Fred's to build Homer grocery

Posted: Wednesday, September 24, 2003

Fred Meyer Stores Inc. an-nounced Monday it had penned an agreement to lease 3.5 acres in downtown Homer where the company intends to build a grocery store and adjacent liquor outlet totaling 45,000 square feet.

The department store chain based in Portland, Ore., now will seek a conditional-use permit from the city of Homer to build at the corner of Lake Street and the Homer Bypass on property owned by the Waddell family, next to the Gold-Mine Gifts and Fine Jewelry and across Lake Street from McDonald's.

But that is within the city's Central Business District where buildings currently are limited to no more than 20,000 square feet by a city ordinance adopted in late July.

That law has a six-month sunset clause. During the interim period, city officials will be working on new design and performance standards for retail and wholesale buildings.

Fred Meyer originally planned to build a store of about 90,000 square feet, later reduced that to 70,000 square feet and was negotiating to buy land in the heart of the Central Business District owned by Cook Inlet Region Inc.

Public concern about the proposed size and the impact a huge department store might have on local businesses, however, led to hours of testimony before the Homer City Council, and ultimately to the temporary ban on structures larger than 20,000 square feet.

There have been other arguments expressed against a Fred Meyer because the CIRI land in question also was under consideration as a key element in a proposed town-center project. Some people expressed doubt that a 70,000-square-foot store would fit into the town-center development.

Rob Boley, assistant vice president for public relations with Fred Meyer, said Tuesday that the company decided to let its temporary negotiating agreement with CIRI lapse and move on to seeking a lease deal for the Lake Street property.

Fred Meyer has never built a store as small as 45,000 square feet, though it has acquired structures smaller than that. At 45,000 square feet, the store would be only slightly larger than the Safeway building a few city blocks away,

"We're talking about a very small store," Boley said. "Unfor-tunately, to go with a store this small, we will have to focus on food and not be able to bring general merchandise and apparel to town."

Fred Meyer's original intent was to build a store smaller than that in Soldotna, but one able to accommodate a grocery store, liquor outlet and clothing and general merchandise lines.

"Although the company said it would like to offer Homer residents a selection of apparel and general merchandise at the new store, concerns voiced by the city about store size has prompted Fred Meyer to scale back is original plans to a small 45,000-square-foot proposal that is limited to a grocery store and liquor store," Boley said.

Whether the city would ever grant an exception to a permanently adopted size limitation, whatever that comes to be, is an open question. Provisions in the temporary ordinance specifically prohibit issuing conditional-use permits or variances exceeding the law's limitations. But again, that law sunsets around the end of January, unless extended by the city council.

Development of design and performance standards for large retail structures that would exceed 20,000 square feet are under discussion at the Homer Advisory Planning Commission, which meets next in October. It is not clear at this point whether the Central Business District limitations will be altered to accommodate Fred Meyer's plans.

Stores as large as 40,000 square feet are permitted in other areas of the city, including two general commercial districts designated GC1 and GC2, however.

Boley said that if Fred Meyer can build its grocery store and adjacent liquor store, it expects to be able to make money, despite bringing still another grocery store to a town with three other food outlets within blocks, not counting gasoline stations with convenience stores.

"That's the type of shopping people do most frequently," he said. "One thing we would bring is a more competitive marketplace for grocery products. That's going to be good for the customer."

With a Fred Meyer store already on the Kenai Peninsula, there are favorable economies of scale associated with supply, too, Boley said.

"It's a logical extension to continue supply trips down to Homer," he said.

If the size limitations are increased and Fred Meyer can get a permit to build 45,000 square feet of building, the design would allow for future expansion, Boley said. Thus, if the company is ever given such a green light, Homer might see the addition of general merchandise and apparel.

Boley said the store would look to see what was missing in the Homer market and act accordingly if that opportunity ever presented itself.

"We believe there is room for some expansion," he said. "We expand stores all the time."

Boley did not have a cost-estimate for the proposed project. He said designs were nearing completion, and that Fred Meyer intends to present them to the city planning department before the end of the year. He also said preliminary designs put the main store at about 42,000 square feet, and the immediately adjacent liquor store at around 3,000 square feet.

While Fred Meyer's Homer store would be limited to food and drink, a larger department store would not have had a negative impact on the local economy, Boley said. Many businesses survive and thrive quite well in mall settings, even when they are in direct competition with a store within the same complex, he said.

"You can have a number of synergies from multiple-retail establishments in one place," he said. "They all help each other by being magnets to bring shoppers to one area to shop."

Such a complex would provide more reasons for people to shop locally and keep their dollars in the Homer economy, he added.

Opponents have pointed to studies that have shown decided impact on small businesses when large stores come to town, however.

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