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Will the Milk Pail survive?

Shopping center development may force grocer's closure after 40 years

To many residents, the Milk Pail market is a charming Mountain View institution, celebrating its 40th year selling affordable produce and gourmet cheese in a quirky, open air European-style setting. But its future has been uncertain ever since a developer arrived on the scene, threatening a critical part of the Milk Pail's business: a friendly agreement allowing the Milk Pail's customers to use a neighboring property's parking lots.

"My life these days is filled with the word 'parking'," said Milk Pail owner Steve Rasmussen, who has only five parking spaces on his property, but needs 22 to meet city requirements to stay open. He says his current arrangement isn't a "free lunch" -- he pays a neighboring property owner for access to ample parking in the Ross and BevMo! parking lots.

Developer Merlone Geier has other plans for the Ross and BevMo! lots and the 9.9 acres surrounding the Milk Pail: a 70,000-square-foot movie theater, a seven-story hotel and a pair of six-story office buildings with new ground-floor shops around a public square. Plans also call for over 1,480 parking garage spaces, but so far none for Milk Pail customers.

If a solution can't be found, Rasmussen says he will be forced to close his doors when his parking agreement ends in 2016.

City officials have been inundated with questions and concerns about the future of the market. Over 700 people have signed a petition on Change.org calling for the City Council to act "to impose a continuation of the existing shared parking policy with the Milk Pail as a condition for approval of the Merlone-Geier Phase II Project."

The conflict appears to be "a David and Goliath story that won't end well" unless the City Council steps in, says resident Nancy Morimoto says, a board member of the Greater San Antonio Community Association, which represents residents of the Crossings and Old Mill housing complexes across the street from the Milk Pail.

Rasmussen's luck in having a neighboring property owner friendly to his parking needs may have run out, unless a new agreement is reached soon. Merlone Geier's development may be approved by the City Council in just a few months. City officials say they can't force Merlone Geier to agree to lease parking spaces to the Milk Pail, but "we have very strongly encouraged that," said City Manager Dan Rich.

"A lot of people are saying this is not the City Council's place to meddle in the affairs between two property owners -- we're not buying that argument," said Morimoto. "It is very frustrating because what I keep hearing is every business is required to have parking for its own business. At the moment he (Rasmussen) has got a solution. He rents or pays the property owners who do have overly sufficient parking. I don't know why they can't require that to continue to happen."

Council member Jac Siegel did not want to say that council members couldn't or wouldn't act to save the Milk Pail with some sort of condition on the project's approval.

"I don't think there's a person in the city government that doesn't want them to stay, myself included," Siegel said. "Do we have the power to make (Milk Pail parking) a condition of approval of Phase II? We probably do. But if we do that we're subject to a significant lawsuit. It would be something we'd have to weigh very carefully. That's essentially the big issue."

Hoping to clear up confusion from residents, city officials sat down with the Voice to explain the city's perspective. City Attorney Jannie Quinn, planning director Randy Tsuda, communications director Shonda Ranson and City Manager Rich all spoke on the issue.

They say there is a lot of confusion over the notion of "shared parking," which doesn't mean what it seems. City officials say that the shopping center's privately negotiated "reciprocal parking agreement" only allows shopping center customers to move freely between certain properties and doesn't exempt individual property owners from the city's parking requirements, which state that Rasmussen must have legal access to 22 parking spaces in order to remain in business.

"Their (Merlone Geier's) development doesn't change (Rasmussen's) fundamental legal obligation, under today's law, to have 22 parking spaces," said Rich. "That has always been the case and will remain the case."

If Merlone Geier were required to give the Milk Pail parking "essentially what would be asked of them is to add 17 spaces at their expense to another property owner," Rich said. "That's a highly unusual circumstance. I don't know if that's ever been done."

Ranson likened it to a resident wanting to build a shed in their yard and being told by city staff that "in order to get the permit you have to re-landscape your neighbor's yard."

When asked if the council could make Milk Pail parking a "public benefit" of Merlone Geier's project, City Attorney Jannie Quinn said "that's going to be not only a policy issue but potentially a legal issue as well, because traditionally public benefits are things that (directly) benefit the community -- so that's street improvements, bicycle lanes, trails, parks. So that would be an issue for the City Council to consider -- whether requiring Merlone Geier to provide parking spaces for a private property owner would be a public benefit."

Quinn said it could also mean fewer public benefits of the type the council has already expressed interest in: bike and pedestrian mobility improvements around the San Antonio shopping center.

Siegel suggested that Merlone Geier and the Milk Pail enter arbitration so that a neutral arbitrator could create a fair agreement between them -- as a condition of the approval of Phase II. City staff members balked at that option.

"Merlone Geier may never be able to meet that condition," if the Milk Pail is not satisfied with the agreement, Quinn said. "I don't think we have a way to force both parties to engage in arbitration at this point," Tsuda said.

"We share the public's desire that the Milk Pail be successful but the government can't be involved in picking winners and losers between two property owners," said Rich.

The Milk Pail's other options

With no agreement for parking with Merlone Geier, Rasmussen says he's been looking at other locations, where he'd be relocated with Merlone Geier's help.

"We have made three distinct offers to Steve," said Merlone Geier's Mike Grehl in an email, declining an interview. "The first two were offers to relocate the Milk Pail within the project. The third offer was based on Steve's decision to relocate to another Mountain View location he identified as desirable. As part of all of these offers, we would pay for the entirety of the expenses related to the relocation. including the build-out of the new store in addition to purchasing his existing property for more than fair market value. Steve has stated that moving slowly has always worked for him in the past. As such, we anticipate continued progress over time."

Rasmussen said he first considered the former Dittmer's site across San Antonio Road, on the ground floor of another large development. He met with a commercial broker about using the site and "nothing became of that meeting," Rasmussen said in an email.

Then Merlone Geier offered two spaces in San Antonio shopping Center. One, a large vacant space under an apartment building near the dog park, is already built. The other is in a proposed building at Pacchetti and California streets, which would make it a gateway site at a main entrance to the new shopping center. In both sites, Rasmussen said he was advised that a business like his may not be able to compete for parking against a flurry of movie theater patrons, retail shoppers, restaurant-goers and dog park users. And he noted there are policies against reserving parking spaces for individual businesses at the center, which Merlone Geier confirmed.

"We cannot provide exclusive parking at-grade for the Milk Pail nor for any tenant because of legal agreements governing the San Antonio Center," Grehl said in an email. "We've proposed creating short-term parking in front of the potential Milk Pail location within the project to allow for his significant customer turnover."

Parking concerns aside, Rasmussen said he also has concerns about higher costs from paying rent and losing the charming nature of his current site, which he owns and remodeled not long ago.

"I can sell things for very reasonable prices because I have a very strong control over my cost," Rasmussen said in November about the likelihood of having to rent the Pachetti site at a premium. "I'm very concerned about moving into an extraordinarily expensive environment that is of a different nature than what the Milk Pail has been all these years."

Rasmussen said he has also considered buying the corner property next door where Oh My Sushi and Savor Mexico Taqueria are located, and using it for parking. But Merlone Geier bought the property instead, presumably to redevelop also. "Did I mention that I'm not a bank?" Rasmussen said of the deal.

Merlone Geier also wants to buy the Milk Pail property. It's the last one of the small corner lots by the Milk Pail that the company hasn't bought.

"The forces I'm up against with this $600 million project are rather huge," Rasmussen said. "The last three years of my life have been competing with an organization that raised $1.8 billion" for various projects in recent years.

"With the enormous change that all of us are seeing now in Mountain View, finding a suitable location is far from easy," Rasmussen said in an email. "Retail spaces are being consolidated for high-cost housing and expensive office buildings. It is my opinion that the small business community is clearly being left behind by the development community."

"I have no idea what the future holds," Rasmussen said. "It's been quite a ride, I guess, and it continues to be quite a ride."

The Milk Pail does have something going for it: its parking agreement stands in the way of much of a $600 million development and "the Milk Pail's parking agreement cannot be unilaterally canceled" before 2016, Grehl said. "Any early termination would be coupled with an agreement to relocate the Milk Pail."

Whatever happens, Rasmussen thanks the community for its support.

"I, along with the Milk Pail staff, have been greatly comforted by the outpouring of support from hundreds or even thousands of residents speaking out for the survival of the Milk Pail to City Council," he said.

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