fulfill their retail assurances in writing, the developers simply let the storefronts go empty.  The retail component is chalked up as a cost of doing business by these developers.  Other developers, seeking more traditional profit maximization, will rent their retail spaces out but at the highest rate the rental market will bear.  That generally prices out the kind of retail the residents want, leaving only chain stores.
Amid the exigency of this closed loop paradigm, Councilman Donahue hit upon a new idea to force the developer of Sherwin Williams to underwrite the retail by written agreement with the City, an expanded cost of doing business that actually would deliver, but he and his colleagues failed to follow through, trusting the staff to do as the Council directed.

Councilwoman Dianne Martinez
"Another thing we're hearing from the community 
is the fear of the retail space going empty. 
The landlord might prefer a write-off 
than lowering the rent"
She directed the staff to get it in writing.

The idea that the developers themselves need to underwrite the cost of providing locally serving, non-formula retail has been kicking around in Emeryville for many years but the previous Council saw adding such constraints as anathema to the pro-developer coda engrained at City Hall.  Responding to citizen complaints in 2003, a previous Council attempted to lure better retail instead with a taxpayer subsidy to businesses at the 'Promenade' development, albeit with mixed results.  A coffee shop that received taxpayer subsidies at the San Pablo Avenue Promenade strip mall development promptly went out of business as did a small restaurant but Arizmendi Bakery, also the recipient of start-up help from City Hall has been a success.
The current City Council has so far tried a different approach, attempting to lure the kind of retail the citizens want with a Byzantine system of 'bonus points', an approach that up until now hasn't met with success.  With the failure of the Council to follow up on the staff's directive at Sherwin Williams, the new idea of forcing the developer to underwrite the locally serving retail is an idea that has still not been put into practice in Emeryville.

A viewing of the short video (below) from the November 2016 meeting shows how stark is the recalcitrance of Emeryville's city staff.  The two Council members whom had promised voters to deliver non-formula locally serving retail when they first sought election, Scott Donahue and Dianne Martinez, were adamant.  Councilman Donahue told the staff the developer represented by Kevin Ma of Lenar Development they could lower the rent for the retail if he (Mr Ma) can't find "non-chain neighborhood serving" retail at the market rate and that the rent should go down until it is rented out to the desired tenant.  "We can come up with something simple that they (Lenar) can agree to tonight that would solve this problem and make this a better community." Mr Donahue told the staff.  "I'm all ears to cutting a deal tonight about this" he added.

Emeryville Planning Director Charlie Bryant
Handpicked by former City Councilwoman
Nora Davis, Charlie did not require Lenar to legally
agree to the Council's requirements.  Lenar is free
to leave the Sherwin Williams retail empty
or to rent to Burger King.

Councilwoman Martinez agreed and expressed concern that the retail storefronts not sit empty as so many others have done over the years in Emeryville, "Another thing we're hearing from the community is the fear of the retail space going empty. The landlord might prefer a write-off than lowering the rent"  Ms Martinez said.
The developer however expressed concern that the development process not be held up for anything, "The biggest problem tonight is from a timing standpoint." Mr Ma told the five Council members  'If we would make any amendments to requiring the regulating of the retail tonight, that really throws us off our timeline...  We've gotten to a razor thin timeline with the current approval schedule".  He assured the Council "We will work with the Planning Commission to bring these commitments..." to which Councilman Donahue responded, "I'm satisfied we can say 'no' to your project if you don't come back to us with something definitive in writing that will deliver just what we're talking about."

And then the Emeryville City Council dropped the ball; they never checked on the staff about putting their directives in writing, leaving the citizens with nothing but the same assurances they've always gotten from developers over the last two decades about all the wonderful retail to be coming.  The staff for their part, refused to comment on why they served the developer rather than the City Council they are paid to, "It is what it is" one staffer tersely told the Tattler last week after affirming that the Sherwin Williams developer could rent to any chain store they want to at their project or to not rent out the future retail spaces at all if that serves their pleasure.  It's all up to the developer's whims now.


The November 2016 smoking gun video that 
reveals the Emeryville staff to be recalcitrant.  

Emeryville Can Demand More From Developers Than Neighbors Cities Can

Position of Power:

Emeryville Can Say 'NO' to Developers and the Developers Know It

After a generation of taking anything and everything from every developer who wished to make a buck off our town, Emeryville is finally in an inarguable position now to demand better development.  And we can easily get it.

Opinion / News Analysis
Abstract:

• Emeryville doesn't need any more market rate housing.
• Emeryville doesn't get any positive revenue from housing.

Got that?  These two points aren't a matter of someone's opinion even though that word precedes them in this story.  These two points are factual and they assertively inform us through hyperbolic debate frames rising up from interested parties of the ideological sort as well as those who would materially benefit.  Once people realize the prophetic exigency of these two points, how we finish the job of developing our town becomes a lot clearer.

Emeryville is in an enviable position with regards to development. Due to forces in our control and those out of our control, we're at a powerful place where we can call the shots; we can rationally say NO to flawed development, starting now.  The last City Council election with its progressive sweep and the rise of a newly enlightened electorate has something to do with this fortunate position we find ourselves in, of course, but in addition it has to do with the extremely limited supply of large scale development properties left in our town and the incredibly valuable geographic location of Emeryville that only gets more valuable over time.   But more pressing than those extant and compelling realities, our new power position has to do with our over the top, nay epic RHNA numbers.

Emeryville's RHNA Numbers
Twice as big as we need.

RHNA or Regional Housing Needs Assessment (pronounced reena) is a housing data compilation of the whole Bay Area produced by a consortium of local governments meant to mete out each municipality's work load share of the goal of providing a jobs/housing parity.  The state mandated idea is each city should carry its weight as far as providing enough housing for the entire region.  Emeryville was given a specific housing goal by this consortium (known as Association of Bay Area Governments ABAG).  Due to Emeryville's huge housing boom over the last 20 years, we not only met our ABAG goal, we smashed the goal.  We actually doubled the market rate housing goal, Emeryville's built market rate housing right now is more than 200% of what RHNA suggests.  At this point, nobody can claim with a straight face Emeryville needs to build more market rate housing, that we're somehow derelict in our duty.
If we do approve more housing projects moving forward, it can and should be only those that improve the livability of our town.  We've already more than done our regional market rate housing duty.

Emeryville's 'double RHNA' numbers have the effect of punching a huge hole in the 'supply and demand' argument that's always proffered by developers.  They use that argument to shame municipalities into approving housing projects they want to build.  Some places, they would have a point.  Not here.
Everybody knows the argument; if we increase the housing supply, the housing demand goes down and so do the prices.  Except here in Emeryville we've doubled RHNA and the housing prices still keep going up, especially rentals.  That's because all the developers are really interested in is maximizing their profits and thus, all they're interested in building (and all we've been getting) are $2500 per month one bedroom luxury apartments. As shocking as it is, this shouldn't come as a shock.  The idea that a developer (or indeed any business owner) might lie to protect his profits should be seen as a given...especially since there's no down side to lying, no penalty.  And so that's what we get from them generally.

With the supply and demand canard off the table, there's really no cogent reason developers can offer as to why we should accept a flawed housing project.  Some apologists will fatuously claim housing development adds to the City's tax base, but that's a lie too; Emeryville actually loses money (a little) off residential projects.  Residents use more in services than they pay in.  City Hall gets its revenue from businesses, not residents.

With nothing to gain and much to lose, at this point with these RHNA numbers, developers better offer something overwhelmingly good in trade for approving a project that will increase traffic, noise, pollution and crowding.  That's the point of the Tattler story of July 23rd.  We posit there are four chief areas where Emeryville needs improvement:

1. Affordable Housing
2. Family Friendly Housing
3. Parks / Open Space
4. Locally Serving 'Non-Formula' Retail

These points are measurable.  We say every developer's project proposal must demonstrably improve (or least not make worse), the existing ratios we have in these four categories.  These should be the starting point for any residential project.  Otherwise, the default position should be no development at all.  Right now, we have an intensively developed town with a lot of density and a lot of commercial revenue shared by our existing population.  If we stay as we are, we're fine.  Unlike our neighbors who haven't met their RHNA goals, we don't need to take on more market rate residential development.
The residential developers may be salivating at our remaining three or four fallow patches of land with their boatloads of potential profit but we could retain the status quo; keep a couple of patches of our town fallow for future consideration (a future park perhaps?), and we'll be OK.
Or we could allow more development...a new kind of development we haven't demanded or gotten up until now; development that demonstrably improves our town.

Emeryville has always had naysayers in our midsts.  There's always been those who loudly claim we're no good, terrible really and we must let the developers have what they want because we don't rate anything better.  Indeed, before last November, the City Council majority itself said as much ad infinitum over the years.  There are plenty of regular residents still saying it now.  Somehow, these Chicken Littles see these last pieces of fallow land left as an emergency; a gap that must be filled with whatever the developers want.   No time to waste they're saying, we must defer to the developers now.
Or maybe they'll bide their time: we expect the naysayers to try to retake the City Council majority next year with lots of hidden campaign donations from developers.
But in the meanwhile, next time you hear the old 'supply and demand' con, remember our epic RHNA numbers.  Next time you hear them try to frame the debate in terms of development being a given, remember we don't increase our revenue from residential projects.

To reiterate:

• Emeryville doesn't need any more market rate housing.
• Emeryville doesn't get any positive revenue from housing.

Locally Serving Retail Can't Afford the Rent in Emeryville

Fast Food, Mattress Stores 

& Empty Storefronts 

Is There No Other Way?

How Do We Get What We Want?

Opinion/News Analysis
Walk down San Pablo Avenue in Emeryville and take a look around at the built environment.  Aside from specific food purveyors and retail establishments along the sidewalk, you'll note there's not much going on in the way of architectural heritage.  In this hundred and twenty year old town you'd be hard pressed to find a building built much before the George W Bush presidency.  Virtually every building is new.  And it's the same way pretty much everywhere in Emeryville. Twenty five years ago, Emeryville was filled with historic buildings from the nineteenth and early twentieth centuries.  Other than some existing single family residences and the Watergate neighborhood, virtually our whole town has been rebuilt in the span of a generation. So much for Emeryville history.

Not Emeryville
There's none of this in Emeryville...

Welcome to the Emeryville as imagined and built by Councilwoman Nora Davis and her latter day assistants on the Council Kurt Brinkman and Ruth Atkin.

Emeryville used to be a town made from bricks. Actual bricks, not the 'lick 'n stick' kind that have invaded the world of shopping malls of late.  Where before there was a real town with lots of beautiful and historic structures; warehouses, nineteenth century factories, an elegant three story Beaux Arts turn of the century triangle shaped bank building, vernacular storefronts on San Pablo Avenue and a classic Art Deco commercial building with a 1930's aquiline parapet and round windows, now there's....well there's what we have: anonymous new buildings with chain stores and fast food.

but there's plenty of this....

New Empty Retail Space
The tenants that are renting the retail spaces in these new buildings have their corporate headquarters in far flung locals and are mostly selling stuff you don't want...stuff like mattresses and fast food.  But there's something else.  And it's not something that's here, rather it's something not here.  While there's a lot of retail space at the sidewalk level in these new buildings, with more retail space in the pipeline, what you'll notice as you walk Emeryville is the street-scape has a Great Depression feeling about it.  There's lots of empty spaces, opaque paper over the doors and windows.  The multi-story residential building may be ten years old but the retail space at the ground level is empty, and it's been that way since the building was completed.

 of course, extra helpings of this...

 It's the same across town: empty retail spaces in new buildings going unrented.  In a city growing, becoming more affluent with lots of tech boom cash floating around, these retail spaces sit idle.  Back before the building boom, Emeryville was poorer but more alive, the retail spaces didn't sit empty like this.

In the mean time, today's Emeryville residents are clamoring for an authentic town.  Other than the parks and bike/ped paths that are essential to a desirable urban public commons, new residents and old alike want the built environment to serve as an ersatz commons; with retail that suits their needs.
Who can blame them?

Won't Pencil Out
If you can manage to sit through a City Council meeting when a developer is guiding one of these ubiquitous (mostly residential) development projects through the process, going through the motions on the way to approval, you'll hear them lay it on thick and heavy.  They'll tell the Council members what they want to hear: the proposed project, Acme Lofts say, is family friendly(!) and they're sure it'll create a vibrant and activated neighborhood with locally serving retail on the sidewalk front.  It won't be put in writing but the developer will assure everyone how wonderful the retail will be.  Once those boxes are checked, the proper words have been spoken, the project can now be approved.
After, when we don't get what was advertised, if you ask the staff or a Council member, they'll tell you (if they answer you at all)  they tried to get the kind of retail tenants that were promised but it just couldn't pencil out; the rent is too high.  Maybe next time.  Thanks for your concern.  

but mostly it's just loads of this.

And that, for all it's obvious and phony histrionics is how it's done. But smugness aside the "won't pencil out" thing is actually true.  The rent IS too high in these new buildings to support the kind of retail we want.  The only retail tenants that can afford this new construction rent are the national chains.  So if we listen to Nora Davis and her minions on the Council, it's simple economics: we now find ourselves in a new city that by definition can only support fast food or national chain retail.  Trust them, nothing can be done...join with the burger...learn to love it.

Cost Of Doing Business
Developer landlords commonly don't care about the retail component of their projects.  They're interested in building (rental) residential projects.  The retail is put in only because the City requires it.  Many of these developer landlords would rather just let the store fronts sit empty rather than bother with being a retail tenant manager.  The required retail storefronts are chalked up as a cost of doing business.

So we're left with either empty retail space or national chains including fast food.
But aside from us not getting what we want, shuttered retail has a way of negatively downgrading a town, both in terms of bringing down property values and psychologically depressing a neighborhood.  This empty storefront paradigm in Emeryville is actively harming the viability for locally serving neighborhood authentic retail.

Who could have guessed we would wind up with a terrible retail situation like this when we began our Nora Davis lead demolition spree a generation ago?   The answer is any proper city planner....like the ones we hire to staff our Planning Department.  They know the way to accommodate the kind of retail Emeryville residents are looking for is to craft your city with a mixture of new and old buildings.
The old buildings are not to be retained simply because they're nice and directly connect people with their heritage (although they do that well).  No,  the main function of old buildings (from a civics perspective) is they provide cheap rent for locally serving neighborhood retail.  Cheap rent also has the added benefit of helping incubate start-up entrepreneurial business it should be noted.
This concept is not radical or even controversial.  It was spelled out by legendary Canadian city planner Jane Jacobs 50 years ago.  It's taught in universities across the land.  This is a close to as it comes to gospel for contemporary city planners.  Here in Emeryville, the bureaucrats in the Planning Department know this but they also know who runs the ship here.  And they're not rocking the boat.  That's going to have to be the resident's job.

It's your town; learn to love it.

Having said all this, at this point in our 'rape and scrape Emeryville' frenzy it's too late to start saving older buildings in hopes of maintaining a stock of cheaper rental spaces for neighborhood serving local retail.  That horse has left the barn as they say.  Or maybe we should say 'that burger has already been eaten'.  For other than to provide a little scenery relief, there's not enough older buildings left in town to make a difference in this equation.
But it's important to note we're not now paralyzed with nothing to be done.  There's a small glut of development projects moving forward right now at City Hall: the Sherwin Williams project, the Maz project, the Golden Gate Key project, the Avalon Bay project and the Marketplace project.  These projects all contain ground level retail space.

A New Coda: How To Get Locally Serving Retail
To salvage something by way of the idea of locally serving neighborhood retail with these last few large projects now securing approval at City Hall, a monkey wrench needs to be thrown into the works.  We know the same old way of doing business will only result in the same old result: nothing but broken promises for Emeryville residents.
What we need now is retail subsidized by the developers themselves, done by written agreement and the force of law.
The City could set up the contracts so that the developers would be allowed to charge market rates for their new retail spaces (from an approved list of tenants; no fast food for instance) for a certain amount of time, followed by a sliding down rent reduction according to a pre-agreed upon schedule.  The rent would slide down until an approved (locally serving) tenant could afford it.  This new coda would be written off by developers as the new cost of doing business in Emeryville and would comport with our new creed that we should 'sell' ourselves at the price the market will bare.  If developers don't like it in the new Emeryville they can move on to Fresno.  We expect the developers and the Chamber of Commerce to push back vigorously against this.  That's what they do; fight for business interests.  But we're finished listening only to them.  We want our interests looked out after as we develop the last bit of our town.

This idea would also go a long way towards securing worker owned co-operative businesses that residents want and what we need to increase and stabilize wages in the retail sector.

This sliding rent subsidized by the developers policy, if promulgated by our City Council, is what leadership looks like.  This is how we can finally secure something for ourselves in Emeryville that's not part of the abstract and greater public/private, socialist/free market debate that seems to be poisoning public policy elsewhere and has heretofore been a silent partner here.  We need to use the tools at our disposal to create a livable town.  Forcing developers to play by our new rules with the last remnants of fallow land left, is such a tool.  The developers use every tool they have to maximize their profits, so why shouldn't we?  We're only hamstrung insofar as we let ourselves be.  Let's stop acting the rube and deliver what we want; locally serving neighborhood retail.

City Calls For More Storefront Retail

Plethora of Pre-Existing Empty Storefronts Doesn't Faze City

City Hall: "We Need More Empty Storefront Retail"

Opinion/Essay

Emeryville's Department of Economic Development has been very busy recently working in conjunction with the Chamber of Commerce and are now calling for among other things, a City Hall facilitated plan of action to deliver more empty storefronts in "neighborhood centers" around town.  This plan, called the 'Economic Development Strategy', is to become policy at City Hall.  It would spend an unknown amount of taxpayer money to "expand retail" and other business promotion.

The plan makes no reference to the vast amount of existing empty and boarded up retail throughout the city nor does it offer any policy change by way of attracting retail tenants to the new storefronts.

The strategy plan as an aside, also calls for putting more cars on our streets and encouraging auto use by improving vehicular traffic efficiency, presumably something good for business.

This is what high rent brings.

It should not be necessary here to chronicle all the cascading negative effects of boarded up storefronts in a town.  Suffice it to say the perception of this kind of blight tends to affirm and multiply it.

Emeryville, it should be noted, has long had an excess of empty storefronts, pre-dating the current recession due to our particular brand of land use public policy. City Hall has by myopic and rigid thinking, pursued a land use philosophy that just about guarantees we will see block after block of empty stores.

"Blight" Irony

The Redevelopment Agency in Emeryville is tasked with what it calls its mandate to eliminate blight.  It is the city council, through the Redevelopment Agency and their narrow, some would say surreptitious agenda that has gotten us to the place where we now find ourselves: awash in empty storefronts.  Perhaps they're incapable of seeing the irony of a government agency, dogged in its fight against blight, instead being the chief agent of blight proliferation.

General Plan Ignored

San Pablo Ave in Berkeley: This is
what cheap rent will get you.

Our $2 million General Plan calls for a policy that would help avoid empty storefronts.  The current general plan and the previous general plan both call for rehabilitating existing buildings, especially historic or architecturally significant buildings but unfortunately in Emeryville, the General Plan always takes a back seat to the whims of developers who are looking to maximize their profits.

Saving old buildings is more than just recognizing the value of the vernacular architecture of the past; leaving some existing buildings as the General Plan dictates, would keep retail rents low since new construction costs usually are added to the financing.  

What retail that CAN afford the high rents tend to be national franchise fast food and mattress stores and the like, something we the people have collectively said is not desirable.

  

Berkeley Model Superior

One only needs to look as far as San Pablo Avenue in Berkeley and its retail renaissance to see the benefits of keeping older, cheaper buildings around.  Berkeley, it seems has figured this out and they've left Emeryville in the dust.  

It should be said that Berkeley's much higher business tax has not served as an impediment to this flowering of resident and pedestrian friendly development.  On top of this, Berkeley is seeing this revitalization of San Pablo Avenue at the height of the recession; further evidence of the wrong-headed thinking in Emeryville.

Since Emeryville seems incapable of saving old commercial buildings regardless of the mandate from the General Plan, a fait accompli really, some other model must be introduced to stop empty storefronts from proliferating as they have been.  Other than simply not building anymore retail, a choice not embraced by the people and made clear in many public General Plan scoping meetings, a new idea needs to rise up.

A New Idea

A different approach would need to see a culture change at City Hall.  This can likely only be accomplished by  changing the ossified old guard city council.  A different council could see how Emeryville has been selling itself short to developers for many years.  A necessary change would involve the council being proactive in pursuing development and they would have to learn how to occasionally be able to say NO to a developer.

Future developers could be welcomed to make proposals for our town but when it comes to providing the street level retail that commonly accompanies the development, the developers must be told we expect the storefronts to be rented, and rented to an approved list of retail types as the General Plan dictates.  Rent could be controlled to make sure our goals are achieved; retail rent would slide down over time as the storefronts remain empty until a tenant steps up.  This rent sliding regime could be initiated in a number of ways to achieve our goals.  Skittish developers can be shown the door.

We need a culture at City Hall where this kind of dissent is not summarily attacked or ignored.  A debate should be allowed, even encouraged.

With the November elections looming, a change-up along these lines could be forthcoming, dependent upon who is elected of course.  Candidates for office should be told in no uncertain terms that new thinking is needed to stop the downward spiral of boarded up storefronts in our town.  Clearly what City Hall and the Chamber of Commerce is offering with the new Economic Development Strategy, is not rational and will only exacerbate this problem that only Emeryville seems to be flummoxed by.  Our neighbors have figured out how to deal with this, why can't we?