Oliver's Market is close to signing a new lease to remain in its flagship store in Cotati, a move that could kill plans for a new grocery store at the town's northern entrance.

The company, which has three stores in Sonoma County, is hoping to sign a lease for at least 10 years to stay in its current location on East Cotati Avenue, General Manager Tom Scott said.

If the lease is signed, it would be "highly unlikely" that Oliver's would build another supermarket as proposed on Old Redwood Highway near Gravenstein Highway, Scott said. Oliver's owns the land and wants to see it developed, but not for another supermarket to move into.

"I don't think we're going to put a competitor in an &‘A' location where we're going to be in a &‘B' location," he said.

Oliver's current lease expires in August 2014. As such, Scott said, the company soon must sign a lease or move forward with plans to build the new supermarket.

"We're scrambling to try to have a store in Cotati one way or the other," he said.

The news marks the latest development in the long-standing efforts to develop a stretch of Old Redwood Highway that city leaders have dubbed the "Northern Gateway" to downtown Cotati.

A year ago, Oliver's announced it wanted to build a 40,000-square-foot grocery store on the site, plus apartments, offices and more retail space. The 6.2-acre site is the largest undeveloped parcel between the town plaza and Gravenstein Highway.

But last fall, Oliver's warned that it wouldn't build a supermarket there if city officials chose to keep two roundabouts as part of plans to redesign the roadway. In December, the City Council approved the plan, and critics since have succeeded in qualifying a measure for the November ballot to ban roundabouts. Oliver's hasn't taken a position on the measure.

Two council members said Thursday they would consider it good news if Oliver's stays at its current location.

"We keep them in Cotati and they stay as the anchor to that shopping center," said Mayor Susan Harvey.

Councilman Mark Landman acknowledged that the elimination of redevelopment funds by the state will make it more difficult to finance the street and related improvements for Old Redwood Highway. But regardless of Oliver's decision, the area eventually will develop because of the area's retail attraction, including its close proximity to a freeway interchange.

"We have the location there," Landman said. "And that's something that doesn't change."

If Oliver's doesn't build, it will be the third supermarket to drop plans for the same location.

Lucky Stores proposed a supermarket for the spot in 1996, a plan that died after Oliver's helped sponsor a ballot measure to limit the size of retail outlets in Cotati. Then in 2000, Albertson's supermarket chain sought to build a store slightly bigger than the one that Oliver's since has proposed.

You can reach Staff Writer Robert Digitale at 521-5285 or robert.digitale@pressdemocrat.com