City Shops for Another Supermarket : Ralphs Drops South Gate Renewal Plan

After negotiating with the city for more than 10 months, Ralphs Grocery Co. has suddenly dropped plans to expand its existing store and redevelop an aging shopping center. Instead, Ralphs says it intends to leave town altogether when its store lease expires at year’s end.

When city officials received the notice from Ralphs in a letter March 21, they immediately began negotiating with Park/Abrams Development Co. of Irvine and with Alpha Beta, a grocery subsidiary of American Stores Properties, based in Salt Lake City.

Park/Abrams and Alpha Beta were granted exclusive rights to work out a proposal within 90 days to take over the supermarket and redevelop the neighborhood shopping center at Tweedy Boulevard and Otis Street.

Ralphs’ decision to bow out of the South Gate project was based on several factors, Arthur P. Garcia, division real estate manager for Ralphs’ parent organization, Federated Department Stores, wrote in the letter to the city.

‘Expensive, Risky’

Developing the proposed market “would be a relatively expensive and risky (project) for Federated, and Federated has decided that the site’s potential is not sufficiently great to justify going ahead,” Garcia stated.

But at a discussion last week before the South Gate Redevelopment Agency, Mayor Henry Gonzalez and other city officials speculated that Ralphs’ decision to drop the project is related to the current battle between Campeau Corp. of Canada and R. H. Macy & Co. of New York to take over Federated.

According to published news reports, both Campeau and Macy have stated that they will sell the 129-store Ralphs chain, based in Compton.

Closed, Reopened

South Gate has had a rocky time recently trying to keep a supermarket in the shopping center, on the eastern end of Tweedy Boulevard in the city’s main business district.

Ralphs operated on the site since 1967, then closed the store in October, 1986, before opening a Giant supermarket in Lynwood less than a mile away. However, that Giant closed a few months later after the Lynwood Unified School District condemned the land to construct a high school.

Ralphs reopened at the South Gate site in September, 1987.

After informing the city that it was dropping out of the redevelopment project, Ralphs agreed to keep the market open until its lease with the Redevelopment Agency runs out at the end of this year, said Eugene Moy, redevelopment project manager.

Lease Extensions

If more time is needed, the lease has three six-month extensions that the city could ask the store to exercise, Moy said.

The agency is subleasing more than two acres of land in the shopping center, which includes Ralphs and four small retail stores, from American Real Property Holdings of Delaware.

The agency has also purchased more than two acres of adjacent residential and commercial property to expand the shopping center.

The present market is about 25,000 square feet, and city officials say they would like to see a market twice that size. There is no large supermarket in the mile-long business district, which is part of the city’s redevelopment area.

Specific Proposal

Acting as the Redevelopment Agency, the City Council authorized administrators Tuesday to begin talking with Park/Abrams and Alpha Beta to work out a specific proposal for the center.

The agency authorized the negotiations by a 4-1 vote, with Councilman Del Snavely dissenting.

The companies also had to deposit $25,000 with the agency to show “good faith” in entering the discussions.

“During that 90-day period, we will work out the finer points of our proposal,” said Steve Park, president of Park/Abrams.

$10-Million Cost

The company’s preliminary site plan calls for a 56,000-square-foot Alpha Beta market with 19,000 square feet of retail shops and 7,500 square feet of restaurant space, Park said. He estimated the cost at $10 million.

Park said his company and Vons Grocery Co. had initially expressed interest in the project before the city began negotiating with Ralphs.

Park said he was confident that his company will be able to work out a firm proposal. He noted that Park/Abrams has been involved in developing two other South Gate projects, including the Tweedy Plaza Food Park on Tweedy Boulevard.