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Transbay developer still on the hook for promised grocery store

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The Avery residential tower under construction at 450 Folsom St. on Friday, Dec. 14, 2018. (Kevin N. Hume/S.F. Examiner)

A Transbay developer failed to convince a city commission Tuesday to release it from a promise to bring a grocery to the neighborhood.

Related California agreed in 2015 to make its best efforts to lease retail space to a grocery store as part of an agreement to build hundreds of housing units at Transbay Block 8, or 450 Folsom St.

SEE RELATED: SF to release Transbay housing developer from grocery store commitment

But the developer says it has failed to attract a grocer, and now wants out of the obligation.

However, the Commission on Community Investment and Infrastructure, which oversees the area, supported a number of residents who said a grocery store was a vital element to create a community and told the developer to try harder.

The decision went against the recommendation by the Office of Community Investment and Infrastructure’s executive director Nadia Sesay for approval of the developer’s request.

The commission voted to give the developer 90 days to examine more options, including following up with the grocers to find out “what gets them to a yes,” reaching out to more affordable grocers and possibly exploring more creative ideas to offer a grocer-type experience.

Related California had provided evidence of their efforts, such as market studies that showed unfavorable conditions for a grocery store, including competition from Woodlands Market a block away.

But those who support the grocery say Woodlands Market is expensive and doesn’t serve the needs of the residents, particularly those who live in below market-rate housing that’s being created as part of the project.

“We are not a community. There is no way that we can build community if we don’t offer the kind of retail that we need to service our community,” said Deborah Garfinkle, a Beale Street homeowner in the Transbay area. “My neighbor, who owns a property over $3 million can’t even shop there. He complains. We joke about it that you have to take a mortgage out.”

Miguel Bustos, the commission’s vice chair, said, “This is what we fear a lot, is that people come in and they tell us what they think we want to hear. And then later they come back and say ‘Oh, we can’t do this.’”

He said that the list of grocery stores they sought were “high end.” The list included businesses like Trader Joe’s, Whole Foods and Amazon Go.

“Where is Grocery Outlet? Where is Rainbow Grocery? Where are the other co-ops that could provide products at reasonable prices?” Bustos said.

He also said maybe they are asking for too much rent for the 12,400 square foot space.

Jonathan Shum, a senior project manager for T8 Urban Housing Associates, LLC, an affiliate of Related California, said that they have offered $55 per square foot a year and that “the market is easily $75 and above. “We are offering a pretty reduced rate,” Shum said. “It shows that we do care that this is a neighborhood serving component. We have been creative.

Katina Johnson, who serves on the OCII’s citizens advisory committee for the Transbay area, emphasized the importance of the retail space.

“This is the last best chance we have to get a full grocery store,” Johnson said. “More housing is wonderful, but just adding housing doesn’t mean that you will have a neighborhood. We need the basics and that starts with a grocery store.”

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