Lowe's pulls out of Petaluma development

<p>Lowe's has dropped out of a proposed Petaluma development that could have given the city its only home improvement warehouse store and perhaps captured millions of dollars in revenue spent in other cities, developers announced Tuesday.</p><p>The move disappointed supporters of the project but was hailed as a stroke of luck by opponents.</p><p>It also reopens the door for a locally favored Friedman's Home Improvement store to return to Petaluma, which until Nov. 2010 had plans to open at the East Washington Place shopping center.</p><p>Tuesday's announcement came a day after Lowe's said it will close 20 “underperforming stores” nationwide and open fewer than half of the 30 new stores it had planned in the next year. The Cotati Lowe's is not affected.</p><p>But Lowe's spokeswoman Stacey Lentz said the decision to drop the Petaluma store was unrelated to the national contraction – that it was the slow pace of Petaluma's planning approval process that caused the company to abandon the plans.</p><p>“The contractual agreements to have all the approvals needed for the project were not obtained before the agreed deadline,” she said. That deadline was Oct. 15.</p><p>“Essentially the clock ran out on a project that could have broken ground in 2010,” said Marko Mlikotin, a spokesman for the developer, Merlone Geier Partners of San Francisco.</p><p>Lowe's was to be the centerpiece of Deer Creek Village, 346,000 square feet of retail and office space, a health club, garden center and restaurant on 36.5 acres of vacant land at the southwest corner of Rainier Avenue and North McDowell Boulevard.</p><p>Lowe's had been in the plans for a shopping center at the site since 2004, before Merlone Geier bought the property.</p><p>A draft version of the final environmental impact report for Deer Creek Village is being examined by city planning staff. The final EIR may go before the city's Planning Commission next month and later to the City Council.</p><p>Merlone Geier plans to move forward with the shopping center and already has begun discussions with other home improvement stores as possible replacements for Lowe's, Mlikotin said. He declined to be more specific.</p><p>“It looks to me like this is Friedman's big chance to have Petaluma to itself,” said Councilman Mike Healy, long a Deer Creek Village supporter. “I hope Merlone Geier is knocking on their door.”</p><p>Friedman's chief operating officer, David Proctor, didn't return a call Tuesday seeking comment on his company's plans.</p><p>David Keller, a vocal opponent of the project, urged city leaders to seize on Lowe's pullout as an occasion to recast the project. </p><p>“This is a perfect time to go back to the drawing table and see what works for our community,” he said. “What's going to work in that neighborhood? I hope Merlone Geier and the Planning Commission and the City Council will be willing to get off the fast train and look at what will work there in the long run.”</p><p>He expressed concerns that outside chains brought in wouldn't care about the community if they failed.</p><p>Of the 20 stores Lowe's announced Monday it would close, 18 of them have been built since 2006 and 10 since 2007. Only one was in California, in the central valley town of Los Banos.</p><p>Greg Geertsen, a Merlone Geier managing partner, said the Deer Creek development application was deemed complete by the city more than two years ago. Typically, entitlements must be granted within a year.</p><p>“Lowe's supporters will no doubt be saddened to hear of this news, since Petaluma has a need for a major home improvement store,” he said in a written statement. “Despite this development, our firm remains committed to building the Deer Creek Village shopping center that promises to bring hundreds of new jobs and new tax revenue for city services.”</p><p>According to a 2009 city economic analysis, Deer Creek would create 510 retail, office and service jobs and 331 temporary construction jobs. The city would receive $681,000 in annual sales tax revenue and $311,000 in annual property tax revenue, in addition to several million dollars in development fees.</p><p>An economic report prepared last year by the city counted $28.6 million in “sales leakage” on building materials and home furnishing spent by Petaluma residents in neighboring cities. Lowe's had said it could generate about $40 million in annual sales at the Petaluma store. Other tenants, including two restaurants and smaller stores, are expected to do another $40 million in sales, developers said.</p><p>The Deer Creek proposal has been undergoing formal city planning scrutiny for more than two years and the EIR has been delayed three times with city requirements for additional studies. Beyond the standard EIR, the city requested separate reviews of air quality, traffic and economic impacts the project may have on other businesses in Petaluma.</p><p>Councilwoman Tiffany Renee called Lowe's exodus an “opportunity” to see Friedman's return to its birthplace. The company, which has warehouse home improvement stores in Sonoma, Santa Rosa and Ukiah, was founded in Petaluma six decades ago but left town in the 1970s.</p><p>“I am very concerned that we could end up with a big-box store that we don't want,” Renee said. </p><p>She and other councilmembers worried that if Lowe's failed, a Walmart or a Super Target grocery store could move in. But city planners said any use other than what was studied in the EIR would need separate approval.</p>