Costco has eyes for West Oakland site

0 Comments | Oakland Tribune, Jun 28, 2005 | by Cecily Burt, STAFF WRITER

OAKLAND -- It's been a couple of years since Costco rolled into town, teasing Oaklanders by shopping around for a new store location on the old Army base and then dropping from sight.

But it appears the warehouse giant was serious. Costco and the city's Redevelopment Agency are poised to start bartering in earnest, if a city panel today approves an exclusive 180-day negotiating agreement for a parcel in the North Gateway development area commonly known as the Subaru lot.

Costco wants to build a 150,000-square-foot warehouse and retail complex on 15 acres north of West Grand Avenue, between Wake Avenue and Interstate 880. The membership club would include a bakery, fresh meat and produce, an optical department, a pharmacy, photo processing, furniture and a gas station.

According to a report to the Community and Economic Development Committee, Costco would employ about 350 people, probably most from Oakland, and generate an estimated $840,000 per year in sales tax revenue. Costco is a nonunion employer but pays $10.50 per hour, and all employees -- whether full or part time -- receive benefits.

Costco officials would not comment on the plan, but city documents indicate company representatives are ready and willing to enter exclusive negotiations for the highly visible site.

And although some community members like the idea of Costco coming to Oakland, they aren't so sure the Subaru lot is the best spot for it.

Councilmember Nancy Nadel (Downtown-West Oakland) said she would rather locate the warehouse store off base land and use the Subaru lot fortrucking or industrial businesses, such as recyclers, that need to be relocated out of residential areas of West Oakland.

Steve Lowe, a West Oakland Commerce Association member who serves on a working group for commercial and industrial uses in West Oakland, said the group would rather see the Subaru site used to house businesses that are increasingly unwelcome in West Oakland, such as trucking or truck repair that serve the Port of Oakland. A better location for Costco, he said, is Third and Market streets.

Aliza Gallo, executive director of the Oakland Base Reuse Authority -- the agency that owns the former base land -- said other locations have been discussed, but Costco is really keen on the Subaru site, which the company believes would even draw customers from San Francisco, Gallo said.

"Costco has indicated they are very interested in Oakland, and their preference is for the Subaru site," she said. "(Costco) is a very significant retailer, not just for Oakland, but for the region in terms of sales tax, good jobs and local hires."

OBRA purchased the 19-acre Subaru lot from the U.S. Army Reserves for $10.6 million, and a

$2.4 million payment comes due in November 2006, Gallo said.

Just how much Costco would pay for the site is an issue to be hammered out during the 180-day negotiating period, and selling 15 acres to Costco would relieve OBRA from having to make that payment, Gallo said.

Costco is required to make a good-faith deposit of $50,000 within

10 days of entering into the exclusive negotiating agreement, as well as provide $250,000 to cover third-party project expenses for activities such as appraisals, project management and legal fees. Successful negotiations could result in a development agreement.

Port of Oakland spokesman Harold Jones said the port is committed to the agreement that divided the former Army base property between the port and the city, with the city getting the Subaru lot.

"We will be supportive of what they want to have happen there," Jones said. "Should the Costco negotiations not turn out, we would certainly be open to discussing maritime support services, but we are not (pushing) that as an alternative."