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On Target

Submitted by on 1, March 4, 2009 – 9:00 am9 Comments

A representative for Alameda Landing developer Catellus told the city council early this morning that negotiations with Target are continuing and that an agreement with the retailer could be in place by the end of this year.

“There’s still a high degree of interest from Target,” Tom Marshall, managing director for the Catellus Development Group, told the council. “We’re still in the midst of some very serious negotiations.”

Marshall said that Target has pulled back from new store construction but that Alameda Landing is one of the few sites the retailer is currently considering for a new store. If an agreement is reached, the store could open here in 2011.

“That’s kind of the best case at this point,” he said.

Marshall said that Catellus, whose parent company, ProLogis, has dramatically reduced development starts in the midst of apocalyptic times for the real estate industry, could move forward on building a standalone Target at the site now in order to keep the retailer in the Landing development.

Building the Target without the rest of the project, which includes additional retail and 300 homes, would cost Catellus $17 million, Marshall said.

The Target would bring the city an estimated $250,000 a year in sales tax, Base Reuse Manager Debbie Potter said.

Marshall stressed that his company remains healthy despite the (well-publicized) impacts it has suffered in this flagging economy, and he said the Landing project is likely to be among the first that is built when the economy improves. (He also said the company has pulled out of San Francisco’s mostly-built Mission Bay development, which it served as the master developer.)

Still, it looks like the city could end up paying money Catellus was supposed to front to extend Stargell Avenue, considered a “must” for the project to move forward. Potter said staff will come to the council on March 17 with a proposal to help fund the $20 million project in an effort to keep state funding the city secured for the project.

Catellus was supposed to pay $9 million toward the cost of the extension; the city has secured $4 million from the state.

Construction of Alameda Landing was originally slated to begin in August 2007, with a completion date in 2013.

Incidentally, while we’re talking about the Landing, Marshall said Clif Bar is pursuing another location here on the Island. Last time I checked with Clif Bar they said they’d let me know when they’d found a new home. Stay tuned.


  • Lauren Do says:

    Uh oh. Standalone Target. I don't know if I like the sound of that. A well incorporated Target into a larger mixed use "Lifestyle Center" I could get on board with. A standalone Target is sounding a little too Dixon for me.

  • David Howard says:

    I'd like to see some back-up for that estimate of $250,000 of sales tax revenue. That translates to over $25 million in sales ($250,000 / 1%) at the store, or over 60% of the estimated $40 million or so of taxable sales leakage in Alameda. We've seen over-optimistic promises of retail sales tax before – re: the parking garage and movie theater. Just last night we saw that the garage/theater hasn't really driven any new taxable spending – it's just shifted some of it from merchandise to restaurants.

    And if there's so much money to be made, why are we looking to fund the project with $20 million? Presumably that would be through tax-increment financing – the City of Alameda General Fund lost $3.79 million last year as a result of past projects diverting property tax revenue to tax-increment subsidies. That $3.79 million is nowhere close to being made up by retail sales tax revenue.

    Where will the sales come from? Presumably not entirely from Alameda. What will the environmental impact be from all the autos from on-island and off-island shoppers that drive to this Target? Will people off-island really fight their way through the tube to come to Alameda's Target? Or will they hop on I-880 to Albany or San Leandro instead? But at least a location close to the tube is better than all those cars driving across the island to Alameda Town Center.

  • DK says:

    Lauren – Target is almost always a stand-alone store. That has historically been their practice. I think the Target in Pinole may be an exception to that rule, but their stores nation-wide are stand-alone. Also it may be interesting to know that each store is very much controlled by Target Corp in Minn – even to the degree of heating and lighting controls. Target is a 24 hour operation with stockers and cleaning contractors (few English speakers on those crews) working when the store is closed to the public. During those 'closed' hours lighting is dropped to 25% and depending on weather and climate, it is not unusual for workers to need to keep their coats on. Not sure why I wanted to point that out, Target is certainly not much different than Wal-Mart in trying to get as much from every worker for as little as they legally can get away with…

    • I'm trying to think of all the Target stores I know of here in the Bay Area, and most of them are in strip malls or malls. Albany is a standalone, but San Leandro is in a strip mall. Down on the Peninsula there's Daly City (in a mall), Colma (strip mall), San Bruno (mall), I think the Foster City one is in a strip mall, there's one in Mountain View is standalone but it's across the street from a WalMart that is in a strip mall. Anyone else out there on this one?

  • Lauren Do says:

    In this one, I have to 100% agree with Doug deHaan who questioned the guy from Catellus on what their plans were for this Target. The Catellus rep basically said that they would be changing their plans for the design of the Target at the Landing from a pedestal style (parking below) to the traditional suburban wasteland style. And they would be building the Target without building the rest of the already submitted and approved designed center around it. That's not what we signed up for. If Catellus doesn't have the money to build everything together then build nothing. Because they aren't actually going to expend any money to build the vertical development of the Target. That's not how Target works. They will sell the land to Target and Target will do the vertical development.

    Also, the Target in Newark is in a mall. Union City is part of a strip mall, but I think the strip mall was built after the Target. Fremont Hub Target is part of the larger Fremont Hub.

    The Walnut Creek one is a standalone though. Those are the ones I can think of off the top of my head.

  • Jill says:

    I opposed the Target at Southshore due to the cross-town traffic impact, but this location seems to make much more sense. Here's the thing: Alameda desperately needs sales tax revenue. Lots of people do a lot of shopping at Target. If there was a Target in Alameda, I think I might even start shopping there, keeping some of my sales tax dollars on the island. To me it's not important whether it's a stand-alone store or in a strip mall. Actually I kind of hate strip malls, so a stand-alone sounds better to me. I hope this happens.

  • dave says:

    The city now gets only .75 of the gross 8.75% sales tax. It was reduced from 1.0 a few years ago in a state budget re-shuffle.

    It will be nearly impossibible for any sales tax gain to offset the property taxes forgone to build this store.

  • David Howard says:

    "dave" is right – the .75 figure was published in City Treasurer Kevin Kennedy's report on the state of the finances of the city, available from the city website, and also available from the state board of equalization website.

    The fanatical obsession with retail sales tax in Alameda is hilarious. Right now, the city of alameda earns about $5 million per year on roughly $500 million of in-city taxable sales from roughly 75,000 people. Do you want another $5 million in retail sales tax revenue to plug alameda's revenue gap? Sure. Just double the population. Who wants to double the population in Alameda to 150,000? Anyone? Anyone?

    Alameda covets Emeryville's high per-capita sales tax, around $148 per person, but they have only 10,000 residents and an almost entirely retail based economy, which took a 22% hit in this downturn.

    A more viable approach for Alameda is to build up business-to-business sales tax revenue – not retail sales tax revenue – from businesses like Peet's Coffee and others like it at Bay Farm Island and Alameda Point. Sales tax revenue from those companies can grow exponentially in relation to population and traffic growth in Alameda. Retail sales from Target, OSH and other big-box stores requires more population, more traffic and more density, which the majority of Alameda residents do not want. Tell City council.

  • Chelsea says:

    Be aware of the impact of your dollars.
    A locally owned independent business returns approximately 45% of each dollar spent back to the community. Local, independent businesses assist the community through a “multiplier effect”: one dollar spent at a locally owned business will return five times that amount within the community through city taxes, employees’ wages, and purchase of materials and supplies at other independent businesses. In addition, these businesses will turn that dollar back into the community through school funding, social services, and contributions to local non-profit organizations.

    Chains and franchises contribute roughly 40% and at times as little as 20% of the store’s sales back into the community through employee wages, sales taxes, and property taxes. Frequently, a chain store’s location is owned by the larger non local company, and the business is given tax breaks by the city in order for shareholder profits to remain high. Locally owned independent businesses do not receive such benefits and thus contribute a far greater proportion of revenues to local taxes.

    If Target comes to Alameda…I am sure it will be the death of Park Street independent businesses. Think about Toy Safari, Books inc, Daisy’s, 3 WISHES, Tot Tank……

    Enough people already leave the island to do their monthly trip to Target. Can Alameda weather a big-box chain like Target coming in and capturing the sales tax from the independents that have been staples in our community?

    Food for thought….

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