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Gresham pushes Latino businesses from former Fred Meyer site

Store owners in the Rockwood business incubator fear they won't be able to start over
by: John Klicker, Mila Villavicencio, owner of Mila’s Hair Salon, left, listens as her business neighbor, Mauricio Alvarez, tells his side of a saga that threatens to pit Rockwood business owners against the city’s Redevelopment Commission.

Three Latino business owners say they are enraged over the city's plan to vacate the Rockwood building they call home.

They say they've helped energize Rockwood and put their life savings into the city-owned building. Now they're asking the city to reconsider its redevelopment plan for Rockwood.

'We want to stay,' says Mila Villavicencio, owner of Mila's Hair Salon. 'And if we can't stay, we want to be compensated.'

The business owners, all part of the Oregon Association of Minority Entrepreneurs' business incubator, which sits on the old Fred Meyer property in Rockwood's core, say the city's recent decision to not renew OAME's lease was unexpected.

'I was told we had seven years left on the lease. I spent my entire savings, $30,000, to expand my business. It was all I had,' Villavicencio says. 'If the city makes me move, I won't be able to start over again.'

'A great partnership'

In 2004, Fred Meyer closed its Rockwood store, leaving a huge hole in an already-depressed section of Gresham.

Residents lamented the loss. With no grocery store in Rockwood, they say, some of the city's most impoverished citizens would have to travel several miles just to shop for food.

Sam Brooks, head of the Oregon Association of Minority Entrepreneurs, remembers being asked by Gresham's Economic Development Department if OAME could help.

'Rockwood was pretty tough at that time,' Brooks recalls. 'But, as the largest business incubator in the Pacific Northwest, we had experience with rough areas.'

When Fred Meyer offered to lease a small building on the 6.5-acre parcel to OAME for no charge, Brooks' association came on board, spending more than $250,000 to renovate the 13,000-square-foot shopping center.

Businesses moved into the incubator, drew customers back to the heart of Rockwood and gradually expanded to include a 5,000-square-foot grocery store/deli, a hair salon and a dress shop.

For a few years, everyone seemed perfectly happy.

'This was such a great partnership,' Brooks says. 'There were no issues until (the city) acquired the property.'

An option to renew

Two months before Fred Meyer pulled out of Rockwood, Gresham residents approved a $92 million, 20-year urban renewal district with an emphasis on revitalizing 'the Rockwood triangle,' a piece of land bordered by 181st Avenue and Southeast Stark and East Burnside streets.

Revitalizing Rockwood, however, hinged on the Fred Meyer property, which sits in the middle of 'the triangle.'

The Gresham Redevelopment Commission moved quickly, snapping up the 6.5-acre parcel for $8.4 million in fall 2005.

For nearly a year, the property was in limbo. The city owned it, but Fred Meyer held the master lease for another seven years, tying up redevelopment plans.

This all changed two months ago, when Fred Meyer agreed to pay Gresham's urban renewal agency $2.05 million to buy out the remaining six years on its lease.

A sublease between Fred Meyer and OAME was set to expire March 31, 2007, but the association had an option to renew for another term of four years and nine months.

OAME says they are entitled to that option. The city disagrees.

They've given notice to the three businesses in OAME's incubator to vacate by the end of March.

'We got a call from the city. They told us, 'We've acquired the property, and it doesn't look like we have to honor your option to renew,' ' Brooks says. 'Even if that were true … we've remodeled that building, we've brought minority owned businesses to the area that are having a positive influence on the neighborhood, so why wouldn't the city want to do something for these businesses? That's the only thing that bothers me.'

The Gresham Redevelopment Commission, which includes all the city councilors, an urban renewal manager and a community revitalization manager, contends that it wants to develop the Fred Meyer property into something that will benefit Rockwood's diverse ethnic population.

Not renewing the sublease with OAME, commissioners say, has nothing to do with the types of businesses in the Rockwood shopping center.

'It was totally a financial issue that the commission was looking at,' says Janet Young, community revitalization manager for the Redevelopment Commission. 'I think it's pretty clear that we're aggressively marketing that property and doing what we promised the community we would do - create a redevelopment in that area.'

'We want to stay'

Mauricio Alvarez owns the prosperous La Tapatia grocery store on the old Fred Meyer property.

In three years, Alvarez has quadrupled the size of his store and gone from two employees to 12. His customers come from all over central Rockwood, most of them walking to La Tapatia after work, to grab groceries and meet up with friends and neighbors.

Alvarez estimates he has more than 300 customers a day. Nearly all of them live within walking distance.

The young father of two understands the city's need to redevelop the property around his business. He wants to see something nice in Rockwood's center.

What Alvarez doesn't understand is why the city won't work with the existing businesses, which have made a go of things in a run-down part of Gresham when other business owners stayed away.

'When I got into business here I was all by myself,' Alvarez says. 'Nobody wanted to do business here. I've worked 14 hours a day, seven days a week to build my business. I've spent $300,000 on this business. And now they tell me I have to go.'

Alvarez recently spent more than $150,000 renovating his store and expanding his meat and deli selections. The bulk of the money went into permanent additions to the building - not something Alvarez could take with him to another location.

His story is similar to Villavicencio's, the business owner who spent her savings expanding her business just a few months before receiving the city's notice to vacate.

Why did the business owners invest in a building they didn't own?

'We were told by OAME that we had another seven years,' Alvarez says. 'Sam (Brooks) told me not to worry.'

Brooks, who has been in the incubator business for more than 30 years, says he never would have encouraged Alvarez and Villavicencio to go ahead with their expansions if he didn't think the city would honor Fred Meyer's master lease, which gave OAME an option to renew.

'We never would have spent a quarter of a million dollars renovating that building if we didn't think it was going to be a long-term agreement,' Brooks says.

OAME is pursuing legal channels for compensation, Brooks says.

'We're asking to be compensated … and the bulk of the money would go to the business owners, to help them relocate.'

OAME will not forsake the Rockwood businesses, Brooks adds.

'These businesses are a great success story. They have gone from making almost nothing to having (revenues) of $3 or $4 million. We're not going to abandon those businesses,' he says.

Gresham City Councilor Shirley Craddick, a member of the Redevelopment Commission, says the city wants to see businesses like those at the OAME incubator stay in Rockwood.

'The goal is to not have them leave the area,' Craddick says. 'For sure, the city wants to support these businesses in the best way we can.'

Craddick adds that the city's 'hands are tied in some ways' when it comes to renewing the lease with OAME.

'In all the branding discussions the city has had (about the Rockwood redevelopment), diversity is to be promoted,' Craddick says. 'We would like to see these types of businesses stay in the area.'

Alvarez agrees, and he has an idea for the city:

'Let us stay while they demolish the Fred Meyer building. Let us stay until they find a developer and then, if there is retail in the new building, maybe the city can help us move in there,' Alvarez says. 'We just want to stay. I don't know how I would be able to start over again.'