Tara McRann checks out Anne-Marie Allen, a loyal customer for 25 years, at Community Market in Santa Rosa, June 11, 2011.

Grocery war taking shape in Santa Rosa

KEVIN MCCALLUM
THE PRESS DEMOCRAT

Sonoma County retailers long have a history of making it as tough as possible for out-of-area competitors to horn in on their home turf.

Yardbirds for years thwarted Home Depot from getting a toe-hold in Santa Rosa.

Friedman's Home Improvement similarly bankrolled the opposition to Lowe's on Santa Rosa Avenue.

Pacific Market in Rohnert Park warned it would close if the nearby Wal-Mart was allowed to sell groceries and promptly did.

And Santa Rosa's downtown restaurants even ran a group of food trucks out of town in part because some hailed from Napa and Sebastopol.

The latest front in the local versus out-of-area chains is opening up over a possible Sprouts Farmers Market natural foods store on Santa Rosa's Mendocino Avenue.

The fast-growing Phoenix-based Sprouts is eyeing the northeast corner of Mendocino's busy intersection with Bicentennial Avenue, across from Kaiser Permanente Medical Center. The four-acre site is covered with oak trees that hide a 22-unit apartment complex and two homes.

It also is less than a mile north of Community Market, a small specialty organic grocery with a long history and loyal following.

Nica Poznanovich, outreach coordinator for the market founded as a co-op in 1975, said despite its strong local support, when Whole Foods arrived in Coddingtown, annual sales of about $5 million fell 10 percent.

"I don't know how we would handle another 10 percent," Poznanovich said.

Some of the market's 35 workers probably would lose their jobs, she said.

At least one supporter said he couldn't see how the market could survive if such direct competition sprouts up nearby.

"They don't have the deep pockets to withstand the loss of market share," said Terry Garrett, operations officer for the Sonoma County GoLocal cooperative.

Community Market is a member the group, which has become the most vocal advocate in the area for the economic benefits of favoring locally owned businesses.

Poznanovich rallied about two dozen Community Market supporters and employees to attend a city Planning Commission meeting last week meant to discuss the first step in any Sprouts project - the rezoning of the property to allow such a retail use.

Commissioners tried to keep the debate focused on whether the site was better suited to a retail than commercial office use, which is its current zoning despite its use as residential property.

But because the applicant, Arizona-based developer AVB Development Partners, has confirmed its hope to build a 30,000-square-foot Sprouts there, the debate spilled beyond those confines.

Sprouts, which has Northern California stores in Sunnyvale and Roseville, with another planned for Dublin, has declined comment on the proposal.

Property owner Ubaldo Tambellini, who attended the hearing, said later that he's not yet struck a deal with the developer or Sprouts, saying he's about "50-50." He said if he does, competition with the other grocery stores is part of business.

At the hearing, Commissioner David Poulsen said, "It's kind of being framed as Community Market versus Sprouts, and that's kind of not what's before us tonight."

Nevertheless, the commission got an earful from supporters of Community Market and Oliver's Market, which has two stores in Santa Rosa and is getting ready to replace its Cotati store with a bigger one.

Tom Scott, general manager of Oliver's, argued that Santa Rosa doesn't need another market, and if one arrives, it will only take business from the others.

He said there are 10 markets - five locally owned - that serve the area, including his, Safeway, Lucky's, Pacific Market and Whole Foods.

The project would need a general plan and zoning change before it could proceed. And Scott argued there isn't enough of a need to merit changing the city's most fundamental planning document.

"The desire of an Arizona-based company to come in and cherry-pick the best sales" from existing grocers "doesn't seem to me to be a profound reason to change the general plan," he said.

Garrett, the GoLocal representative, tried to head off criticism that such an anti-competitive position is somehow unfair or even un-American.

"We may say that in a free market economy that's just the way it works. A strong, bigger business prevails and the weaker ones just kind of go out of business and the community just kind of goes on," Garrett said. "The question is, do we work in a free market system or do we work in a regulated free market?"

He went on to argue that because the profits of locally owned businesses stay in the community and because they tend to hire local professionals, the effect of a small local business often can be greater than that of a large one.

He said Sprouts tends to gross $10 million in sales versus half that for Community Market but the smaller market would generate a greater economic benefit for the community.

Tambellini said he has little patience for the anti-competitive arguments of project opponents.

A retired butcher, he started his business, Tambellini Meats, in 1955 in San Francisco and over nearly 40 years built it into a business that employed 54 people.

"You can't stop competition. In fact, you don't want to stop competition," the 84-year-old Healdsburg resident said. "If I was the only one selling meat, a lot of people would have starved to death."

Tambellini said he wonders why Community Market would oppose a Sprouts because it was not local, but it doesn't protest a Wednesday Night Market whose fruit vendors are largely from the Central Valley.

He said he's previously rejected opportunities to build a 7-Eleven on the site.

He said the apartment building there is old, having been built in the 1960s, has sewer problems and is tough to keep at full occupancy, in part because of the noisy intersection. The site also has had problems with illegal dumping and homeless encampments.

A conceptual plan for the property calls for a 30,000-square-foot building in front with a parking lot at the corner and 10,000 square feet of additional retail along the back. That would require the demolition of the apartment building.

At the hearing, city planning staff members tried to keep the issue strictly on the rezoning and general plan amendment. Planner Bill Rose recommended the commission find there were no environmental impacts because no project had yet been proposed.

That frustrated some commission members, who said they believed they were being asked to sign off on zoning changes that would speed the way for a project that might or might not be a Sprouts.

Commissioner Caroline Banuelos said she was "stunned" by the findings of what she thought was a flimsy traffic report. She also seized on Rose's statement that there would be no housing impacts from the project even though the project would raze the building.

"From my perspective, putting anyone out of their home is a significant impact," Banuelos said.

Similarly, Sonia Taylor, a graphic artist, called Rose's statement that there would be no effect from the project from a geological perspective "beyond belief" given the long history of slides near the site.

Rose stressed that there was no current application for any project, just a zoning and general plan amendment.

Ultimately the commission couldn't reach a decision. Three members wanted to approve the request, one wanted a more thorough environmental review and another wanted the zoning and project to be handled at the same time.

The commission agreed to continue the meeting, but not the public hearing, until two absent commissioners could review the issue and weigh in at a future meeting, probably July 14.

The general plan and zoning change is appealable to the City Council. The project itself would be heard by the Design Review Board.

You can reach Staff Writer Kevin McCallum at 521-5207 or kevin.mccallum@pressdemocrat.com.

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