Over a period of just ten days in early 2004, 3,200 Grand Lake neighbors signed petitions opposing a McDonald’s franchise in the long-neglected Kwik Way drive-in—culminating in a community meeting at Lakeshore Avenue Baptist Church on April 7 that was attended by over five hundred very vocal residents. To some extent, this outpouring of opposition was a visceral, gut reaction to McDonald’s, which is, at least in this neck of the woods, the number one symbol of corporate globalization and everything that is wrong with the typical American diet.
There was, however, a second element underlying the community’s outrage that fueled the fire and focused needed attention on this neglected and previously ignored commercial stretch. Just six months earlier, the new Splash Pad Park had been dedicated with great fanfare allowing the Grand Lake Farmers Market to move out from under the freeway and quickly establish itself as a huge draw and valuable community asset.
Moreover, the City had invested upwards of $1.5 million on park and pedestrian-safety improvements and now had a vested interest in what happened in the immediate vicinity of the park. On April 5, 2004, the Oakland Tribune ran an article by Cecily Burt, “Neighbors Have Beef with McDonald’s,” in which then Council Member, Danny Wan, was quoted as saying:
It’s not true that McDonald’s will make it better. It is hamburger to hamburger, but a McDonald’s franchise has high volume of car traffic, and the traffic is already bad.
We’re trying to encourage a pedestrian link between Grand and Lakeshore and it doesn’t really help to have a large volume of cars going across the sidewalk (to the drive-through window) and back out again.
In the ensuing months, it became increasingly clear that the community enjoyed the support of additional members of the Council, as well as the ear of the City’s Planning Department. When the Planning Commission voted unanimously to require a Major Conditional Use Permit before allowing construction to begin, the Hahn family, which owns the property, tacitly acknowledged that even if they applied for a permit there was little likelihood it would be approved and the battle was over.
Full circle: Hamburger to hamburger
Three years later we’ve come full-circle: “hamburger to hamburger.” There are, however, pronounced differences between the previous effort and the one currently with FatBurger. Most importantly, FatBurger isn’t McDonald’s and isn’t burdened by the same kind of awful public-relations baggage. Moreover, FatBurger’s architect would incorporate indoor seating for 28 customers and de-emphasize the drive-thru window. By most accounts from fast-food devotees, the burgers are good quality.
While these factors all weigh in favor of FatBurger, there’s a 500-pound gorilla in the room heavily tilting the scales in the other direction.
When the Hahns finally abandoned their lobbying for MacDonald’s, they entered into a partnership with David Latina’s Paramount Development Group to build a mixed-use project with retail on the Lake Park Avenue frontage and housing above. [See “Local developer: mixed-use development on Kwik Way site still works” by Pamela Drake here in the Guardian as well as a October 2005 article by Laura Casey in the Tribune.]
At Latina’s insistence, the community was involved in providing input from day one and the more we heard, the more enthusiastic we became. Alex Hahn’s decision to walk away from the partnership (and his contractual obligations to pay for the services of the architect, facilitator and surveyors) after his son, Allan, became seriously ill was a crushing blow for everyone involved—including those of us in the community who thought for a tantalizing few months that a pedestrian-friendly link between Lakeshore and Grand was about to become a reality. Once that door was opened, it became extremely difficult to close—certainly not for the 15 to 20 year duration of a FatBurger lease.
Council member Pat Kernighan acknowledges that a development such as this would be the highest and best use of this parcel but, while attempting to maintain the semblance of neutrality, seems to be leaning towards the FatBurger as a quick fix for Kwik Way’s blighted conditions. Most of the community activists she invited to meet with the Hahns and FatBurger representatives are very clearly on the other side of the fence.
If she commissioned the Kitchen Democracy poll in the hopes of getting a strong affirmative vote from a larger slice of the community, the final tally offered little comfort. As Jim Ratliff points out in his comprehensive statistical analysis, “Nearby voters strongly opposed FatBurger proposal,” the overall vote was clearly against FatBurger and, significantly, the numbers and percentage of those who are opposed increased dramatically the closer they live to the site.
The numerical results were, however, nearly overshadowed by the comments that accompanied them. A large majority on all sides of this issue agreed that the Kwik Way is an embarrassment. [See “Fix this blight as soon as possible.”] The fast-food opponents argued vehemently that, despite the blight, we needed to show continued patience and insist on a more pedestrian-friendly option. The majority of those voting “Yes” or “Maybe” argued just as vociferously that anything would represent an improvement. Matt Gerhardt posted a particularly graphic comment:
Kwik Way is such an eyesore and smells terrible. The place is filthy. If FatBurger wants to come in and clean up, I say we welcome them with open buns.
The Hahn business model
This kind of blight appears to be not an anomaly, but rather a direct consequence of the business model followed by the Hahn family. According to online sources, they have a very substantial, multimillion-dollar investment portfolio that currently includes about ten pieces of commercial property in Alameda County including two buildings on the 1200 block of Webster (each with about 18,000 square feet of retail/office space), a large empty lot on the 2000 block of Telegraph, a large parcel on the corner of MacArthur and High, plus the Giant Burger on Telegraph and another in Hayward as well—and of course the Serenader, Bank of America and Kwik Way on Lake Park.
The approach Mr. Hahn seems to favor in building this portfolio is to purchase undervalued properties and either turn them over for a quick profit or hold onto them with an absolute minimum of maintenance while waiting for the values to increase.
In some cases, they have allowed a property to deteriorate to the point the community and the City say “uncle.” This latter approach paid off quite handsomely with Mr. Hahn’s purchase in 1989 of West Oakland’s troubled Acorn Plaza Center for 1.9 million dollars. Constructed just three years earlier, the Plaza had received to that date $6 million in subsidies from Oakland’s Community and Economic Development Agency. According to a report to the City’s Redevelopment Agency in October 2003:
The Agency sold the Center to a private investor, Alex Hahn, in 1989 for $1.91 million. After Hahn closed the grocery store due to low sales, the Agency responded to concerns from the community about the deterioration of the Center and lack of a grocery store and re-acquired the property for $2.97 million in December 1996.
Their purchase of Emil Villa’s Hickory Pit on Pleasant Valley Road may not have paid similar financial dividends for the Hahns, but still inflicted an enormous cost on the surrounding Rockridge community. When a limb from an adjacent Eucalyptus damaged the roof in 2004, the Hahns laid off 50 employees and shuttered the doors. In a Tribune report dated March 13, 2004, Charles Hahn was quoted as saying, “We are just closing down temporarily,” but within months the parking lot had turned into an informal dumping ground. Three years later, the once thriving eatery is still closed and surrounded by chain-link fencing.
Their ownership of a one-acre parcel on the corner of High and MacArthur has been similarly contentious—stemming largely from Mr. Hahn’s inclination to impose what he thinks makes most financial sense to him, with little regard to the community that will be impacted. His initial plans for this space were torpedoed by Council Member Jean Quan, who insisted that fast food or a suburban strip mall would not be acceptable as the gateway to the Laurel commercial district. As reported in a Monclarion article by Quynh Tran dated Sept. 22, 2006, Hahn then offered an option on the property to a Los Angeles developer who proposed building a six-story complex with 144 units intended for active seniors. According to one account, the height and density were the only way the developer could make the project pay given the Hahns’ asking price for the parcel. Recently, the project has been scaled down by 25 percent with one story eliminated and the Hahns have reluctantly agreed to accept a reduced profit on the transaction. This latest plan was to be presented to the Laurel community on February 13.
What’s the prognosis?
Are we in a similar predicament? Are there chain link fences on our horizon? Are we destined for many more years of grime and blight? Is there no realistic prospect of getting the kind of mixed-use development that was vetted by the Grand Lake community and overwhelmingly approved?
I’m not placing any bets at this point, but I am reasonably optimistic that our shared vision of a bustling, pedestrian-friendly link between Lakeshore and Grand can still prevail.
For starters, my guess is FatBurger is going to bow out. I think I speak for all the stakeholders who participated in the sit-down session with Chester McGlockton and his team at All-Pro eateries in saying that they seem like good people—genuinely interested in doing right by the community. The less than enthusiastic reception they received from the stakeholders and the negative vote on the Kitchen Democracy poll have undoubtedly caused them to have second thoughts about this project—particularly since the proposed facility is substantially smaller than a typical FatBurger restaurant. Ironically, they would love to be a major tenant if a mixed-use development is built here or to simply purchase the property and build an entirely new restaurant with additional seating and very likely, no drive-thru. Unfortunately, Mr. Hahn wasn’t selling and that’s the rub.
His reasons for not wanting to sell the Kwik Way and/or the Bank of America properties, which he purchased jointly in 2002, seem fairly transparent. The price the Hahns paid for these two parcels undoubtedly reflected the existing conditions. The Kwik Way was already sadly neglected and largely unprofitable. More importantly, BofA has a long-term lease that runs through 2016 with an option to renew for another ten years and, according to my sources, they are in the enviable position of paying 75 cents per square foot—less than half the going rate for prime commercial space. In addition, as has already been well reported, the Kwik Way property is seriously encumbered by the fact that it is a legally non-conforming use [see “FatBurger should earn high level of official scrutiny”] and by the lease that requires the owner to provide thirty parking spaces to BofA.
In sum, the Hahns bought low and, if they retain ownership, stand to profit enormously in 2026 when the BofA lease expires. The quandary they face meanwhile is what to do with the Kwik Way. The logical response might have been to clean it up, bring in new management, and make it profitable and more of an asset to the community. Unfortunately, that does not conform to the business model outlined above.
In the four years they’ve owned the Kwik Way, repairs and maintenance have been extremely minimal. Available cash went not into improvements but into the purchase of additional properties elsewhere to the tune of at least several million dollars—not to mention simultaneously settling $2.1 million in federal and state tax liens over a three-year period beginning in 2002 as reported in the San Francisco Business Times.
McDonald’s would have solved their cash-flow quandary at the Kwik Way—bringing in a substantial lump-sum payment and a regular infusion of cash over the life of the lease, and it is quite likely any lease with All-Pro Eateries would be similarly structured. Unfortunately for the Hahns, they probably did not anticipate the requirement for a Major Conditional Use Permit with the McDonald’s application and are now equally dismayed to find that the requirement for a CUP would likely again apply in this case.
If the FatBurger proposal collapses, the Hahns do have other options. Despite a campaign to convince us otherwise, there is no lack of interest in developing this site as a mixed-use development. The only relevant question is whether Alex Hahn will agree to sell at a price that reflects the difficulties involved in building on an odd-sized lot combined with the obligation to provide parking for BofA.
Getting Hahn to sell should be #1 community goal
Getting the Hahns to sell, quite frankly, should be the community’s number one goal. Mr. Hahn has not been a good neighbor here or elsewhere in Oakland. To a large extent, this reflects his vision of an American free-enterprise system in which private property is sacrosanct.
When he finally agreed to meet with Grand Lake representatives in the midst of the McDonald’s brouhaha, he was quite forthright in saying that he didn’t care what the community thinks and seems equally frustrated by any governmental restrictions on what he can or cannot do.
The illness of his son, Allan, is a personal tragedy and our hearts go out to him and to his family. But it also is, at least in part, the reason we are again fighting this very same battle. Allan led the negotiations with Paramount Development and he understood that a successful businessperson can act in a more responsible fashion—working with the community, not against it, towards common goals. In his absence, we’re back to square one with his father.
Kernighan should twist some arms and fight the blight
So, what exactly can we do as a community to accomplish that goal? For starters, we should be urging Pat Kernighan to do some arm-twisting to help facilitate what she herself acknowledges is the ideal use for the property. We should, however, be wary of agreeing to any increase in height over what was planned by Paramount—particularly if the only purpose is to guarantee the Hahns a substantial, unmerited profit.
Finally, we should announce once and for all that we will no longer tolerate continued neglect at the Kwik Way or the adjacent Serenader, which they recently placed on the market.
While Charles Hahn has made some genuine efforts to comply with the terms of the Serenader’s cabaret license and to improve its appearance, the entire operation suffers from inadequate management. Of particular concern is the absence of uniformed security guards; continued reports of drug activity in the Serenader and adjacent Kwik Way parking lot and management’s unwillingness or inability to prevent late-night disturbances that awaken neighbors.
Add to this mix the unending proliferation of litter and grime at the Kwik Way and you end up with a recipe that demands intervention from Kernighan’s office in concert with all the responsible city, county and state agencies.
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Comments
Your allusion to campaign donations is more than a bit simplistic. Any contributions in time and money that Pat Kernighan received from the Hahn family is more than balanced by the support she received from those of us who are opposing the Fatburger proposal.
In reality, I'm convinced that Pat is simply on the horns of a dilemma. She was at the center of the negotiations for a mixed-use development on this site and hosted the many meetings that included community representatives, the developer and the Hahn's.
As much as she would like to see such a project proceed, she's tempted to accept a bird in the hand--fearing that the alternative is perhaps additional years of continued blight. This is a concern that I share--but am convinced that this key link to creating a pedestrian-friendly thoroughfare can't be tied up in its present configuration for another fifteen to twenty years.
I was a bit disappointed to see that you have again raised the issue of prejudice. Although I have no doubt that your father indeed suffered discrimination, that certainly is not--nor will it ever be the basis for any action on the part of this community.
As for your discussion of "property rights", it's premised on a false assumption. None of us living in an urban environment have unlimited property rights. We are all subject to zoning restrictions and other requirements.
These regulations and restrictions exist in order to promote the "common good". This is, in a way, the very same kind of motivation that prompts us to schedule volunteer workdays in our parks and other public spaces. Since you have been a frequent volunteer, I'm hoping you might see the connection and recognize that what happens at the Kwik Way and Serenader clearly falls under the purview of the city and of neighbors who have a shared commitment to building safer, cleaner and more vibrant neighborhoods.
I still find your comments troubling and misleading when you wrote Hahn Family’s Fatburgers in Fire, “what exactly can we do as a community to accomplish that goal? For starters, we should be urging Pat Kernighan to do some ARM-TWISTING to help facilitate what she herself acknowledges is the ideal use for the property. We should, however, be wary of agreeing to any increase in height over what was planned by Paramount—particularly if the only purpose is to guarantee the Hahns a substantial, unmerited profit.” Ken, attempting to coerce a City Councilmember in “arm twisting” we believe is unethical and raises questions about your intentions in having the Councilmember committing to such tactics. I think your choice of wording should be revised, because your language is a bit reminiscent of Tammany Hall, don’t you think? Now I would gladly trade the expenses that you mentioned for the architect, the facilitator and surveyors totaling in thousands, when my family paid a million + for the acquisition of the Serenader’s property and business to make the development project work. Don’t you think we should be reimbursed for making a move for a community envisioned mixed use project if we made such a substantial investment without public funding? We’re not asking for that, we just want to offer the community a better Lessee at Kwikway that could really improve the appearance of Kwikway site. PDG did not assist us with the acquisition of the property with any funds whatsoever. So arm twist the Hahns’ so we could sell it exclusively to PDG for a lesser price than the appraised value? Are you suggesting that if we don’t capitulate to your demands, than the Hahn’s will feel the wrath of our political influence? You speak of unmerited profit, but this could be viewed as extortion.
1. Acorn Plaza
Let’s go back in time in 1989 and get the facts straight. The crack epidemic was at its peak and the owner of the Acorn complex was applying for bankruptcy. The City of Oakland needed a grocery store operator since Acorn market was the only shopping market in the area. The City of Oakland understood that my father ran a successful grocery market in Castro Valley and asked for my father to come to Oakland and operate the store, by bidding for the center in a public auction. In 1989 my father was awarded the center being the highest bidder in the auction process and spent 1.9 million dollars more than the appraised nearly vacant at 40% parcel. Three years later the Acorn Center under Alex Hahn’s leadership, all the vacancies in the center were a 100% leased, including the new arrivals of KFC and Pizza Hut. Also, he hired more than 35 West Oakland employees, 80 % of those employees were African Americans and the remainder consisted of a mix between Asian and Latino Americans. Still crime was a major issue at the Acorn Shopping Center. Crime was a major problem nearby the Acorn Shopping Center, as stated before my family got front row seats and witnessed the devastation of the “crack cocaine” epidemic of the 80’s-90.
Back in 1989 there once stood the notorious Acorn housing projects. After 1992, The City of Oakland had numerous drug related problems and decided to shut the projects down for a redevelopment project that would help revitalize the area. When the housing projects closed, 50% of the residents relocated elsewhere, in which caused a dramatic drop in sales. By contract, Alex Hahn had to keep the business running and managed to do so even during the final closure of the projects. The City of Oakland finally bought Alex Hahn out, knowing that the appraised value at that time in 1996 was 4.3 million dollars. The Acorn Center is now worth over 9 million dollars. Alex Hahn managed to take a bankrupt business center with only 40% tenants remaining, transforming the center to 100% occupied and employed 30+ employees locally. So how could this be blight when the center is fully occupied on his watch? In fact Tony Martinez used to manage the Acorn Grocery store with my father and learned how to start his own business from that experience. He now has a successful flower business at the Acorn Shopping Center.
2. Emil Villas
My father was a frequent customer at the Emil Villa’s in Rockridge. One day an employee approached him and suggested that my father buy the chain, sensing that the stores once owned by Clorox and in the mid 90’s David Preuss, were about to file for bankruptcy. Alex Hahn knowing most of the employees by first name, wanted to save the 300 + union employees at those locations. The Hahn family purchased the bankrupt chain and despite financial hardships endured by the five years of operation, my family managed to save the Hayward and San Leandro locations. The Rockridge location was shut down by the City, because of structural deficiencies and we tried to save it by shutting it down temporarily, but the financial burden was just too costly to fix the aging structure. Yes, the Rockridge store is an issue that I have to live with and trust me the pain of letting my employees down still resonates with me today. Your criticism bought back many painful memories that I have to live with and you don’t have to atone for. I may be mistaken but I highly doubt Ken’s expertise in this matter would’ve held out for five years as we did and managed to save the two stores in Hayward and San Leandro. I am sure recreational facilities funded by the City alongside his noble volunteer efforts are much more applicable to him.
3. Koreatown Development
I am sure the generous retiree who constantly picks on the Hahn family could remember when many businesses and residents left Oakland when Lionel Wilson was elected as the first African American Mayor of Oakland. Sears left a tire center at 27th and Telegraph in which was extremely blighted. Alex Hahn, the visionary that he is, noticed that Telegraph Avenue could serve as a major draw for Korean American businesses. Therefore, Alex Hahn purchased in Sears Auto Center and managed to lease it to three Korean American businesses. One is the Sam Won bbq that has been serving customers since 1995. As a result of my father’s pioneering venture on Telegraph Ave, once blighted properties began to have successful Korean American businesses such as the Koreana Market, who serves fresh groceries not only geared for Korean Americans but the owner has noticed a diverse pool of customers that frequent the well known market. The Attorney General of California the honorable Jerry Brown lives across the street from where my father purchased the center. Both the SF Chronicle and the Oakland Tribune, took notice of the developing Oakland Koreatown, here’s an example of what my father has accomplished despite Ken’s inaccurate assessment of my family’s business practices. http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2002/06/13/BA54268.DTL
4. The Serenader
Ken you were there at the Serenader with me. I showed you the no smoking signs and how well we kept the place in accordance with the Cabaret Permit. You stated on public record you were going to fill in the driveway with concrete, but I ended up paying a significant amount of money getting those 100 pound planters to appease your concerns, especially since you stated on City of Oakland recorded audiotape “I’ll fill in the driveway for you.” Since our last meeting I received no complaints about drug activity and the no smoking 25 feet signs were posted and have been actively enforced. You do recall there was confusion when OPD said my customers shouldn’t park across the street and you agreed with them fearing that my patrons would litter Splash Pad Park. Recently, the City Administrator’s office said they want my patrons to park across the street or chain link the Kwikway parking lot. Mr. Katz you didn’t deliver on your promise to fill in the existing driveway, so could you please build me 6 concrete reinforced 4 foot steel poles, so that I could chainlink the Kwikway property in the late hours? I expressed to you that we wanted to repaint the sign and the exterior, but the Cabaret permit states that I need community approval when it comes to exterior improvements. I still have no color samples for the exterior painting or any feedback from you on how the Serenader sign should look. I believe on the Serenader we have made some significant improvements. I thought the Serenader would be a fun project that the community, the Hahns and the Councilmember could do together, apparently it stand idle because exterior improvements must meet approval from the community? I mentioned how frustrated I was with this Cabaret, and I feel some of the conditions of my license are monologues from Yossarian the character in Catch 22. The interior is looking a bit better, come inside and have a drink, I think you’ll like the new maroon red carpet. The summer season should allow us to re-tile the bathrooms and possibly refurnish the bartop. When Bob Archibald, Mary Ellen and yourself visited me at my establishment, you even told me when you saw our signs you expressed to me “You showed good faith.” We moved the garbage container to the side, when we used to keep it in the side alley, until OFD required us to move it out front. I am nearby during the weekends and I make surprise visits to the Serenader. I have not witnessed any drug activity in prime hours, and would suggest that we should keep due process of law in mind, when making accusations of the Serenader patrons.
5. Kwikway
I tried to run it the best I could. The former owner Redi Bassi left it in bad shape and rarely had employees clean the interior and exterior of the store. I changed this to the best of my ability with limited improvement costs and everyday my employees are active in cleaning up the store and surrounding areas. Our initial assessment was that McDonald’s would have leased the premises from us. The community made it very clear that McDonald’s wasn’t a good idea for the Kwikway site.
So we had to wait, but while waiting we accrued operational expenses. We tried to develop the property, but as we sat for two years waiting for the project to unfold, numerous disappointments in that timeframe took place, while additional operational costs accumulated. Bottom-line, the Kwikway’s blighted features that you complain about, including someone posting “gook” on my side door after the Planning Commissions revocation of the permits , are just misfortunes of not having a better operator that could afford to clean it up, since my family was paying debts off the Emil Villa’s franchise and tax liens that you mentioned. Now we do have an operator that could do a better job than we could and that is committed to fix the blight and improve the Kwikway’s blighted features. If the community doesn’t want a blighted Kwikway, than please support a Fatburger in which would be a major improvement to the area. When you mention blight, one should also mention the Chinese restaurant and the Louisiana barbeque? Aren’t those stores equally an eyesore? Did you know that Louisiana bbq does not have a trash facility and we caught them many times, illegally dumping their garbage on our lot? Why is my property the focus of this community, when other businesses on that strip are equally unattractive? Please be fair when assessing blight, because the Hahns have no control of the two lengthy waiting periods of not having the McDonalds come in and a housing market that couldn’t sustain a proposed mixed used development.
Ken, why are the Hahn’s the subject of your personal vendetta. I don’t recall that we have ever spoken badly of you nor attacked you personally. I actually gave the Grand Lake Center parking permits for Mrs. Katz’ and the other volunteers that have been participating in the book drive. The Hahns have donated computers, monitors and other office equipment to the Grand lake center. Alex Hahn has been committed in bringing more businesses to Oakland by also increasing the City’s diversity with the advent of Koreatown and your attacks on my family were without merit. You’re acting unethically by trying to use the Councilmember and rally community members to force us to sell our private property. How would you feel if I said sell your house now, just because I didn’t want you to make a specific improvement that is within your legal rights as a property owner?
Thank you for mentioning my brother. I had to pick him up from chemo last week. Maybe if you could see my mother crying every morning, you could truly understand my family’s pain. I am aware the Katz family has children, imagine the thought of losing your eldest son, while being subjected to personal attacks? How would you feel? I sincerely hope we can stay focused on the issues pro/cons of Fatburger rather than mere accusations. I hope you’re a man on principles and retract some of your earlier statements about my family. I am thankful for your patience and coming forward with your concerns.