Grocery store, hobby shop seen as positives for city

SAN MARCOS — The San Marcos City Council is expected to finalize lease agreements that will pave the way for the city’s most high-profile retail vacancy to be filled.

The council will vote to approve the a 20-year and 10-year lease agreement with WinCo Foods and Hobby Lobby, respectively, to fill the space in the Creekside Marketplace once occupied by Lowe’s Home Improvement Warehouse, which closed in late 2013.

The lease agreement is on the consent calendar, which is usually approved by a single council vote unless a council member or a member of the public asks for a more detailed discussion of the item.

City officials said the tenants are both unique additions to the city.

“In the case of Hobby Lobby it is a type of tenant that does not exist within the city boundaries,” City senior management analyst Geoffrey Foster said of the arts and crafts store that is similar to Michaels. “WinCo is a unique 24-7 grocery store that will provide additional services to our residents.”

WinCo, a 24-hour grocery chain, would fill 91,000 square feet of the 150,000-square-foot property, and would pay the city $875,000 in annual base rent during the first 10 years of the lease and $962,500 years during the final 10 years.

Hobby Lobby will pay $768,500 in base rent during years one through five, and $826,500 during the latter half of the lease.

Under these terms, the city will recoup the money it spent on the purchase of the building in about five years.

The city spent $8 million to purchase the building from Lowe’s and rejected WalMart as a tenant before starting negotiations with the pair of tenants.

“It’s a net positive for the city,” said Geoffrey Foster, a management analyst for the city.

Foster said the city is able to demand more from the new tenants than it did from Lowe’s, which paid less than $650,000 in rent in 2013, because the city is leasing both the land and the building to the tenants.

Hobby Lobby is at the center of a controversial Supreme Court ruling that states certain companies and corporations cannot be required to pay for specific types of contraceptives for their employees. The U.S. government sued the Oklahoma-based company for refusing to provide emergency contraceptives to female employees – a key provision of President Barack Obama’s healthcare reform laws. Hobby Lobby claimed the mandate violated the religious beliefs of the company’s owners, the Green family.

The 5-4 ruling, along ideological lines, has sparked debate over religious and reproductive and women’s rights.

U.S. Rep Scott Peters (D-San Diego) in a prepared statement called the ruling “hugely disappointing.” A representative of U.S. Rep. Darrell Issa (R-Vista) said Issa had not released a statement on the ruling.

This post was updated on July 2, 2014.