The Hercules City Council sold one piece of property Tuesday night but delayed the approval of the purchase of a second parcel after expressing concerns about the deal.
On Oct. 8, the council will take another look at the purchase agreement for the 11.4-acre Sycamore Crossing property after changes are made to the contract.
Under the agreement discussed Tuesday evening, Safeway would have paid $5 million for the land.
Their current plans are to build a one-story supermarket with roof-top parking on the front side of the property at Sycamore Drive and San Pablo Drive. The plans also call for a gas station on the site as well as other retail establishments.
City Manager Steve Duran told the council the Safeway agreement was the city's "last and best hope" to build a new supermarket in town.
The city lowered its price for the property because of additional work Safeway will need to do to build the supermarket.
Duran said the city will net between $2 million and $3 million once it removes 100,000 cubic yards of dirt and undergrounds the utilities.
He said that money will be used to pay down redevelopment debt owed by the city.
Duran said it was more important to get something that benefits the city built on the site than it was to get top dollar for the property.
"The price is secondary," he said.
Duran added the store will bring in between $14 million and $26 million in sales tax revenues the next 30 years.
He said the new store would also raise the value of the Market Hall site across San Pablo Avenue.
Councilman Dan Romero expressed concerns about the amount of changes that were made recently to the agreement without consulting the council.
Vice Mayor Myrna De Vera also expressed concerns about the lack of protections in the agreement for the city should the deal with Safeway fall apart.
Duran assured the council the details have been carefully worked out. He noted the actual plans for the supermarket will still need to be approved by the Planning Commission and the City Council.
De Vera also questioned the amount of financial consideration being given to Safeway because of the cost of the project.
"I don't understand that logic," she said. "The cost should be borne by the developer."
Councilwoman Sherry McCoy said there didn't appear to be any concrete obligation in the agreement for Safeway to build a supermarket on the site.
She said Safeway could decide to build something else or sell the land to someone else.
Councilman Bill Kelly was more supportive.
"I'm anxious to find reasons to say yes to this deal," he said.
Kelly said the Safeway store would bring in at least $456,000 a year in sales tax revenue. That's money, he said, the city will desperately need in the coming years.
He noted two city bond measures will expire in the next few years, reducing the city's annual revenues by $1.5 million. He said without extra sales tax revenue and other income sources, the council will have to cut services.
After the Sycamore Crossing debate, the council voted unanimously to sell the 17-acre Parcel C property to Lewis Land Developers.
Under the agreement, Lewis Land will pay $8 million for the property near John Muir Parkway.
Their initial plans call for building single-family homes on the site.