City Official Urges Selling Sears Store Site to Group With ‘Urban Village’ Proposal

The San Diego city manager’s office recommended Tuesday that the city sell the controversial Hillcrest Sears store to a development group proposing to build a $46.6 million “urban village” of homes, stores and offices on the 12.4-acre parcel.

The developers--The Odmark Development Company and Oliver McMillan Inc.--would pay the city between $9.6 million and $11 million if the City Council follows Deputy City Manager Maureen Stapleton’s recommendation and approves exclusive negotiations with the builders. The council is scheduled to review the recommendation at its regular meeting Monday.

In selecting Odmark and Oliver McMillan from among three bidders, Stapleton recommended rejecting two other offers of $10.5 million from Trammell Crow Co. and Old California Development Co. Inc.

All three offers were above the $9.5 million minimum demanded by the city, which is seeking to partially recoup its $10 million investment in the site.

‘Unusually Diligent’

“This development team was unusually diligent in preparing their proposal and they have a thorough understanding of the situation,” Stapleton wrote in a memo to council members about the Odmark-McMillan proposal.

The developers “had just done so much in meeting with the community and spending their own money, not knowing whether they were going to get the project or not,” said Herbert Lemmons, project administrator for the Sears site in the city’s property office. The developers have already negotiated purchases of two adjacent parcels of property on University and 10th Avenues to expand the project and would pay for improvements to University Avenue, he said.

Lemmons said that the other two bidders had not met once with Hillcrest residents and business-owners, who have lobbied hard to see that the huge Sears site is not turned into a strip mall that could rob nearby businesses of customers.

The three offers appear to vindicate former City Councilman Bill Cleator, who led the drive to buy the site and the cavernous Sears store for $9 million in 1986.

Cleator Criticized

Cleator came under criticism last year when consultants reported that the city could expect to receive no more than $7.2 million when it sold the site to developers under rules that restricted the amount of space that could be devoted to retail stores. The Sears site is located in the 2nd Council District.

At Cleator’s urging, the council softened its stand in November and changed the restrictions into “guidelines” for developers.

“I feel vindicated and I feel very pleased,” said Cleator, whose original goal was to place a new central library on the Sears site. “There’s always a gamble in any business deal . . . and I think from time to time, one has to step out if they think the overall good will outweigh the negatives.”

Stapleton’s recommendation has the support of current District 2 Councilman Ron Roberts, whose backing would be crucial to approval by the council, said Roberts’ aide, Paul Grasso. But Roberts could raise objections when he reads the developers’ entire proposal, Grasso said.

Anchored by Ralphs

Odmark and Oliver McMillan are proposing to build 60,000 square feet of retail stores--anchored by a 40,000-square-foot Ralphs supermarket--and an additional 20,000 square feet of commercial buildings.

The eastern portion of the Cleveland Avenue site would be devoted to 350 residential units, divided among town houses and three stories of stacked apartments. In addition, there would be two levels of apartments over some of the commercial outlets, according to plans submitted by the developers.

Part of the proposal would relieve the city of building a community center on the site. The developers offered to build, operate and maintain a 3,000- to 4,000-square-foot community center, which is considerably smaller than the 9,500-square-foot center the city originally wanted to construct.

Odmark and Oliver McMillan would pay the city at least $9.6 million for the Cleveland Avenue parcel, and add $450,000 to fund construction of the community center, Stapleton’s memo said. The developers have offered to pay an additional $960,000--bringing the total purchase price to $11,010,000--if the city does not impose “unusual off-site or other requirements” during negotiations over the project.

Those requirements could include rebuilding the Vermont Street bridge leading to the site, or replacing the main sewer line in University Avenue. The amount could also be reduced if the developers encounter “unknown hazardous materials” during demolition.

$500,000 Cleanup

A consultant hired by the city has already reported that cleanup of asbestos in the 35-year-old building will cost $500,000. The developer will pay for removing the asbestos.

The developers have agreed to pay the city $1,005,000 upon selection by the council and forge a development agreement with the city by May 23.

Before then, Uptown Community Planners, the Hillcrest Business Improvement Assn. and the city’s Planning Commission will review the developers’ plans for the parcel.