Oakland willing to waive living wage rule for jobs

FILE - This June 4, 2014 photo shows a Walgreens retail store in Boston. Walgreen Co. reports quarterly financial results on Tuesday, Dec. 23, 2014. (AP Photo/Charles Krupa. File) FILE - This June 4, 2014 photo shows a Walgreens retail store in Boston. Walgreen Co. reports quarterly financial results on Tuesday, Dec. 23, 2014. (AP Photo/Charles Krupa. File) Photo: Charles Krupa, Associated Press Photo: Charles Krupa, Associated Press Image 1 of / 1 Caption Close Oakland willing to waive living wage rule for jobs 1 / 1 Back to Gallery

East Oakland has been starving for commercial development for decades. After nine years of assembling the pieces, the city is close to landing a deal that would bring a Walgreens and 106 jobs to a part of town where the unemployment rate is twice as high as other parts of the Bay Area.

But to keep the deal alive and open a store near the intersection of Foothill Boulevard and Seminary Avenue, city officials were confronted with a dilemma: Was it worth sacrificing one of the city’s core ideals to bring jobs to a neighborhood desperate for help?

In this case, Oakland officials were prepared to exempt Walgreens from a 17-year-old ordinance requiring businesses that receive city tax breaks to pay workers a “living wage” of $14.10 an hour if they don’t offer health care coverage, or $12.27 if they do.

The city’s willingness to cut Walgreens a break in this situation has some advocates worried that officials will capitulate to other corporate demands when the city’s new minimum wage law — $12.25 an hour with paid sick days for all employers — kicks in March 2.

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“What is going to prevent the city from exempting other big corporations from paying a living wage?” said Jennifer Lin, deputy director of the East Bay Alliance for a Sustainable Economy, which advocates for low-income workers. “It sets a bad precedent.”

City staffers and some City Council members say they were willing to cut Walgreens a break to get the jobs to an impoverished part of Oakland.

In 2012, the council approved $6 million of tax credits for Sunfield Development LLC for the development of Seminary Point, where Walgreens would be the anchor tenant. The city’s former redevelopment agency sold the land to the developer for $6,000 — roughly the cost of a month’s rent in one of San Francisco’s trendiest neighborhoods. They were told that Walgreens, which reported $809 million in earnings last quarter, would bolt if it didn’t get the waiver of the wage requirement.

Walgreens threat?

Councilwoman Annie Washington Campbell tweeted on Wednesday that for more than a year, “Walgreens had threatened to walk away from this project without a waiver.”

A city staff report on the project concurred that “the proposed retail anchor tenant is unable to meet the requirements of the living wage.”

So Sunfield CEO Sid Afshar asked for the exemption.

On Tuesday, the council’s Community and Economic Development Committee voted 4-0 to grant Walgreens the exemption — meaning if the store opens, it could pay the minimum wage rather than the living wage.

But after hearing an earful from community activists at the meeting and elsewhere, Walgreens changed course. Or, as a Walgreens corporate spokesman said Wednesday, Oakland “didn’t have accurate information on our policy” concerning a living wage.

“To clarify recent comments by others, it is not our company’s policy to seek such exemptions from living wage ordinances,” said Walgreens spokesman Phil Caruso. “We have not yet determined whether we will sign a lease for a new store in Oakland, but that decision will not be based on the exemption application submitted by the real estate developer.”

City officials and the developer said a lower-level Walgreens employee who is no longer with the company requested the waiver. When directly asked if the company had requested the waiver, Caruso said he didn’t have the details on what had happened. “But that’s not our policy,” he said.

Unfinished deal

The deal remains unfinished, and Caruso said he doesn’t know when Walgreens will decide whether to build.

Councilwoman Desley Brooks, who said her staff has worked for nine years to bring this project in her district to fruition, is confident it will get done. “That’s what this story should be about,” Brooks said. “This is going to be a win-win for our community.”

Developer Afshar described the incident a “bump in the road.”

“I think it will get done,” he said.

Ashfar says he looks forward to Walgreens opening in early 2016. But if Walgreens pulls out, he conceded, the project could be in jeopardy.

Regardless of what happens in East Oakland, city officials will probably have to stare down a similar dilemma in the future.

“This was falsely set up as economic development vs. living wage jobs,” Lin, the community activist, said. “But we can have both.”

Joe Garofoli is a San Francisco Chronicle staff writer. E-mail: jgarofoli@sfchronicle.com Twitter: @joegarofoli