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January 12, 2006

15 Questions for Cherie Arkley


photo of Cherie ArkleyIn the last few weeks, word has leaked out that Eureka power couple Rob and Cherie Arkley, owners of the financial firm Security National and the Eureka Reporter newspaper, are close to finalizing plans for the Balloon Track, a 30-odd acre vacant parcel that lies between the Wharfinger Building and Broadway in Eureka.

The Arkley's proposed development, which will be called "Marina Center," includes space two big box retail establishments -- a touchy subject in Humboldt County, and particularly on the Balloon Track. In 1999, Walmart wanted to build one of its megastores on the site, leading to a pitched citywide fight between pro- and anti-Walmart forces. Walmart was eventually defeated at the ballot box.

In the wake of the Walmart battle, the City of Eureka had long intended to conduct special long-range planning effort targeting the Balloon Track. In 2004, the city had secured a grant from the county's Headwaters Fund to pay for such studies. But when it became known that the Arkleys were looking at the property, the city immediately abandoned the plan (see "Blown Off Course," Nov. 4, 2004). Soon afterwards, Cherie Arkley assured the Times-Standard that she would never propose a big box development on the site.

If everything moves according to plan, Cherie Arkley (pictured at left) -- the leader of the project -- will make her first pitch to the Eureka City Council at its Feb. 7 meeting. She's hoping that the city will be able to move fairly quickly for a project of this scale, and that she can come back to the council for an up or down vote sometime in May or June. After that, the Marina Center will head to the California Coastal Commission.

On Monday, Arkley, a former member of the Eureka City Council, sat down with the Journal to talk about the project and why she believes it's different from Walmart.

1. So you've been talking with City Council members one-on-one, showing them rough sketches. The only things I've heard so far is that there will probably be a Home Depot there, and probably another anchor store -- possibly Best Buy. Can you describe the project in greater detail?

It's still in a very fundamental, rudimentary phase. But here's the project. It's a 400,000 square-foot project , under roof -- 400,000 square feet of building. Home Depot is only 100,000 square feet, so it's 25 percent of the project. And we are in contract with them.

We chose Home Depot because of their corporate responsibility -- they're a really responsible home improvement company that gives benefits and good wages. Best Buy, probably. We don't know any more than that. But we've also got a huge amount of office space, and we have some local tenants who have signed up.

We've got the Discovery Museum coming on -- we're doing a build-to-suit for them. It should be a nice, big museum. It's our donation to them, because they can't afford to build a full building. We're in talks with Barbara Groom of the Lost Coast Brewery for a brew pub down there on seven acres.

It's just going to be a wonderful, overly landscaped project that will finally give money to the City of Eureka instead of taking it.

2. Taking it? What do you mean by that?

All [the Balloon Track] does right now is suck money out of the city. It's taxed like a public utility, so it's taxed in the lowest tax bracket. So it throws off hardly any money to the city and the county. So by Union Pacific selling the property, it triggers the need for the new owner to clean it up.

UP has a certain amount of liability because there are hydrocarbons on the property -- diesel, things like that -- and they don't want to take on that responsibility and that liability. So they have said that we're not going to sell it if there is going to be any public use, meaning residential or park. Thus -- in regard to my comment of 14 months ago -- that leaves us with only commercial, and perhaps a tiny bit of residential on the part of the property that is not UP.

3. But aren't there a number of EPA, brownfield grants out there -- the type of grants that are specifically targeted toward cleaning up old industrial sites? Wouldn't that have been possible at this site?

We could have, but we are cleaning it up ourselves. We want to do it. We are in contract with UP.

That's what's funny about this grant from Headwaters. This is private property. Union Pacific owns this. This is like your home. And so the Board of Supervisors asking to have a study done on it, it's like somebody asking to have a study done on your home. UP doesn't want to have a study done, they're in contract with us...

4. But why not have a study done, if it could identify these sources of funding?

There's going to be one. By law, if we get the go-ahead from the City Council, the CEQA [California Environmental Quality Act] process is automatically triggered, by law. And they will do a full CEQA -- traffic studies, environmental impact, economic impact. The full CEQA should address all their questions. And we have to pay for it.

The thing about Union Pacific is that they have done everything to be compliant thus far. They're almost grandfathered into this. There was a document, and I don't know where it is, that basically said to fence and ignore this piece of property. It's a 35-acre microchip in the UP empire. Union Pacific is a $57 billion corporation. There's this little chip in Eureka, Calif., that they can basically leave alone and fence and ignore forever. But they have a willing and credible buyer in us, and we're willing to clean it up and develop it.

We don't want to spend $12 million to clean it up. That's a third of our project. It's going to be a relatively expensive project, because we're doing it well. We're going to be spending a chuck of change to clean it up, but we're going to be cleaning it up to standards that we can put retail it on, and basically cap it.

I think it'll be marvelous for the city and the county. And the schools.

5. What about that, though? There's a lot of fear about big box retail...

I know! I know! I don't know why. We have them all over! We have Target, Costco... The Pierson mall [aka the Eureka Mall on Harris Street] is 100 percent big boxes.

6. Uh...

Or national retailers. National.

But this is going to bring $100 million of gross sales to the city, $1 million in taxes per year to the general fund of the City of Eureka. And that's a conservative estimate. That is police, that's fire, that's public works.

7. Does that figure take into account business that might be drawn from other places?

I don't know. That is just what the studies say.

But you know what? What has Target done to this area? What has Costco done to this area? I think they've just assimilated right in. I don't know why Home Depot would be any more of a gorilla than Target or Costco or any of the ones in the Pierson mall. It is a wonderful store that is really corporately sensitive. They fund things around towns all the time, they give huge benefits.

8. I think there have been credible economic studies done -- on Walmart, specifically -- that with the effect it has on has on local businesses, it ends up being a net drain on a local economy.

First of all, Home Depot is not Walmart. At all. And the Walmart that was planned six or seven years ago, that was only Walmart. This is 25 percent Home Depot. And so it's going to be a lot of local businesses. We're trying to get a local restaurant down there.

We have to have an economic engine. Practically speaking, you've got to have an anchor that runs the project. They fund the rest of the whole thing. So 25 percent of this -- Home Depot's 100,000 square feet -- pays for the project, so we can have other things. In terms of big boxes, it's not big. The Best Buy will be dramatically smaller.

9. But the project will put local businesses in competition with huge businesses, ones with established buying channels and enormous economies of scale.

But look at all the bleeding that goes out of this county already. There's a huge amount of bleeding that's lost in the home improvement sector. There's a brand new Home Depot in Crescent City. People from Humboldt County, our dollars, are going to Crescent City. Our dollars are going to Ukiah right now. It's really important to keep that money here.

Home improvement has been looking at Humboldt County for years. Lowe's has already been approved in Fortuna. It's coming -- the home improvement sector is coming. It's just, where are they going to come to? I am partial to the City of Eureka. I want it to come here.

And we're going to have local things. Plus, we're going to over-landscape it, with native species and berms and walking paths. It's going to be done really, really well.

10. Do you have an architect?

We do. He's out of Portland ... his name escapes me at the moment. He's wonderful. He designs large-scale developments like this just beautifully. He's preparing the drawings right now. It's going to be fashioned like Cannery Row, with mixed-use.

The big thing is that this is a mixed-use project. It's all of a sudden become just about Home Depot, but it's so much more. The storefronts are going to be mixed up -- it's going to look like different stores, all together. Sort of a nautical and industrial look -- lots of steel and glass...

11. Brick...

Brick. Exactly. It'll look beautiful.

12. Was Walmart a bad idea?

You know, in retrospect, that was probably not the idea for that area. Number one, because it was only Walmart. This is a completely different concept of the development. And it's just going to give a lot of life to that area.

It's also going to feed downtown. We're going to ask the City of Eureka to move the Rescue Mission, which is right on that corridor. We're going to extend Second Street down, to extend the walkingscape down from Old Town into this project. We're going to put palm trees and lights in. And we're paying for this, by the way. The taxpayers are not paying for this. And we're not getting some grant from the state of California, or blah blah blah. We're paying for it.

13. Where would the Rescue Mission move to?

I don't know. I don't care. Arcata! They want it! They want it!

14. Come on, you don't mean that...

No, no, I'm totally teasing.

It could probably move down by the Rocking R, down by the south end of town. Perhaps that's the place for them to be. And they could be fed and clothed and housed and all that down there, in the city of Eureka. But when we have our citizens walking around fearing for their safety, that's not OK.

So we need to have a walking corridor between our project and Old Town. They will mutually enhance each other. Personally, I believe it's a dream come true for the City of Eureka.

15. Do you think there's going to be a fight again, like with Walmart?

You know, I don't know. I hope not. I hope people see through that smokescreen.

It keeps being said that this is Walmart. This is not Walmart. All big boxes are not created the same. Home Depot is tremendously responsible. They pay huge benefits. Seventy percent of their employees are full-time. Thirty percent are seasonal. They are a really responsible, admired corporation, and we chose them because of that.

I just think that people will see the value of the project.


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