East Oakland retail center promises change for neighborhood

Top: Area residents take photos during a groundbreaking ceremony for the new development in Oakland’s Seminary neighborhood. Above: Jose Corona of the mayor’s office speaks during the event Monday. Top: Area residents take photos during a groundbreaking ceremony for the new development in Oakland’s Seminary neighborhood. Above: Jose Corona of the mayor’s office speaks during the event Monday. Photo: Carlos Avila Gonzalez, The Chronicle Buy photo Photo: Carlos Avila Gonzalez, The Chronicle Image 1 of / 9 Caption Close East Oakland retail center promises change for neighborhood 1 / 9 Back to Gallery

No chain drugstore in Oakland has generated as much enthusiasm or consternation as the planned Walgreens that broke ground this week in a low-income neighborhood not far from Mills College.

The 27,000-square-foot store will anchor a development that represents the first significant retail investment in the area in more than two decades, city officials say. The project is scheduled to create 125 jobs, 54 of which will be permanent, in a neighborhood that has long grappled with crime.

“This neighborhood has been plagued with addiction for years,” said Dwayne MacArthur, who runs a charter tour bus company across the street from the Walgreens site at Foothill Boulevard and Seminary Avenue. “With jobs in the area, a child might decide to go work at Walgreens because he has an opportunity other than standing on that corner over there selling drugs.”

On Monday, MacArthur was among the business owners and residents who showed up for a groundbreaking ceremony after waiting nearly a decade through false starts and setbacks that punctuated the path from empty lot to shopping center.

“I know that we’ve been waiting for a long time,” Councilwoman Desley Brooks told a group of 60 or so community members before picking up a ceremonial shovel. “I want everybody — everybody — to say, ‘Finally.’”

“Finally!” chorused back the crowd.

The shopping center will have space for about half a dozen businesses in addition to the pharmacy. In a city that already has plenty of drugstores, including nine other Walgreens locations, Brooks and other promoters of the project say this one will benefit the elderly and youth who can’t drive or walk long distances.

To help revitalize the area ahead of construction, the city poured money into repairing the surrounding streets — putting in new sidewalks, gutters, trees and old-fashioned street lamps. Their efforts didn’t go unnoticed.

Outside a convenience store across the street, Marlin Godfrey Jr., who runs a nonprofit, and his friend and barber shop owner Don Tutson talked about how the composition of the community might change as new retail comes in, concluding that a little gentrification would be tolerable in order to stem the gang violence. Godfrey pointed out a line of colorful flags affixed to the new street lamps overhead reading “eat, drink, shop, play,” along with the name of a merchants group in the corridor.

“I guess this is the Heartlands now,” he said, reading one. A third friend riding his bike overheard and interjected, “Nah, man, this will always be the Seminary.”

Godfrey corrected the friend as he rode away, “Nah, man, look at the flags.”

To deal with the difficulty of attracting business to the site, the city gave the project $14 million in federal tax credits. And City Council members at one point even considered waiving a requirement that Walgreens pay its workers Oakland’s living wage, now nearly $15 per hour, before the company withdrew its request to be exempted from the ordinance.

The millions of dollars in tax credits, according to the project’s backers, are needed to bridge the gap between how much construction will cost and how much business tenants are willing to pay in rent. New Markets Tax Credit, a federal program designed to spur economic growth in low-income communities, is filling in the shortfall.

“These types of tenants we can attract here are not what we can attract, let’s say, in downtown Oakland or downtown San Francisco or Walnut Creek,” said Larry Gallegos, a development program manager for the city. “You still have the same type of construction costs as we do here, but over there they can at least attract higher on the actual leases.”

On top of persuading Walgreens to anchor the site, the project was stalled by obstacles large and small, like the 2011 dissolution of the city’s redevelopment agency and later the discovery of lead and hydrocarbons in the soil of the lot.

“At first it was frustrating,” said Yakpasua Zazaboi, who owns a computer repair store nearby. “We can’t just stick a shovel in and start building, I understand that now.”

Kimberly Veklerov is a San Francisco Chronicle staff writer. Email: kveklerov@sfchronicle.com Twitter: @kveklerov