EL CERRITO -- The city has three major retail buildings that are vacant but has its hands tied in trying to fill the properties, both to clean up eyesores and crime magnets and make more sales tax flow into coffers still depleted by the Great Recession.

The three buildings are a former Safeway store located in the strip mall at San Pablo Avenue and Moeser Lane, the former Orchard Supply Hardware store on Eastshore Boulevard near San Pablo Avenue and the former Guitar Center building at the corner of San Pablo and Eureka avenues.

The Safeway property closed after the grocery chain moved north to a new location on San Pablo in El Cerrito. But Safeway and the owner of the old building haven't been able to agree on a tenant, resulting in a standoff, said city Economic Development Director Dwayne Dalman.

The former Guitar Center on San Pablo Avenue is one of the large retail vacancies in El Cerrito.
The former Guitar Center on San Pablo Avenue is one of the large retail vacancies in El Cerrito.

"Safeway still holds the lease on the building for a few more years," Dalman said. "They have a tenant in mind and they may not want a competitor, such as another grocery store, in there."

On the other hand, revenue from the lease is based in part on sales receipts and Safeway's tenant candidate may not have the sales receipt potential to produce enough income to satisfy the landlord, Dalman said.

Orchard Supply, which closed its El Cerrito store during the chain's bankruptcy proceedings last year, was subletting from the Kroger grocery chain, which had the lease on the property.

A developer is in negotiations with the owner to buy the building and either rent it to another tenant or tear the building down and build something new, Dalman said.

In the Guitar Center case, Dalman said he believes the building owner has an unrealistic idea of how much the property is worth in a lease or a sale.

"The owner has a price in his mind and is willing to wait until that happens," Dalman said. "We have pushed him to hire a commercial broker to get a good poll of what the market is going for, and he has been unwilling to do that."

Cities could formerly use their redevelopment agencies to condemn empty properties through eminent domain and negotiate deals with developers.

But that capability ended when the state dissolved the agencies in 2012.

In a report to the City Council in December, the city Finance Department projected a decline of $372,000 in sales tax income in 2013-14 compared with what El Cerrito received in 2012-13.

As a result of this and several other factors, El Cerrito is on course to spend down its reserves from 8 percent of its annual budget to 6 percent, even though it is continuing to leave vacancies on its city staff unfilled, according to the report.

The projections are based on analysis of four months worth of income from July through October with a second interim report due in March, Malek-Zadeh said.

The largest of three major retail vacancies in El Cerrito is the former Orchard Supply Hardware site.
The largest of three major retail vacancies in El Cerrito is the former Orchard Supply Hardware site.

"The Great Recession, loss of redevelopment, and outside reductions in key revenue streams have all served to have an impact on the city's ability to obtain adequate funding to maintain the current level of services that it provides," according to the report summary.

Malek-Zadeh said she is not allowed to give sales tax information on specific businesses, but she cited the closure of the Target, Orchard Supply Hardware and Guitar Center stores as partly to blame for the decline in receipts.

Safeway built its new store on the former Target location. Target is now providing sales tax to Richmond after relocating to a site there near Interstate 80.

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