Friedman's Home Improvement may not be returning to Petaluma after all, at least not anytime soon.
Last year, the Santa Rosa-based chain agreed to open a hardware store, nursery and drive-through lumber yard in a Target shopping center under development by Regency Centers next to the fairgrounds.
But Regency representatives recently broke the nonbinding agreement, telling Friedman's it no longer fit their financial plan to build a 100,000-square-foot warehouse.
"They said &‘You can buy the land and you can build your own building,'" Friedman's Chief Operating Officer David Proctor said Thursday. "It totally eliminated any of the underlying assumptions of the prior letter of intent."
The agreement called for Regency to build the structure, which would occupy the rear of the 34-acre site.
Regency Senior Vice President Pete Knoedler said he couldn't comment on the breakup.
Regency, which bought the land outright in 2004 with the city's encouragement to build a large development on the former Kenilworth Junior High site, received final approval for the project in February after years of delay.
The Florida-based developer sued the city over the delays and a community group sued the city after it was approved, arguing that the environmental review was inadequate. Regency eventually paid the opponents $100,000 and agreed to pay everyone's legal fees, which resulted in both lawsuits being dropped.
Proctor said Friedman's was "still reeling" over Regency's turnabout on their agreement.
"They wanted a higher return and so they didn't want to invest more of their own capital into the project," Proctor said.
Regency's unexpected move has sent back to square one Friedman's hopes of moving back to the city where the family company was born.
And it leaves Lowe's as the only active home improvement possibility in Sonoma County's second-largest city.
Although a big-box store, the potential of a locally-owned Friedman's outlet erased some opposition to the East Washington Place project, which some viewed as too big and too corporate. Once the local company was on board, though, Mayor Pam Torliatt and Councilman David Glass threw in their support and the council approved it 5-2.
Still, it was expected Regency would be required to conduct additional costly and time-consuming environmental studies if Friedman's was formally signed as a tenant.
Given that, City Councilman Mike Healy said Regency's decision wasn't terribly surprising.
"Adding that into the mix, it would probably have forced them to revise the environmental analysis," he said. "They can't just slip Friedman's into one of the approved buildings because the Friedman's business model requires a lot of outdoor storage, which was not what Regency got approved. They would have to go back and redesign things."
Friedman's, which was founded in Petaluma six decades ago, left town in 1976. Petalumans have been forced to head out of town for most construction and do-it-yourself home improvement supplies since 2005, when Home Depot acquired the Yardbirds regional home improvement chain.
As it stands, Target would occupy the largest parcel in the East Washington Place center, anchoring the 378,000-square-foot development with a 139,000-square-foot store. Other tenants haven't been announced.
Lowe's is slated to anchor the proposed 315,000-square-foot Deer Creek Village on North McDowell Boulevard. That project, proposed by Merlone Geier Partners of San Francisco, is currently undergoing several planning reviews.
A draft environmental report was tentatively scheduled to be out between October and December, according to Petaluma's website. But that has been delayed with new studies required by the city.
The delays have sparked not-so-veiled threats of litigation from the developer and a suggestion that they may abandon their application.
The presence of a Lowe's store in town would make it more challenging for Friedman's to consider returning to Petaluma, Proctor said.
"We're still very interested in coming back to Petaluma," he said. "We're back to evaluating the options. We need to evaluate what kind of market will be there."
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