City: State putting up stink over Walgreens connection

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The Walgreens is under construction on this plot of land at the end of McCray Street.

Companies such as Walgreens can routinely build new stores with a short turnaround, once given the green light. That hasn’t been the case in Hollister, and city officials are blaming Caltrans for the delay.

Hollister council members in February 2012 approved a developer’s bid to buy city property and build a Walgreens on 1.47 acres at the intersection of the Highway 25 bypass and Tres Pinos Road. The city, which received the land from the Council of San Benito County Governments as part of the bypass’ completion in the spring of 2008, chose Walgreens developer Hawkins Companies over a competing bid from a firm interested in building a Denny’s Restaurant.

At the time, city officials assumed the builder would have the capacity to connect to Hollister’s sewer system – and a line under Tres Pinos Road – in constructing the 14,550-square-foot Walgreens store. That assumption hasn’t come to fruition – and city officials, through informal talks, believe Caltrans opposes the issuance of an encroachment permit for the state-owned road.

To this point from the city’s perspective, there is no clear reason for the hold-up and Hollister has received nothing in writing from Caltrans, said planning official Bill Avera. Compounding the frustration, he pointed out, Caltrans at some point plans to hand over jurisdiction of Tres Pinos Road to Hollister as part of the exchange for the bypass, which wasn’t built with sewer and water infrastructure.

Avera said similar encroachment permits usually haven’t spurred any issues, so city officials have been caught off guard by the delay. In the meantime, the city must wait for the process to play out before the $900,000 sale of the property goes through.

“Basically, all our entitlements and everything are done,” Avera said. “The city is not really involved. All we want is money for the closing. As for the developer, they’re responsible to receive the appropriate encroachment permit.”

While the city is continuing to work with the developer in trying to resolve the problem – company representative Jeff DeVoe did not return a phone call seeking comment for this story – Caltrans remained vague about its intentions. A Caltrans spokeswoman, Susana Cruz, emphasized that there is no final decision on the Walgreens permit. As of Tuesday, she said there was “another week” left in the review process.

“They’re going through the review process,” Cruz said. “They haven’t been denied. We still have another week or so.”

As for any possible reluctance from Caltrans, she responded, “It’d be hard for me to say.”

Avera was surprised by Caltrans’ perspective about the time frame, and said the permit has been with the state “for months.”

“That’s funny,” Avera said. “I’m not going to even pretend like I know what they’re doing up there. That’s actually news to us.”

Avera said the city is convinced of Caltrans’ opposition because of talks through “the grapevine” and through staff conversations with the state agency.

“This is ultimately a problem not just for Walgreens,” Avera said. “It would’ve been a problem for anybody (who wants to develop there). If Caltrans for some reason doesn’t like access to a particular piece of property, they just don’t like it.”

In the meantime, the city and developer are preparing for the potential of having to build an alternate main for that area, which would run down the former McCray Street corridor and connect at Park Street. Hawkins Companies would fund the main’s construction and get reimbursed by other, future builders in the area.

Hollister has experienced issues in the recent past with such agreements. More than 20 years ago, the Hollister City Council had the developer of Crestview Estates and Valley View Estates build oversized sewer facilities to accommodate future growth. In 2011, the council acknowledged that it owed Hollister Development Associates nearly $1 million for the oversized facilities and agreed to pay back the builder through a fee charged to future developments there.

When reminded of that situation, Avera replied: “It’s probably always a concern for the first guy.”

In the meantime, Hawkins’ goal of starting construction by March 11 doesn’t appear realistic. Walgreens wants the store opened by October. If that time frame can’t be met, the project would be put off until at least the spring of 2014, Avera said.

“It shouldn’t take that long,” Avera said of the building phase. “Everything is technically ready to go. They’re not going to pull the trigger until they know they can get a sewer line.”

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