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.