9/03/2004

Rite Aid Shut Out of Island's Bridgeside Shopping Center



Judge orders drug store out of 30-year home as renovation starts
By Susan McDonough


Rite Aid apparently will be left out of a revitalized Bridgeside Shopping Center, despite its efforts to become part of the vibrancy developers are promising for the aging center.

Superior Court Judge James Richman denied the drug store company's motion to restrain the city from using eminent domain to immediately seize the property Rite Aid has leased 30 years.

The city reportedly offered Rite Aid $484,200 to take over the lease.

The drug store has remained as one of the few viable businesses at the Blanding Avenue plaza, which has slipped into disrepair in recent years.

The center's owner, Regency Realty Group, plans to demolish the Rite Aid building and rebuild the shopping center into a glowing neighborhood plaza anchored by Nob Hill Foods and its in-house pharmacy.

Rite Aid objected to the plan, claiming, among other things, that developers failed to provide the store with its legal right to reestablish itself in the revitalized center.

Under redevelopment law, displaced businesses must be given reasonable preference for relocation in a redeveloped project, said Lee Rosenthal, an attorney at Goldfarb & Lipman, which represents Rite Aid.

The city and project developers say Rite Aid was given plenty of opportunity to remain in the retail center, but the parties couldn't agree on terms.

The city bought Bridgeside from its former owner in July 2003 for $6.25 million and later sold it to Regency Realty, one of the country's largest owners of shopping centers anchored by grocery stores.

Doug Wiele of Foothill Partners is developing the shopping center for Regency. He plans to spend almost $20 million to rebuild the center, add new retail and office space and re-landscape the property to emphasize its waterfront location on the Oakland Estuary.

The judge's decision authorizes the city to take immediate possession of the Rite Aid lease.

Sources say the store could close as early as Oct. 1.

Had the judge granted Rite Aid a stay, construction on the Bridgeside project could have been delayed until at least next spring, said Assistant City Attorney Teresa Highsmith.

Construction is set to begin this fall, after the city approves the project's design, Wiele said.

In the meantime, negotiations with Rite Aid over the value of its lease will continue, Highsmith said.

Rite Aid argued the amount offered by the city to buy out its lease undervalues the drug store and the goodwill generated during the 30 years it has done business in the Blanding Avenue neighborhood.




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