What's at stake:
A lawsuit alleges that the city of Fresno did not follow best practices on where to site a new Costco. The relocation of the Shaw Avenue location puts yet another Fresno commercial area on blight watch.
City boosters have applauded the arrival this fall of one of the world’s largest Costcos in northwest Fresno, but a lawsuit alleges that the city of Fresno took shortcuts to give the retail giant a greenlight for a warehouse whose rain run-off fills a basin that overflows into the San Joaquin River.
The Fresno City Council approved a new Costco in April – one that would close down the existing Costco on Shaw avenue and move it to a new location near the San Joaquin River. One notable feature of the new location is that the city allowed for a small warehouse to be added to the big-box retailer’s blueprints without an upgrade to light industrial zoning.
The traffic back-up for the proposed Costco location, awkwardly sandwiched between railroad tracks and Herndon Avenue, could be dangerous for everybody involved, said Daniel Brannick, a local resident who’s organized nearby Fresno residents to file the suit in Fresno County Superior Court this summer.
“The traffic is going to be so bad, it’s a safety issue. There’s a serious risk the back-up could go to the railroad crossing,” he said. “You are teeing people up to be in harm’s way – cars, bicyclists and pedestrians.”
The city’s move to allow 40,000 square feet of warehouse space – roughly 25% of the plan’s blueprint – could declare open season to many parts of Shaw and Blackstone for big rigs and warehouses, he added.
“Does that start to happen across the city? Manchester Center – we could turn that into a distribution center too. It’s a de facto zone amendment on allowing truck uses that were not contemplated in the General Plan,” he said.
The claims of the lawsuit are “grasping” for an issue, City Manager Georgeanne White said.
“There are warehouses adjacent to commercial all over. Home Depot, Sam’s Club, Leslie’s Pool Mart, Autozone. A ton of them have same-day delivery that exists right now.”
A court date has not been set, and negotiations with the city are in their early stages, according to Brannick. Other issues potentially addressed in the lawsuit include questionable drainage of the warehouse’s run-off into a basin with an overflow pipe going into the San Joaquin River.
A major demand from the group is that these potential hazards disappear, Brannick said, which could easily happen if the city had considered a site at the end of the existing El Paseo shopping center, just off Veterans Boulevard and Highway 99. He says that the state’s environmental laws required such a project alternative to be considered, and there are multiple benefits including having a drainage basin away from the river.
“It is so plainly evident to anyone who lives there that other sites should have been analyzed. They never analyzed an alternative site,” he said. “The planning department needs to stop acting like the development department.”
White said their hands are tied when retailers choose a specific location. “We evaluate a project that comes to us,” White said. “We don’t say that’s not a good site, you should look at another site instead.”
Why Fresno won’t have a Costco south of Herndon
The debate over the new Costco frames a larger issue in Fresno. The new megastore will replace an existing Costco on Shaw Avenue — one that in 1985 represented California’s first venture into the popular warehouse retail chain. Its closure marks another chapter in Fresno’s struggle with disposable development, where yesterday’s retail landmarks become tomorrow’s vacant eye sores.
“We’re always behind the curve here in Fresno,” said White, referencing the vast commercial corridors of Shaw and Blackstone Avenues, now designated for mixed use but struggling to attract investment.
Many parts of Blackstone Avenue – built during Fresno’s go-go years of the 70s and 80s – have sat vacant for years, an Urban Blight report recently found.
The recent move of lucrative storefronts from South Fresno underscores this growing problem for the majority of the city’s residents.
Over 60% of Fresno residents have a Costco membership, according to company records. But by the beginning of next year, there will be no Costco south of Herndon – where most Fresno residents live. It’s a pattern that echoes a recent relocation of Trader Joe’s from Blackstone Avenue to an upscale shopping center near Woodward Park.
“The same thing happened with Trader Joe’s when they closed that one at Blackstone and Barstow,” White said. “People were very, very upset about not having a Trader Joe’s south of Herndon.”
The pattern is familiar but accelerating. Since Fashion Fair mall opened on Shaw Avenue in the 1960s, Fresno’s institutions have steadily marched north. For decades, residents have watched as hospitals, shopping centers and subdivisions replace farmland while established neighborhoods lose key businesses.
While rents climb, Fresno has second-worst jobs forecast in the state
The flight of retail in south Fresno presents a stark contrast to Gov. Gavin Newsom’s ambitious vision for California’s fifth-largest city. Despite its downtown being crowned as the future home of America’s first high-speed rail station — a designation promising to unlock a quarter-billion-dollar state investment — Fresno faces one of California’s bleakest economic forecasts.
According to the state Economic Development Department, Fresno faces the second-worst job growth forecast among major California cities through 2032 — better only than the struggling agricultural hub of Salinas. The city’s stumbling economy means that it will be short roughly 35,000 jobs compared to more dynamic cities in Southern California over the next eight years.
Investment in Fresno has become a serious problem: Fresno has the lowest per-capita investment of any large city in California, an Urban Institute report found this spring.
As more parts of the city’s economy stagnate, existing residents face mounting challenges and miserable conditions.
Home construction forecasts have plummeted to 40-year lows, and Fresno has the fourth-worst rent affordability in the US, according to Axios. In a city with 100-degree days from March to October, over half of the city’s rentals don’t have air conditioning. Small business lending ranks third-worst nationwide, the Urban Institute found, with what little investment that exists concentrated north of Herndon Avenue.
“When you look at the history, a lot of the incentives and encouragement was given to this big box stuff because they [the city] felt like it would generate property and sales tax,” said Keith Bergthold, former planning director of Fresno.
“But hardly anybody talked about what happens when you decide to move someplace else or close down. That probably needs to be part of future approvals.”
Down on Shaw Avenue, one mile south of Herndon – the city’s new Mason-Dixon Line – Fresno’s stagnant economy has translated into a sit-and-wait game of organized abandonment with private property owners.
“They’re going as long as they can, because they’re making a cash flow,” said White about the Shaw property owners. “And then when they have to put any serious money into them [the properties], they’re going to dump them.”
Fresno City Councilman Miguel Arias said the Council’s decision to relocate the Costco on Shaw to the riverfront fringe was dictated by the existing location’s dilapidated facilities which Costco didn’t want to upgrade.
“When they met with us early on, it was about the fact that the Shaw Costco was under-built. The physical space wasn’t big enough,” he said. “They presented it as we basically have overgrown our space. There isn’t any room for the new model of stores that they have.”
Are ‘new towns’ to blame?
In Fresno, generations of mayoral administrations and city councils have had a hard time saying no when businesses ask to flee north, with no back-up plans to address the structural decline for most of the city’s neighborhoods.
Today, local governments are competing to build escape hatches for wealthy residents – and retailers are taking the cue.
New planned communities are proliferating across the region, close to where the Costco will be relocated. Across the San Joaquin river, Madera County is building scores of luxury pads; Fresno County wants some riverfront gated communities too. Clovis markets itself as a permanent “new town” alternative to Fresno’s struggles. Even Fresno itself dreams of building a new miniature downtown outside its borders—though its limited tax base makes such ambitious plans increasingly difficult to finance.
“I’m guessing that these large retailers do their homework and place their stores where the biggest potential for profit is,” White said. “I mean, they’re capitalists, right? Especially Costco, because of the memberships, they have your information, they have your address, they have your spending patterns.”
Bergthold, the old planning director, has spent the last decade trying to reverse the tide of the city’s lost retail strips.
Along Blackstone Avenue, Bergthold estimates it would take $750 million to transform just one mile-long stretch into a viable mixed-use district with 1,500 housing units. “That’s possible if everybody pulled the wagon together,” he said.
Some signs of renewal exist. An old Vons supermarket has been converted to housing. But with up to 20 miles of aging big-box corridors along Shaw and Blackstone, the city faces an uphill battle against the gravitational pull of the newer developments that it and other governments are greenlighting.
Fresno’s “new town” dream has already become a self-fulfilling prophecy. Ed Kashian, the developer behind the soon-to-shutter Shaw Avenue Costco, has already planted his flag in the promised land, opening a glossy new shopping center near the city’s imagined future downtown in southeast Fresno.
It’s a preview of coming attractions, as retailers chase rooftops sprouting across city and county borders.
“I’m sure they looked at rooftops,” said White about the Costco relocation. “And they’re probably looking at the rooftops in Madera, north of the river too. I’m sure they’re looking West of 99 with Veterans Boulevard.”
Disclosure: Keith Bergthold is a Fresnoland donor.
Correction: An earlier version of this story incorrectly spelled Keith Bergthold’s last name. The story has been corrected.
