West Oaklands Meals Desert Stays | East Bay Specific

A federal court sold the Jack London Gateway Plaza on February 27th. Credits: Photo by Scott Morris
West Oakland has long been classified as a food desert due to the lack of grocery stores in the area. And the neighborhood could stay that way for years to come, as the recent fraud case involving the former owner of the Tribune Tower sold a mall where city and community partners have been trying for more than ten years to open a supermarket.

The sale of the Jack London Gateway shopping center at 800 Market St. was cleared by District Court judge Richard Seeborg on February 27 as part of an ongoing US Securities and Exchange Commission fraud case against Tom Henderson, who owned the shopping center, Tribune Tower and several other properties in Oakland. A bailiff sold the mall to a Los Angeles property manager because of strong objections from the nonprofit that has been involved in the property since 2003 and has been desperate to open a grocery store there.

The SEC sued Henderson over a year ago for fraud. The agency accuses him of running a massive program taking advantage of the federal EB-5 visa program, which gives foreign investors green cards to invest in U.S. companies that create jobs.

Henderson suggested countless Oakland businesses to meet the job creation goals for the hundreds of EB-5 investments he requested, including a promise to open three grocery stores in West Oakland by the U.S. Department of Agriculture classified as a food desert.

To that end, with the help of Lynette Gibson McElhaney, a member of Oakland City Council, he joined a nonprofit community group called the West Oakland Marketplace Advancement Company (WOMAC) and eventually bought up WOMAC’s partners on the mall. Henderson then owned 75 percent of the space, and when the SEC sued him, it came under judicial control.

Prior to the sale, the court-appointed recipient made an agreement with the city that each buyer would agree to open a grocery store on the premises within three years. The property, which includes the 59,000-square-foot mall, McDonald’s restaurant, and 59,000-square-foot residential complex to the north, hasn’t had a grocery store since 2007. Several companies are renting space in the shabby square, including a Chinese restaurant, donut shop, pizzeria, and check cashing shop.

The property was sold to Rishi Thakkar and Kevin Louie. RVT Capital’s Thakkar is based in Los Angeles and manages several other real estate investment firms, according to state records. He did not respond to interview requests.

The mall, located across from the Acorn Housing Development, was built in 1983 by the nonprofit Acorn Community Improvement Association and funded by a federal grant and loan from the now-defunct Oakland Redevelopment Agency. The redevelopment agency eventually took control of the property and sold it to a private investor, Alex Hahn, in 1989. But Hahn closed the grocery store in 1996 due to low sales. Eventually the redevelopment agency bought the site back.

In the late 1990s, the redevelopment agency sold the mall to a new coalition: the nonprofit East Bay Local Asian Development Corporation (EBALDC); commercial developer Portfolio Properties Investors or PPI; and community partner of the Westside Economic Development Corporation. In 1999 the new owners opened a Gateway Foods location there. In 2003, WOMAC, affiliated with Acorn, replaced Westside Economic Development Corporation as a community partner.

The Gateway Foods store closed in 2004 and a Korean grocer moved in. However, this shop suddenly closed in 2007 due to reports of embezzlement. The square has no longer had a grocery store

After Henderson bought the Tribune Tower in November 2011, Henderson quickly became very influential in Oakland, hanging out with local politicians and receiving rave profiles in local newspapers for his promise to bring hundreds of jobs to Oakland. By late 2013, he had publicly promised to open three grocery stores in West Oakland and notified Gibson McElhaney of the idea, who arranged talks with the owners of the Jack London Gateway location.

According to emails the Express received upon request from public records, Gibson McElhaney had once hoped to partner with Henderson to get Henderson into the grocery project by May 2013. The square’s owners had considered renting space to a Dollar Tree store and the city council should decide whether to lift a deed restriction that put a grocery store in the area, but Gibson McElhaney delayed the decision.

By December 2013, Gibson McElhaney had arranged meetings with Henderson, city officials, and representatives from EBALDC and PPI, and Henderson had indicated that he intended to buy the mall. But he seemed to be stalling. On January 7, 2014, PPI’s Lorie Alemania wrote to Gibson McElhaney: “We did not receive the offer from Tom Henderson that he would have before the end of the year.”

At the time, Henderson was involved in a dispute over a logistics company he was working on to open in a warehouse in West Oakland. In April, after Henderson won an appeal, Gibson McElhaney sent him a congratulatory message. “It will be good to push this and your other projects forward to promote a healthy community and economy,” she wrote.

Henderson replied the same day complaining about the difficulty of doing business in Oakland. “Some people can tie a project together without knowledge,” he wrote. “The grocery store and the JL Gateway project are in full swing starting this morning.”

But less than two weeks later, Henderson wrote back to Gibson McElhaney, alerting her that he was withdrawing from a meeting organized by the Block by Block Organizing Network to discuss the grocery store project. PPI and EBALDC would not have responded to a letter of intent from WOMAC on its behalf. They “need to be pushed,” he wrote.

Then, in June of that year, after further delays, Henderson sent an angry email to Gibson McElhaney. “We are ready to buy the property. To date, we’ve created more than 400 jobs in Oakland, ”he wrote. “Are you delaying this project with your list of hurdles no one has seen before?”

In December 2014, Henderson finally reached an agreement to acquire EBALDC and PPI shares in the mall and share them with WOMAC. He received a $ 6.9 million loan for the purchase and borrowed $ 3.7 million from WOMAC, which he promised would begin repayments in February 2015, according to court records. But Henderson never started making payments, and in September 2015, WOMAC sued for not only failing to repay the loan, but not taking any action to rehabilitate the property.

In November 2015, Henderson began soliciting investors for the grocery store despite litigation related to the project. However, he has only attracted four investors to the project for a total of $ 2.2 million, all of which he raised after WOMAC filed the lawsuit. At this point he was already being sued by another business partner in his call center business and being sued by a third partner, restaurateur Chris Pastena. He had reached an agreement.

After the SEC sued Henderson in January 2017, WOMAC eventually put the lawsuit on hold and the mall and most of Henderson’s properties were taken over. On October 5th, Judge Seeborg approved the application by the court appointed recipient Susan Uecker to offer the property for sale. She had sold some of Henderson’s other properties, such as the Tribune Tower, to repay investors.

In court filings, WOMAC denied the sale, noting that the SEC claims that only $ 150,000 in EB-5 investor money was used to purchase the mall – unlike other properties that Henderson has with millions of investor money had acquired.

As WOMAC had feared all along, Henderson’s fraudulent behavior has taken the mall out of local control, and only time will tell if after more than a decade a grocery store will ever open at Jack London Gateway. Henderson has now reached a preliminary settlement with the SEC.

Henderson’s attorney Gilbert Serota said he could not disclose the terms of the settlement because the talks were confidential.

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