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City of San Leandro <br />Meeting Date: September 9, 2013 <br />Staff Report <br />Agenda Section:File Number:13-452 WORK SESSION <br />Agenda Number:2.A. <br />TO:City Council <br />FROM:Chris Zapata <br />City Manager <br />BY:Cynthia Battenberg <br />Community Development Director <br />FINANCE REVIEW:Not Applicable <br />TITLE:Staff Report for and Presentation by Innisfree Ventures II on Revisions to the <br />Village Marketplace Development at 1550 East 14th Street <br />SUMMARY AND RECOMMENDATION <br />In 2009, the Redevelopment Agency purchased 1550 East 14th Street to provide temporary <br />parking during the construction of the downtown parking garage and then develop into a project <br />which would serve as a catalyst for downtown retail. The Redevelopment Agency worked in <br />partnership with developer Innisfree Ventures II and the community for three years to create the <br />Village Marketplace, a retail project with a specialty grocery store anchor. Revisions to the Village <br />Marketplace development were necessitated by the loss of the grocery anchor. In Summer 2013, <br />Innisfree identified an alternative anchor tenant and submitted revised designs and elevations to <br />the City for approval. This high profile project is being brought to the Council for direction. <br />BACKGROUND <br />In 1947, Lucky began operating a grocery store at 1550 East 14th Street (Site). In May 2005, Red <br />Mountain Retail Group acquired a portfolio of Lucky properties, including the Site. Red Mountain <br />held ownership of the Site through Norcal AL LLC, a limited liability corporation. In September <br />2005 the grocery store, which had changed to an Albertsons , closed due to underperformance. <br />In 2007, Norcal filed a series of lawsuits against the City contending that various planning and <br />zoning actions related to the City's approval of the Transit Oriented Development Strategy violated <br />its constitutional rights or were otherwise contrary to law. In 2008, the Council placed a priority on <br />resolving the litigation due to the prominence of this downtown site and the blight created by the <br />store vacancy. In April 2009, the Council voted unanimously to approve settlement terms which <br />included the Redevelopment Agency’s purchase of the Site for $6.175 million, a price that included <br />Norcal’s demolition of the building. The settlement price was deemed reasonable based upon <br />executed Letters of Intent for reuse of the building. <br />In September 2009, the Redevelopment Agency entered into an Exclusive Negotiating Rights <br />Agreement (ENRA) with Innisfree Ventures II (Innisfree) for the Site. Staff worked closely with <br />Page 1 City of San Leandro Printed on 9/4/2013