AG City officials tussle in escalating fight over grocery store

May 9, 2016



While the former space of Arroyo Grande’s only full-service grocery store remains empty, city officials are tussling over what should be done.

In late October, as part of a bankruptcy, Haggen Food and Pharmacy shuttered its Arroyo Grande location. The anchor store site remains empty with no concrete plans to put in another grocery store.

The closure has led to residents leaving the city to shop, lower tax revenue for the city, and problems with reduced income for neighboring businesses.

In the past, grocery stores at the site brought in about $2.4 million per month in revenue making it one of the city’s top five tax revenue generators. While food items on the shelves are not taxable, food from the hot delis, pharmaceuticals and nonfood items are taxable.

In addition, stores near the empty anchor site have seen significant reductions in revenue. In contrast, merchants  adjacent to  Trader Joe’s have voiced concerns over the lack of parking because of the closure of the city’s major grocery store.

In November, Spencer’s Fresh Markets was the top bidder in a bankruptcy auction for the Arroyo Grande Haggen’s location, according to court documents. However, some locations including the Arroyo Grande site were pulled from the auction because of lease issues between two Haggen entities, OPCO and PROPCO.

After months of no updates and no action by the city, on Feb. 23, Mayor Jim Hill sent a letter to the Federal Trade Commission (FTC) expressing his concerns.

”I would greatly appreciate your attention to the issue with the former Albertson’s Haggen location in Arroyo Grande and the possibility to restore competition and vital access for our residents to a full service traditional grocery store at the earliest,” Hill wrote in his letter.

The FTC responded back in a letter it sent to Hill through city hall. City staff then sent the response to the mayor and councilpersons at the same time.

In a May 5 email to Hill, Council Member Barbara Harmon chastised the mayor for sending a letter “conveyed an official city position” without informing her of the letter. (Nowhere in the letter does it say it is sent by the city and the letter did not include a city letterhead). Harmon also voiced her concerns that members of the public were aware of the letter, while she was not, and that it appeared the mayor was supporting one business over another.

“After giving this matter much consideration, I am sending this email to express my disbelief and disappointment about your actions and your lack of transparency involving your letter to the Federal trade Commission,” Harmon’s email says.

Hill said that he was not promoting one business over another. While there has been no concrete report of any other grocery store operator interested in the site, Spencer’s Fresh Markets was the bidder of record. Hill’s goal is to have a competitive grocery store fill the location as soon as possible.

Hill also questioned Harmon’s letter.

“Now, Council Member Harmon is questioning my contact with the Trade Commission claiming ‘lack of transparency,’ apparently because I didn’t check with her in advance,” Hill wrote in his response to Harmon.

When asked about her email, Harmon said she gets calls from concerned residents at least once a week, and wants to be informed of any actions taken by Hill. While noting her lack of understanding of bankruptcy court processes, Harmon said she was worried that any city involvement could slow down the process even further.

During the past week, Harmon had heated discussions with several members of the public including John Spencer, over Harmon’s letter chastising Hill while she has not stepped forward to address the issue.

“Through this long process, I have not heard from any city officials expressing their concern about the process,” John Spencer said. “It seems at this point, Harmon’s concerns appear to be strictly political.”

Nevertheless, the FTC said that after the store was pulled from the Haggan bankruptcy, if Spencer’s Fresh Markets wanted to move forward, they could negotiate with the landlord directly. However, Haggen continues to pay the lease insuring that all negotiation be conducted through Haggan’s PROPCO which was not involved in the Haggan OPCO bankruptcy.

Jim Hill’s letter to the FTC, the FTC’s response, Barbara Harmon’s letter to Hill and Hill’s response to Harmon  by CalCoastNews


I’m not sure which is crazier : The mayor siding with a flea to fight a Goliath, or a small no-whereville named AG, thinking the FTC in DC, cares an iota about a store in the middle of nowhere California.

Guess what? Out side a 50 mile radius of SLO, no one cares about your sim-quality local, Cal Poly nepotism crap. If Albertsons wants the locale, they’ll get it. They are a professional corporation, right or wrong. Not some local boss hog crap out of the 80’s like what passes for business here.


Now Kristen Barneich wants an agenda item (Guthrie seconded the motion) to discuss letters written by the council members and perhaps develop a policy restricting their ability to write without council approval.

I do not believe any council member would appreciate a policy that would shackle their First Amendment rights to speak on any particular issue (in writing or not). To take the council down this road is a complete waste of time, surely legal counsel will advise against any restrictions (that opinion will come with a legal bill).

Who would ever want to serve on a board or council if they were restricted from voicing their opinions, seeking information, or asking for help (as the Mayor was with his letter to the FTC)? It is a council person/Mayor’s job to serve the public! This is the job we expect them to do.


a bunch of dumb asses!


Barneich should ask herself one question:

Would I dare pull this crap on Ferrara?

Her attempt to neuter Hill is laughable.

Guthrie has apparently lost his mind.

Grow up Arroyo Grande!


Hopefully after the next election we will not be bothered by Barniech and Guthrie anymore, maybe they will do us a favor and not even run, but something tells me their ego’s will not let them just walk away.


I found what you posted here Julie very interesting, but conflicting. I don’t understand why Ms. Barneich is raising this question, when she as the Tree Guild President has convinced the city to allow her foundation first review of development projects and appeals prior to review of city committees and council.

She then votes on these projects as a council member, with no disclosure to the fact that she had prior input.

Tree Guild routinely solicits funds at city events, meetings and on their website. No other council member has this privilege. Maybe someone should request an agenda item to look into the relationship of the city and the Tree Guild!


I think the city counsel was just embarrassed because the mayor did what they should have done long ago. It’s nice that someone is watching out for the city of Arroyo Grande. I’m impressed with the new Smart & Final stores.


Why does Ms. Harmon feel entitled to know every move the Mayor makes?

With Ferrara and Adams gone, is there no one else capable of recruiting a suitable replacement? Where are the city manager and others on this issue?

It should be all hands on deck when it comes to the city’s economic development.

Refocus your energy Ms Harmon. You were elected to work towards solutions, not against those who are.


I say the public should vote on it.

I vote Spencer’s. The best. Clean wide isles, brand name products, fresh produce and Harris Ranch beef-all at reasonable hometown prices.


With all this squabbling and bickering over nothing, is AG becoming the new Los Osos?


It wasn’t that long ago that Spencer’s put up a fight to block food for less from coming to town. Then they all of a sudden closed up shop and moved out of Arroyo Grande. Why in the world would you allow someone who left your city, come back? Didn’t like them before and will not shop there if they return. How about letting someone new come in. So tired of the same old, same old. Just look what they are doing at Grand and Elm. All that work but the same people. Just what we needed was a drive up StarBucks.


Mad Hatter what grocery store do you want? Do you realize how few grocery stores there actually are and where their distribution centers are?

Do you know why the Spencer’s left? Do you know what the city told them would go in on the corner? And the city lied and then wanted to put in a smart and final.

Why don’t you show your a$$ up to a council meeting and get involved? People sure like to &itch about things but they can’t show up and be part of the process.


John Spencer is an outstanding citizen and business man of Arroyo Grande. Mayor Jim Hill is an outstanding Mayor of Arroyo Grande. Mayor Hill’s taking action on this matter was appropriate in representing the interests of the City.

Barbara Harmon’s criticism is inappropriate. It suggests a dark motivation or an ineptitude of gross transparent incompetence, the latter being the most serious attribute considering the embarrassment suffered by those voting for her election to become a Council Member.


Hopefully we won’t make the same mistake twice if Ms. Harmon decides to run for re-election.


Shouldn’t the Mayor and the City Council favor the grocery operator who resides in their city and has a proven record as a top notch operator?

Isn’t that what elected officials are supposed to do, support their constituents?

Council Member Harmon’s complaint that Mayor Hill appears to favor Spencers over other operators is not only hollow, but counter productive for a citizen of AG.

Also, why do people at the City open mail addressed to the Mayor, and route it before even the addressee sees it. Isn’t a sealed letter addressed to an INDIVIDUAL supposed to be either opened by that individual or their personal assistant, and shouldn’t the addressee be the first to see the letter and decide who else sees it?


Top Notch??? I wouldn’t call a person who works everyone up to suppress competition, claiming there were enough grocery stores in the area, successful stopping the Food for Less, then closely his own store. Even if Spencers opens in the old Hagen location I will not shop there given John Spencer’s ethics