The Anatomy of Public Corruption

Connecting The Dubious 1989 Safeway Richmond Warehouse - A perfectly timed loss for the investors


Safeway Stores Inc. continues to mull Tracy, Calif., as the site for a new dry grocery distribution warehouse.

The supermarket giant needs a new dry grocery storage facility to replace its huge Richmond, Calif., warehouse, which burned to the ground last July. That facility, which was the size of nine football fields, was the largest of five facilities making up Safeway's Richmond distribution center.Safeway has until April to exercise an option to buy 180 acres on land in southwest Tracy from Union Pacific Realty Corp., according to sources.

Reportedly, Oakland, Calif.-based Safeway desires an additional 60 acres of Tracy land owned by another company, ostensibly for employee parking.

But observers noted the extra acreage at the Tracy site, about 60 miles southeast of Richmond, would be roomy enough for Safeway to build additional facilities. Richmond is a suburb of San Francisco, where Safeway stores are


Recently, a consultant recommended Safeway either build a grocery warehouse at a new location or create a new distribution complex at a new location.

The consultant, Cleveland Consulting Associates, recommended several locations, including Tracy and other existing Safeway facilities as potential new warehouse sites.

Safeway officials declined to disclose the company's plans other than to say an exhaustive traffic study is under way in the Tracy area.

But because land also is available for expansion at Sacramento, Deborah Lambert, a spokesman for Safeway in San Francisco, said, "We're also looking at expanding the Transco site."

Since the blaze, dry grocery products for most of Safeway's northern California stores have been supplied from a public warehouse operated by Transco Services in Sacramento, 90 miles away from Richmond.

Safeway officials have said the company requires "much more" than the 500,000 square foot storage space the company had at its Richmond warehouse.

Observers noted the company might be shy about its plans because of worries about angering its labor unions. Safeway furloughed personnel from its Richmond warehouse following the fire.

Both Southern Pacific and Union Pacific serve Tracy and officials from both carriers have talked with Safeway. But neither carrier cared to discuss specific traffic plans, citing sensitivity of negotiations.

SP has a 12-track switching yard at Tracy while UP's main line runs through the town to its yard at Stockton, 20 miles away.

Safeway's tentative plans at Tracy call for a 100-foot high facility with 1 million square feet of storage space, according to Don Simpson, vice chairman of the Tracy Chamber of Commerce's economic development commission.

If built, he said, the new facility would employ between 1,200 to 1,500 people.

Such a warehouse would more than replace Safeway's Richmond dry grocery center, the main dry grocery distribution center for its northern California division stores.

But any new facility would not be ready until 1991 at the earliest, according to Robert Bradford, a Safeway spokesman in Oakland.

The Richmond complex still has four facilities in operation, all handling fresh produce and meat products.

An official at Transco, who declined to be identified, said the Sacramento facility's volume "more than doubled" following the July blaze at Richmond. Transco's facility is a former Safeway warehouse.

Safeway decided not to rebuild at Richmond after a study conducted by CCA determined such a move wasn't economical.

The company has said rebuilding the Richmond grocery warehouse would involve the single largest capital expenditure in its history.

In its study, CCA stressed inadequate expansion space at Richmond, projected traffic congestion in the area and expectations of higher market and population growth outside the Bay Area.

In addition to offering a larger site than is available at Richmond, Tracy lies outside the area targeted for increased traffic congestion, Safeway officials said.

Safeway has 1,156 stores comprising six U.S. divisions and one in Canada, according to Brian Dowling, a corporate spokesman.

Safeway's northern California division operates from Richmond; the Seattle division serves Washington and Idaho from Bellevue, Wash., and the Portland division serves Oregon from Portland, Ore.

Safeway's Denver division serves Colorado from Denver; its Phoenix division serves Arizona and one New Mexico store from Phoenix, Ariz., and its eastern division handles a pocket of stores in Washington, D.C., Maryland and Virginia from Landover, Md.

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