The following is an article, from the August HVNA Voice, written by Jason Henderson and Jim Warshell.
Hayes Valley Needs a Grocery Store
Hundreds of new housing units are under construction or planned in Hayes Valley. Construction and renovation at 55 Laguna will likely begin this year and the former freeway ramps at Fell-Laguna-Oak have been razed and cleared for infill housing. 8 Octavia is underway, 301 Grove (at Gough) is almost complete, and more housing is coming to Gough at Fulton Street and at 450 Hayes. As the full build-out of the Market and Octavia Plan comes to fruition, thousands of new people will eventually reside within a few blocks of Patricia’s Green. And while Hayes Valley has a wonderful array of locally-owned, non-chain restaurants to feed this new influx, incumbent residents and new arrivals need a full-service grocery store offering fresh food at affordable prices.
For over a decade HVNA has advocated for a neighborhood-oriented supermarket that would serve lower income residents while meeting the demands of new population. HVNA has also advocated for an independent and locally-owned supermarket rather than a huge chain store pedaling processed food or expensive boutique groceries. Ultimately we’d like to see a supermarket that hires locally and is engaged in the community, emphasizing fresh, local foods, but at prices affordable to all of our neighbors.
Brief History of 555 Fulton
In the early 2000’s the old Christopher Dairy at 555 Fulton, between Laguna and Octavia, was identified as a good location for a supermarket as part of a larger mixed-use development. The site was folded into the much-heralded Hayes Valley formula retail ban to ensure that it not become a chain store.
Beginning in 2005 the HVNA Transportation and Planning Committee met with developers and encouraged the independent supermarket idea. The Market and Octavia Better Neighborhoods Plan, adopted in 2008, included a “special use district” (SUD) to allow a 32,800 square foot non-chain grocery store at 555 Fulton. The developer next hired architect Stanley Saitowitz, and his innovative and striking design for the site was championed by HVNA.
In 2010 the Planning Commission approved the proposal for 136 housing units above a non-chain grocery store. HVNA’s T&P Committee endorsed the design, applauded the inclusion of 16 affordable housing units, and was very excited to have the prospect of a local supermarket to serve our whole community. During the 2010 deliberations over 555 Fulton the developer accepted the neighborhood’s desire without seeing ways around the hard fought formula retail controls that help protect the special character of our neighborhood.
But 555 Fulton, like every other project in Hayes Valley, became stymied in the economic downturn. In late 2012 the site and its’ entitlements were sold to a new developer, Fulton Street Ventures (FSV). In January 2013, the new developer informed HVNA that they were seeking a “legislative amendment” to be excluded from the Hayes Valley formula retail ban. We responded, in no uncertain terms, that the formula retail restriction must stay in place.
In March the HVNA Board of Directors unanimously resolved to oppose the proposed legislative amendment that rescinds the ban on formula retail at 555 Fulton. The HVNA Board, T & P Committee, and Hayes Valley Merchants are united in efforts to preserve the character of the neighborhood while accommodating new growth. The formula retail ban is a critical piece of this and we vow to defend it.
Since March several members of the T & P committee discussed options with the developer to keep the grocery non-chain. We helped compile a list of potential non-chain store candidates for the site, and have proposed that the 32,800 square feet for the grocery store could be reduced in size to make it more viable for a smaller, locally owned business, with remaining space allotted to a hardware store or another utilitarian neighborhood-serving business. We have also asked Fulton Street Ventures to consider a bold alternative to make an affordable, non-chain grocery store viable – rethink the expensive underground parking garage that was part of the original proposal.
Parking v. Affordability
Fulton Street Ventures claims that a grocery store is only “economically viable” with the elimination of the formula retail ban. Another way to look at this is that only a chain store can afford the lease the developer expects to recoup their construction expenses. This takes us to parking.
Parking is the crux of the economic viability for the project. Local experts we’ve talked to point out that each underground parking stall costs anywhere from $80,000 to $100,000 to construct depending on the geometry and geological conditions. A few years ago underground parking for a proposed grocery store in the Tenderloin penciled-out at $100,000 per space. This construction cost excludes the opportunity land costs (consider that the parking could be used for something else, like storage, more retail, or community space, etc). Additionally, with hundreds of cars circulating in a cave, a grocery store parking garage requires ample ventilation, lighting, and security, adding more to construction costs as well as maintenance and operations.
As proposed, 555 Fulton has two categories of parking on two underground levels. Parking for the grocery store (77 spaces) is on the first basement level and the residential parking is on the bottom level. At $80,000 per stall, the parking for the grocery store amounts to $6.1 million. At $100, 000 a stall, the total cost to build parking for the grocery store amounts to $7.7 million dollars! And this excludes the aforementioned operations and maintenance.
Parking at 555 Fulton is going to literally “drive-up” the rents for tenants seeking to lease the grocery store space. This makes it more difficult to find an affordable, local, non-chain grocer and will also translate into higher food prices, since grocers transfer the cost of parking onto all shoppers regardless of whether they drive or not. This is the crux of economic viability. Not the ban on formula retail.
But there is a way to avoid this. The Market and Octavia Plan allows, by right, that a grocery store can have less parking than the 77 stalls already approved, and even zero parking. The developer could study a scenario whereby they eliminate one level of parking, reduce their construction costs, and reduce the asking price for a grocery store lease. Instead of creating a divisive atmosphere pitting economic viability against hard fought community values, the developer can make this project work and be innovative at the same time.
The HVNA T & P committee has urged the developer to consider eliminating all or most of the retail parking, thus lowering construction and operating costs, and providing a truly local, walkable and bikeable grocery store. This area is flat, incredibly walkable and proximate to thousands of existing residents, with thousands more on the way. Moreover, those who insist on driving can still chose to drive to the Safeway on Webster and Ellis Streets.
A car-free or car- lite grocery store can also deploy innovative ways of delivering groceries, such as a jitney service or delivery vans, for those who need such service, and to limit the amount of store parking to a small number of car share and disabled parking stalls. A grocery store with little to no parking would be at the cutting edge of truly sustainable urbanism, while also providing more
affordability to all residents of the community.
A Leadership Opportunity
Unfortunately the developer has ignored our suggestions, and continues to press to overturn the formula retail limits. They have not shown us the true cost of their undoubtedly expensive parking structure, or hinted that they even care about how this impacts the cost of groceries and the character of the neighborhood.
We believe this is an excellent opportunity for our supervisor, London Breed, to bring the voices of all the community together by leading to negotiate a solution which represents our concerns and values. Supervisor Breed shares HVNA’s values when it comes to affordability, local small business, and the city’s transit first policies. We appreciate that. But so far she has been silent about the specific legislative amendment to waive the formula retail ban at 555 Fulton, and she has not stepped up to nudge the developer to broker a solution with the community. Instead, as Breed stated at the July 2013 HVNA general meeting, she does not plan to intervene to force the developer to consider alternatives such as the ones we suggest. Yet intervention is exactly what Supervisors are supposed to do. They bring disparate groups together and seek to find solutions.
Supervisor Breed says affordable groceries are her number one priority. We agree. We have proposed a way to get there by rethinking parking and preserving the formula retail ban. It’s time for the Supervisor to lead and broker a solution we can all live with: an economically viable, affordable, non-chain grocery store with fresh food, local hires, and a truly walkable, bikeable project. This issue is likely going to the Planning Commission October 3rd, so we urge you to write to Supervisor Breed and ask for her leadership. You can contact her office at: London.Breed@sfgov.org.