Is Grocery Outlet coming to the old RiteAid site on Main Street?
Rite Aid vacancy prompts rumors and maneuvers
The former Rite Aid store on Sebastopol’s Main Street is now empty of all merchandise and pharmacy inventory, but it’s full of circulating rumors about what might take its place.
Some of the gossip about a Grocery Outlet taking over the space has been gaining traction in recent days as representatives from the regional office of the bargain chain have been circulating around the Sebastopol community. One of the Grocery Outlet executives said they’ve submitted a “letter of interest” and his company is conducting its “due diligence” ahead of securing a possible lease or filing required city permit applications.
“We’re going to get on the permitting process here pretty soon,” Joe Tanner, an entitlement manager based in Grocery Outlet’s Emeryville office told the Sebastopol Times this week. “We’ll probably submit something in the next 30 days or so and then go through the city process.”
Ross Frederiksen, Grocery Outlet’s vice president of sales and merchandising, said, “We’ve been looking at Sebastopol for a long time.”
City of Sebastopol Building Inspector Steve Brown confirmed that he’d been contacted by Grocery Outlet representatives about zoning and permit requirements concerning the Rite Aid location, as well as other general questions about the community.
“There’s nothing official,” Brown said.
Meanwhile, the Rite Aid property owner, Robert Schwab of Los Angeles, confirmed he has had talks with “several prospects” for his building at 218 N. Main Street. “There is no decision yet. It’s all very preliminary.” Schwab refused to disclose or confirm any names of potential tenants at this time, including Grocery Outlet.
“We’d like to see a new tenant relatively soon. Nobody benefits from a vacant building,” said Schwab. “Just signing a lease is one thing but getting everything finalized for an opening is another thing.” He said any new tenant will require some building improvements and will take some extra time. “I assure you the building will look nicer than it does now.”
Schwab and his R&L Properties of Los Angeles has owned the downtown Sebastopol property since the 1990s. The location was once the site of Sebastopol’s original Safeway store before it moved a half-block north to its present location in the early 1980s. A Sprouse-Reitz “five-and-dime” store occupied the space until 1992 when the chain liquidated all of its 387 stores along the West Coast.
Rite Aid became the tenant of the building after buying out its former corporate occupant Payless/Thrifty in the mid-1990s.
Rumors of a new Grocery Outlet store coming to Sebastopol have been met with vocal opposition by the majority of the town’s independent grocery market owners. A city-sponsored town hall meeting this week designed to gather input from local businesses was quickly overwhelmed by questions and complaints about the possibility of a Grocery Outlet opening downtown.
Owners and managers from Andy’s Produce, Pacific Market and Fircrest Market all stated their objections to having another grocery store open in the community. Other business owners asked if allowing a large chain store like Grocery Outlet would be a violation of the city’s ban on formula businesses in the downtown area.
Eric Meuse, co-owner of Fircrest Market, said the Sebastopol community is already served by seven grocery markets, which exceeds most economic models that recommend one grocery store for every 3,500 people. “I think we’re already beyond that and allowing a Grocery Outlet here doesn’t help where we’re trying to go as independent operators.”
Former Fircrest owner David Hoffman told the city council about his encounter a few years ago with Grocery Outlet representatives while he and his brother were in the process of selling their business.
“Their fancy guys would come in with their business cards and say, ‘We want to buy your store.’ And I’d say, ‘Sorry, you just don’t fit in here.’ I mentioned the Formula Business Ordinance to them, and they said, ‘Don’t worry about that. We know how to get around that.’ I thought that was pretty cocky.”
Rite Aid property owner Schwab said his final decision on a new tenant will be based on many considerations including finding a tenant that “can be a benefit for other downtown businesses.”
“We’d like to see a new tenant that can help the other downtown businesses with extra foot traffic and interest. We love Sebastopol and its people. We’re long-term property developers. We don’t come in and just flip properties.”
Schwab said he has not heard directly about the resistance to a new Grocery Outlet in Sebastopol but acknowledged that “resistance to something new happens a lot. People don’t like new competition, but you have to look at what’s best for the community. What if you have a new business that offers good value and helps people save money?”
Schwab called Sebastopol a “wonderful community.” He said he expects there will be opposition to whatever new tenant choices he makes.
What about the city’s formula business ban?
At Tuesday’s business town hall, city staff said the Rite Aid building is located in the area covered by the city’s Formula Business Ordinance. That ordinance, established in 2018, prohibits formula businesses (otherwise known as chain stores) in the downtown area. It defines a formula business as one with 25 or more establishments.
According to the ordinance, this means Grocery Outlet would need to apply for a Formula Business Use Permit.
“After a review of the ordinance, we are telling them that they need to go through the use permit process,” Interim City Manager Mary Gourley said at Tuesday’s business town hall. “They have been in touch with the planning department. We’ve told them that. We’ve spoken with our city attorney, and he concurs with us that they do need to go through the use permit process. If it is denied at the Planning Commission, they, of course, will come to the city council. So there will be multiple opportunities for the community to come and show up at these meetings and voice their opposition or support.”
“We can’t stop them from applying,” said Brown, director of the city’s Building Department. “They can put in an application. It’s probably going to meet some resistance at a couple levels, but we can’t just blanketly deny it.”
The possibility of Grocery Outlet moving into the Rite Aid location has reminded many locals about another problematic property dispute with a national chain. In 2012, CVS wanted to leave its location in the Redwood Marketplace at the north end of town and move to the middle of downtown at the corner of Highways 116 and 12. The city of Sebastopol tried and failed to prevent this move. This turned into a five-year battle, which cost the city $300,000 in legal fees. Despite the city’s best efforts, CVS moved into its new downtown location in 2017. (Its old location in the Redwood Marketplace still stands empty.) To this day, many folks who were involved in the fight against CVS won’t step foot in the downtown CVS store. The city’s Formula Business Ordinance was created in response to this expensive and ultimately unsuccessful legal fight.
At its Sept. 16 meeting, the Sebastopol City Council directed City Attorney Alex Mog to review the city’s Formula Business Ordinance.
“The intent behind the review of the Formula Business Ordinance was not to open the doors [to chain stores],” Gourley said at Tuesday’s business town hall. “The intent was to look at our regulations to see what needs tightening.”
Updates to the city’s Formula Business Ordinance are expected to come before the Sebastopol Planning Commission on Oct. 14.
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