[Ref: 8/17/10 Ocean State Job Lot Introductory Meeting II]

This meeting was held at the Elizabeth Peabody House at 7 PM August 17. The chief presenter was one of the founders of Ocean State Job Lot. I was too late arriving to get his name. The following is from my notes.

Presenter: Ocean State Job Lot engages in good merchandising. We specialize in picking up closeouts of good products (opportunistic purchases).

We met with the Mayor, who said we are not welcome. We said, “Come to our store.” Getting no good response, we walked away. After 9 months, nobody had rented the space, so we signed leases. After we filed our plans, the city changed the zoning. The city could have taken the site by eminent domain if they wanted it. The procedure seemed unusual.

In response to a question: The nearest stores are in Quincy or Danvers.

[COMMENT: This implies that there are not a large number of stores, and therefore each store will draw from a substantial radius.]

Presenter: One of our core principles is philanthropic work with the community. We are the largest contributor to the Rhode Island food bank. We are big in Massachusetts also. We donated ~1 M pounds of food one year. We support the Boston Medical Center and Cambodian charities.

Ben Levy: I live up Broadway. I don’t think this is a bad company. The issue is, this is the wrong place. The neighborhood needs fresh food. We can buy Trappist jam other places; we need space for fresh food. If both Ocean State and Rite Aid have multiyear leases, the site is locked down. I am grateful the city fathers made the necessary changes to zoning. This area has been blighted. The larger needs aren’t being met.

Kulitz: Neighborhood needs grocery store. This is the landowner holding back tenants. Businesses are going out of business because there is no anchor store. Bad people drink in the parking lot. We are writing off opportunities for the next 10 years. I don’t see a better option.

Alderman White: The BOA didn’t rezone the Star Market site. We rezoned all of upper Broadway with a revised Commercial Business zone, same as in Union Square. The new zoning now requires special permits. The planning board evaluates factors; there will be a public hearing. There were a number of public meetings regarding the new zoning, which extends to Sullivan Square and Union Square. The Planning Board will decide what to do about the Ocean State special permits.

[COMMENT: It is illegal to do "spot zoning", or zoning aimed at a particular location. This indicates that Somerville did not do spot zoning.]

Ocean State counsel: Even under the old zoning, this was a change of use. We would be going through the Planning Board process.

Person named Walt: I’ve lived here since 1951. Broadway has always been Broadway, and has never been developed. Do we want to wait 20 years for something to come here? Do we want vacant land for 20 years? Why would Star Market come here? No grocery store is coming. Something is better than nothing. This property affects 6 abutters. If it’s empty, it hurts them.

Ocean State counsel: The city didn’t give us one name of a grocery store interested in coming here.

Person named Erica: If the conditions at the site are so bad, isn’t that the landlord’s responsibility?

I was on the zoning committee. I resent the idea of “moving goalposts”. How do you know this is a good fit for our neighborhood?

Ocean State person (Mark): I didn’t say zoning was only involved in our site. The zoning was only enforced after we signed our lease. Mr. Cohen is a tough businessman, trying to do the best he can. I have to invest $750 M because the place is a mess. Why did Star Market leave? If it were making money, it would have stayed.

Ocean State will trade with anybody. We never target people by class. We maximize price/value. The merchandise is what it is, and I have to pay rent whether or not we make money.

John Murray: I’ve lived 60 years in my house. I see the parcel as a big opportunity to improve the neighborhood. Ocean State didn’t move into Davis Square. I won’t be able to get out of my driveway; this will bring people from all over.

If customers are the boss, we should have a say in this. Your philanthropy is great, but irrelevant to whether this is a good use. I want to be careful here. I want to be able to walk to fresh food. Want up-development of Winter Hill. Ocean State belongs out of the highways.

Q: You have 40 stores in Massachusetts. Will the store be incorporated in Mass.?

A: Will pay MA sales tax and corporate income tax.

Q (to landlord): What tenants did you reach out to?

A: Star Market, Shaws, etc. 22 stores were contacted and turned us down. We talked again to Trader Joe’s 2 weeks ago, no interest. Our agent listed the site for 2 years. 27 K square feet is the wrong size.

Q: What level of foot traffic does Ocean State make? I think this is about car traffic.

A: We haven’t studied that breakdown. Expect 300 K customers per year.

Q: Have you ever had to do an economic inpact analysis? Mode split? How many people go to another nearby place as well as to Ocean State, or how many just drive there and leave again?

A: Traffic study estimated total trips, compared against former use. If estimated trips greater than old use, go to further detail. We projected fewer trips than old use, so didn’t go to the next level. Assumed 100% car. Don’t think it’s a huge regional draw.

Q: Have you done an economic analysis of the impact on the community? Net jobs, etc.?

A: No formal analysis, just common sense. Sales tax goes to the state, jobs produced by stores that go to local employees. Of the 300 K customers, the neighboring businesses will get a share.

Q: Is Ocean State a discount clothing store?

A: No. Clothing is 1/6 of stock. The biggest item is food. Also have hardware, Christmas lights, gardening. Ironical that we had pressure NOT to sell food. A superstore put us in their old location, and then pushed against our competing.

Q: Winter Hill needs something. School Street is facing the lot. It’s been 4 years. I’m surprised that there’s been no meeting on how to stop people shooting up and drinking in the parking lot. How many Somerville employees? Will you support Little League?

A: We have an educator program, helping teachers get supplies. We’re taking 30% off our prices. We have our $40K in discounts. We would hire about 60 people locally. We’ll be sinking $750 K into the property, which will include security lights and similar measures.

Remark: The zoning changed before Ocean State went in. Star Market closed before Stop & Shop arrived. We are opposed to Ocean State here. Should be off the highway, not here. Is there to be one in Medford?

Remark: I’ve been to the Southbridge and Holyoke stores. They’re good enough stores on the inside, but the outsides are kind of junky. We want improvements here.

A: We can’t fix the building, the landlord is responsible. It’s a tough area there. We control the property in Dedham and Quincy, results are much better.

Q: How long is the lease? I’ve heard 10 years and I’ve heard 25 years.

A: 25 years: 10 years firm, 15 years options. Anyone who goes into this space will want a long-term lease. It needs a lot of money to fix it up.

[COMMENT: Significance is that a 25 year lease locks down the site for a generation.]

Remark: Your Quincy store is like Building 19. Lots of bins, people digging through them.

A: Offended at being likened to Building 19. Building 19 is in salvage business, we aren’t. We might have over 30 acres under a roof, and we don’t sell merchandise with water damage.

Quincy store is too small for its popularity. We work hard to keep stores up. We don’t want to be associated with Building 19.

Remark: I don’t understand why the Planning Board and the city do not mandate that buildings all conform to standards along here. The buildings look like krap. I’m a marketing person: the look should be consistent. Here we have cardboard signs, hand-painted wooden signs.

Alderman White: That’s why we did the zoning change. These places are all grandfathered. It is part of the special permit for a new use that the building has to meet the design standards?

Q; Why Somerville? Why Winter Hill? Was it that it was empty>? Why not along the highway? What about traffic from Assembly Square?

A: It was empty. We took the best place we could find. We wouldn’t go into Worcester. It was the best combination of rent and population density. It’s very expensive here. Somerville has great demographics from our point of view. Our choice has nothing to do with off ramps or Assembly Square.

Q: There will be all kinds of traffic at Assembly Square and IKEA.

A: We’ve never had to close a store because people didn’t like it. Chatham said “we don’t want it”, but 10 years after we got in a person came up to me, said they’d opposed it, but were now a shopper. There is a Medford store (at Wellington Circle).

[COMMENT: After Home Depot went in, Somerville Lumber went out of business. I had to go to Home Depot.]

Alderman Pero: I was at the Chatham store, it’s not comparable. It’s on the highway next to the airport.

A: We’ve created 97 stores with a 100% success rate.

Q: When did you compare Ocean State traffic with Winter Hill traffic?

A: First used industry averages by square foot. We also counted Somerville supermarkets (10.5 trips/s.f.). Ocean State had lower rate. Ironically, Trader Joe’s on Memorial Drive in Cambridge had the highest traffic rate.

Q: Is the condition of the building the landlord’s responsibility?

A: The landlord can insist on fixing things.

Q: Is there a Medford store now?

A: We expect one to open in November. Will be dry packaged foods, nonrefrigerated products. Pepperoni stored in nitrogen. We have a bakery in Road Island, could bring up our bread. Can’t compete with Star Market.

Q: Hours of operation? Overnight operations?

A: 8 AM – 9 PM, shorter Sunday. Overnight rare. Maybe on holidays. Will do deliveries outside business hours to avoid traffic. Will comply with ordinance and neighbors.

Remark: I see good products at good prices. The landlord would’ve wanted grocers, weren’t any interested.

Q: What is the special permit for?

A: Change of use from supermarket to Large Retail. The change runs with the land, so next tenant will start with Large Retail.

Alderman White: The city has spent a lot of money making economic development plans and has done hard lobbying for the Green Line Extension. We don’t want the site to lie fallow, but we’re looking for changes 5-10 years ahead. This could be a 25 year lease. This could be an ideal spot for high-end development in 10 years when the Green Line comes in. A shorter lease period would help acceptance.

[COMMENT: Key point: length of lease is awkward.]

A: This is an opportunity now. Neighborhood has opportunity. Planning Department could agree on appearance. If the city were really interested in high-end development here, they’d do a TIF [Tax Increment Financing] deal here, for instance a 10 year tax break. We aren’t getting it from the city. We want to move forward, do the right thing.

The Planning Board is holding their hearing on this use at 6 PM August 24 on the 2nd floor of City Hall.