Petaluma again delays Lowe's project

On the last business day before a draft environmental impact report of a Lowe's shopping center proposal in Petaluma was to be released to the public, city planners told the developers another study is required, forcing a further delay in the process.

The move sparked a strong response from the developer, Merlone-Geier Partners of San Francisco, which issued a statement Friday suggesting it is might abandon its proposal for what would be Petaluma's only home improvement store.

The statement also reinforces the company's previous that it could sue the city for what it sees as unnecessary - and costly - planning holdups.

"Persistent delays now threaten the project," the statement said, in part. "The firm will continue to evaluate the merits of doing business in Petaluma and what recourse to take if unwarranted delays threaten the financial viability of the project."

City Manager John Brown didn't return a message this week seeking comment on the new study. A planner under contract to the city to handle Petaluma projects couldn't be reached on Friday, when city offices are closed.

According to the city's timeline on the project, first proposed in 2003 by the former landowner, the public release of the environmental analysis of the Deer Creek Village on North McDowell Boulevard was set for last Monday.

(Oct 18)

But on Friday, Oct. 15, Petaluma planning staff informed Merlone-Geier that a new study - this one on air quality impacts - would be needed.

This comes on the heels of two additional environmental reports the city has required beyond the draft EIR. Those reports, which were required after an initial study period, focused on traffic and economic impacts that Deer Creek may have on existing businesses.

It was unclear why it was just recently determined that the air quality report was necessary.

Councilman Mike Healy, who has been in close contact with Merlone-Geier representatives during the city's review process, said the latest developments are disturbing.

"This certainly doesn't do anything to enhance our reputation as somewhere any rational person would want to do business," he said.

It could also become a campaign issue as the Nov. 2 election nears.

All five candidates who describe themselves as pro-business have said they support Deer Creek and Lowe's as currently proposed. They are mayoral candidate Jeff Mayne and council candidates Chris Albertson, Mike Harris, Ray Johnson and Karen Nau.

The four self-described progressive candidates, David Glass for mayor and Teresa Barrett, Jason Davies and Gabe Kearney, all declined to take a position, as did the more conservative Wyatt Bunker.

The Deer Creek project proposes 346,000 square feet of retail and office space, a health club, garden center, and restaurant on a 36.5-acres of vacant land at the southwest corner of Rainier Avenue and North McDowell Boulevard.

A Lowe's home improvement store is planned as the anchor tenant.

Petaluma has no home improvement stores, although Friedman's Home Improvement is negotiating with another developer, Regency, which won city approval in February for a Target retail center after suing the city over planning delays. Additional studies may be required on that proposal as well because potential impacts specific to Friedman's and its lumber yard weren't considered during the environmental review.

Neighborhood opponents of Regency also sued the city after it approved the project, saying the environmental studies inadequate. Then, in a settlement to the lawsuits that was approved 4-3 by the council, Regency gave the opponents $100,000 and paid all legal fees.

Healy, an attorney, said it's his understanding that Merlone-Geier has about $17 million invested in the Deer Creek property and development work and has a signed lease with Lowe's. Legally, developers could be entitled to recoup "carrying costs" and lost rent if the delays were deemed improper, he said.

It wasn't clear what the city's new timeline would be for public review of the EIR or hearings before the planning commission and city council. A city website on the project was last updated on Sept. 29. The now-outdated timeline had the council reviewing the draft EIR in December and after another public comment period, considering the final EIR in February.

This summer, Merlone-Geier said publicly that the city needed to consider the final EIR by Nov. 12, the one-year deadline set by state law. Brown acknowledged the one-year date, but said city attorneys consider it a guideline, not a legal mandate.