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Price Co. to Anchor Mall in Alhambra

July 31, 1986|JEFFREY MILLER | Times Staff Writer

ALHAMBRA — It came down to a choice between economics and aesthetics.

The City Council, sitting as the Alhambra Redevelopment Agency Monday night, opted for economics and selected the Price Co., which runs 25 Price Clubs nationwide, to develop the city's new 19.2-acre shopping center at the corner of Palm and Commonwealth avenues.

The agency board voted 4 to 0 for the San Diego firm, which runs the large discount warehouses, over Costco Wholesale Corp., a Seattle-based company that owns 20 warehouse discount stores and is often described as a "clone" of the Price Co.

Mayor Michael Messina abstained from voting because he had applied for a personal loan from Downey Federal Savings & Loan, a partner in the Costco proposal.

Known for Discounts

Both stores are known for offering discount prices on a wide array of merchandise by buying everything from toothpaste to tires in bulk and selling them in "no-frills" warehouse-like stores.

Robert Price, the company's president, said he was surprised by the agency's decision, particularly after the city planning staff had recommended against the Price Co.'s project because of aesthetic problems and design flaws.

"I didn't expect this; I was not confident about what was going to happen," Price said, adding that his confidence also was shaken by an economic consultant's report, which he contended overestimated the sales potential of Costco.

Although the Costco plan was more aesthetically appealing to the city's staff, the Price Club was more economically attractive to consultant Calvin Hollis of Katz, Hollis, Cohen and Associates. The private consulting firm, retained by the agency, estimated that the Price project could net the city as much as $1.7 million more than the Costco proposal over the next 25 years.

Aided by Reputation

This, along with the reputation the Price Club has gained from its stores in nearby areas such as Azusa, Burbank and Cerritos, was the deciding factor.

"The Price Club is so well known throughout Southern California that there's instant name recognition of the business by everyone in the shopping area," said Councilman Talmage Burke, chairman of the redevelopment agency.

"I was not particularly influenced by aesthetic considerations," he said. "I think that when people shop at a facility like that, they expect something that's more plain because of the nature of the business."

Councilman J. Parker Williams said the planning staff's concern for aesthetics was "important, but for me it wouldn't have outweighed the economic considerations for a minute.

Arguments for Costco

"I thought the Price Club experience would benefit Alhambra not only in a bigger way, but that they would see more action much more quickly than the other outfit . . . but the Costco project was very pretty," he said.

In his report to the redevelopment agency, city Planning Director David Carmany recommended approval of the Costco project, hailing its superior appearance, parking and traffic flow design and its "linkage" of the warehouse store to 10 smaller businesses to be developed within the shopping center.

Carmany criticized the Price Co.'s project--which called for only seven other businesses in the center, unattached to the main store--for its "lack of amenities" and the awkward design of its parking lot and access from adjoining streets.

Before the agency voted, Joseph Kornwasser, a developer working with the Price Co., assured board members that the center's design could be changed to make it more amenable to planning staff guidelines.

No Significant Difference

In his analysis of the two projects, Hollis said there was no significant difference in economic performance between the Price Co., which pioneered the warehouse discount store concept in 1976, and Costco, which entered the business three years ago.

"It was our conclusion that the two projects would generate the same sales tax revenue," Hollis said.

"They would be part of the same market. Costco is essentially a clone of Price Club. . . . There's essentially no substantive difference in the ability of the two firms to develop the project they propose."

Hollis said that both firms eventually would be able to do about $130 million in business a year, but that Price Club--because it has already established a reputation in the market--would be able to reach this level of sales in two years, while it would take Costco three years to do so.

Financial Arrangements

The critical difference between the two projects, Hollis said, was their financial arrangements with the redevelopment agency.

The Price Co. will pay the agency $7.5 million of the $14.8 million needed to buy and clear the shopping center property. The firm will give the remainder of the purchase price to the agency in the form of an interest-free loan, to be repaid by sales-tax revenue generated by the shopping center.

The Price Co. will guarantee the agency minimum sales-tax revenue of $200,000 a year.

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