News Roundup

Food Fight

December 16, 2002 - Vol. 124 - Issue 129 - Page 1
Amber Bethel
Staff Writer New Orleans CityBusiness

A summary judgment by a federal court could rekindle plans to build an Albertsons grocery store in Central City. The size of the planned supermarket is the issue. Developers want to remain with the original store plans while the store officials want a smaller Albertson’s on site. The lawsuit pits development company St. Charles Ventures LLC against Albertsons over a store intended to open this year at the intersection of Felicity and Carondolet streets. Instead, only gravel and litter mark the vacant lot where about a dozen homes were removed to make way for the development.

“Personally, one of my proudest moments turned out to be a big disappointment,” says developer Reid Falconer, who has worked since 1995 on the supermarket project with his partner, Greg Clayton. Originally planned as a Sav-A-Center, the site was later offered to Albertsons. Falconer says the store would have been a beautiful addition to the community featuring New Orleans-style architecture seen on Magazine Street instead of the typical big-box grocery chains. Falconer says the store’s rent would have generated money each year for two neighboring partner churches. The churches would have received $98,000 per year or 10% of the store’s rent. “We knew one of the concerns in urban site security is crime, including theft and vandalism,” Falconer says, emphasizing that a guard post was the last thing they wanted to add to the neighborhood. “We wanted a thousand neighborhood eyes to be watching the store with a sense of ownership.”

Plans for Albertsons and St. Charles Ventures were complicated when Wal-Mart announced in 2001 it would build a SuperCenter just a mile away from the site. “When we originally contemplated building the store there, we based it on the fact that there was no other retailer providing food in that community,” says Etharin Cousin, Albertsons senior vice president for public relations and governmental affairs. Cousin says the company decides what size store would best serve the community by mapping out area grocery stores. Cousin says the Wal-Mart announcement convinced Albertsons a large supermarket wouldn’t fare as well as projected in Central City.

In summer 2002, Albertsons sent a certified letter to developers to void the lease because Wal-Mart planned to build on Tchoupitoulas Street.

One day after the developers filed a lawsuit against the grocery corporation, Albertsons offered to build a smaller 40,000-square-foot store instead of the planned 66,000-square-foot space. Both sides are hoping for a rare summary judgment in this federal court case, so work could begin soon. “In our opinion, if there was ever a time to have a summary judgment, this is it,” Falconer says. He believes Albertsons should honor the original agreement. Cousin says the company still wants to do business in Central City and would like to see a summary judgment in favor of the smaller store. “If you have reduced sales volume and reduced operating cost, you have a much better chance of succeeding against the type of competition Wal-Mart would provide,” she says.

While the larger Albertsons would have meant about 200 jobs for the area, the smaller store would have about 15-20 fewer jobs, Cousin says. “We’re hoping the developer will provide us with an opportunity to open a store that will be successful,” Cousin says. “Nobody wins if we build a store that doesn’t succeed.” No matter which store size is built, Albertsons will be responsible for 25-year lease notes of about $980,000 per year, Falconer says. That’s about $15 per square foot on the larger building or $25 per square foot for the smaller building. If Albertsons opens then pulls out of the venue, the company would still be accountable for making up the difference if the next tenant pays a lower price. The extra space would be used for additional parking and possibly room for other vendors, Cousin says.

Should the company file bankruptcy, however, Falconer says he’s the one who pays. “No tenant within the realm of reality is going to be willing to pay $25 per square foot when the fair market value of the area is $15 or $16 per square foot,” he says. “We have bought the land and have to pay on that so we can’t reduce the rent.” Praising Albertsons for remaining a great company, Falconer says he’s afraid it has lost its focus. “They have certainly concluded that they cannot compete with Wal-Mart,” Falconer says. “It breaks my heart because not only was this something I could be proud of but it would have had a positive impact on the neighborhood. I hate the thought of disappointing the community.”