Jimbo Speaks His Truth

As many of you are aware, we’ve had ongoing legal issues with the past and present Landlord at Horton Plaza. For the most part, the new owner is making it very challenging for us and they have gotten their story out as to what they hope to accomplish—which at this time seems to be at the expense of Jimbo’s. In order to give the Jimbo’s side of the story to the city council, I sent them this letter, and felt it would be important for all you to see:

 

Sent Via Email: christopherward@sandiego.gov

Dear Councilmember Ward:

I feel compelled to write this letter. I attended the economic development and intergovernmental relations committee (“EDIR”) meeting you chaired on April 11th at City Hall. As I listened to the Stockdale presentation, I realized I needed to tell my story. As things stand now, without me telling my truth, I don’t stand a chance of being able to work out a mutually agreeable solution with Stockdale. So I am going to try and dispel some myths and provide facts as best I can. I truly hope you consider them. I am also asking for your leadership and assistance in helping me to work with Stockdale.

I want to express without equivocation that I support the redevelopment of Horton Plaza. This is critically important for everyone to understand. I believe that Stockdale is trying to paint me as someone who is trying to prevent them from doing what benefits the downtown San Diego community and businesses. Absolutely not: I am simply trying to protect my rights and have the opportunity to be a part of the future Horton Plaza. As I stated at the meeting I, and my entire team, have been living a nightmare as to what Horton Plaza has become over the last five years. Because Jimbo’s has been a bulwark against the storm of homelessness and vagrancy threatening to obliterate Horton Plaza, I feel I deserve the opportunity to be able to partake in a more robust Horton Plaza.

For many years Horton Plaza has been not just a ghost town, but also a travesty. Jimbo’s has had to hire full time security to protect our staff and our customers. There are ongoing physical incidents and theft is commonplace. This started under Westfield but continues under Stockdale. On numerous occasions we have had to let Stockdale management know that there were feces on the mall walls that needed to be cleaned up. Our customers are afraid to shop at night; our employees are always looking at what is coming around the next comer. We asked Stockdale for additional security months ago but they never responded. And yet we have remained open in an attempt to serve the downtown community. Trust me when I say that we unequivocally want to see a redeveloped Horton Plaza!

Stockdale is portraying my situation as something that I was fully aware of and one that I signed up for. When I signed my lease I was aware that Westfield was planning to redevelop Horton Plaza. And I was very desirous of such redevelopment. It was one of the primary reasons that I signed the lease: Westfield told me they intended to redevelop Horton Plaza and I was the first piece of the puzzle and the center piece of their redevelopment. So I signed a lease and spent over $5,000,000 to open the store. I would not have done this if I knew that the mall was going to become what it is today.

I believe Westfield spent north of $10,000,000 to retrofit the mall for my use and build out my space. I also signed an amendment to my lease in 2014 that allowed Westfield to move CVS from their current location on the other side of the mall to a space adjacent to me. Westfield never executed this. But it would have been foolish for Westfield to spend that kind of money to retrofit and build my store, and consider moving CVS, if Horton wasn’t going to continue as a mall. This was not their plan. Westfield’s plans were to make Jimbo’s a flagship anchor tenant and the welcoming piece to the mall from First A venue.

Prior to Stockdale closing their deal with Westfield, my broker John Still, and I met with Dan Michaels. Mr. Michaels stated that Stockdale wanted to help me work out a solution with Westfield because their equity partner would not lend Stockdale the money to close unless there was a solution between Jimbo’s and Westfield. Stockdale was well aware of my situation with Westfield before finalizing their agreement and knew that these issues would carry over to them as the new Landlord.

Right after Stockdale closed, my broker and I met with Mr. Michaels and their VP of Construction in September, 2018. Mr. Michaels gave us a copy of a demolition plan which, to date, is the only plan Stockdale has shared with us for the redevelopment of Horton Plaza. That plan called for a crane to be put in front of my front door and the parking garage to be closed from within the mall. This would force Jimbo’s customers to walk around the vacated Nordstrom building and potentially up an exterior stairwell to their cars. This plan violates my lease. It would also be so detrimental to my business that it would likely shut down our store. Despite our numerous questions, Stockdale has left us in the dark by refusing to explain what access I would have for deliveries; whether I would have any issues with my utilities; if my cartveyor would be removed, and much more.

I believe Stockdale is trying to make it difficult, if not impossible, for Jimbo’s to continue to operate. There are two main reasons for this. First, if I leave they do not have to try and work around me. If I stay, it is going to cost them significantly more money to work around me. And perhaps most importantly, if I leave, Stockdale will make tens of millions of dollars on what Jimbo’s is currently paying for rent and NNNs, compared to what another tenant would pay.

My lease with Westfield provides me with a reduced rent and a nominal NNN charge. I have over 29 years remaining on my lease. I occupy over 30,000 sq. ft. of space although I pay rent on less than that. My NNNs are fixed with a nominal fixed annual increase. Just on the NNN s alone, the difference between what I pay and what the actual NNN s were, and would be, are I believe at least $25 sq. ft. That means that a new tenant would be paying at least $25 more a year just on triple nets than I would be paying throughout my term. Calculating $25 times the 30,000 sq. ft. over the remaining 29 years of my lease, assuming they open in 2020, is
$21,000,000. Over time I believe the difference will actually get bigger especially when all the construction is finished and the property is assessed.

Furthermore, the base rent I pay is significantly below market rent. When you factor in the base rent difference, including Stockdale’s costs to build out a space, and the NNNs, Stockdale would likely be able to generate at least an additional $30,000,000 more income over the life of the lease if leave than if stay. Stockdale has no interest in Jimbo’s being there and they want to make it as hard as possible for me to remain open because they are fully aware of the additional money they could make if I leave.

I know at EDIR Mr. Michaels stated they were working with the tenants to solve our concerns. Such a statement is disingenuous. There has been very little attempt to address or solve my issues. As described above, there is little incentive to do so. Beyond the original demolition plan from Mr. Michaels last September, I have not been provided anything further. It is inconceivable that they would not share their plans with a major tenant. Even at the EDIR public meeting, there were more glossy renderings than there were details to support those renderings. It would seem to me that any reputable developer would want to be transparent and provide not just the tenant, but also the public, with the future plans for Horton Plaza.

As a company, we have always been what I believe to be a model citizen. I, and the entire Jimbo’s team, take pride in that. We have been in business for 35 years: never missed a rent payment and always pay our bills on time. In the past 20 years, we have donated over two million dollars to various charities throughout San Diego. When we opened up Horton Plaza we donated nearly $25,000 to the Connections Housing Project (in partnership with the Alpha Project). We have an ongoing partnership with the New Children’s Museum and have supplied school children with food in backpacks. We have donated much, much more to downtown as it is important for our company to be very involved in the community in which we exist.

We spent tens of thousands of dollars to be the first Leed certified grocery store in San Diego at our Horton Plaza store. If you walk inside the Horton Plaza Jimbo’s you will see that the store is a historical tribute to downtown San Diego; with numerous old photos adorning our walls; our aisle signs with downtown street names; and areas of the store with San Diego references. We were the first store in San Diego to eliminate the plastic shopping bags at the register-over 10 years ago. In the 35 years Jimbo’s has been in business we have never laid anyone off. We are an independent family owned business that employs over 350 folks.

Horton Plaza’s redevelopment has been a very painful process. My passion is providing the highest quality food products to our customers not dealing with the issues I am dealing with regarding Horton Plaza. When I look back at the meeting that I attended last week, I can say that I was frustrated with the result, but upon reflection, I realized that if I were a council member I would have reached the same conclusion. The redevelopment of Horton Plaza must move forward: but at what cost? And how it happens is incredibly important to me; as I hope it is to you.

So, I request your help. As previously discussed, we would like your assistance in setting up and navigating a meeting with Stockdale to better understand their plans. We must have knowledge of Stockdale’s demolition and construction plans and how will they give Jimbo’s an opportunity to stay in business. We would like to continue to serve the over 7,000 weekly customers we get in spite of the fact that the Jimbo’s Horton Plaza store loses money each year and is by far the least profitable Jimbo’s. I further implore you to ask Stockdale their perspective relative to the facts I presented regarding the tens of millions they would make if I were to leave. Again, due to this point, this leaves them with little or no motivation to work with me.

The decision that was made on April 11 th was to be expected. Everyone including myself is hungry to see a change in what was once an iconic and thriving mall for many years but is currently an eyesore. I have been told that the Horton Plaza Jimbo’s is like an oasis in the desert. We have, and to the best of our ability will, continue to serve the downtown community. Jimbo’s has suffered greatly but we have been patient. I am hoping that we will have an opportunity to participate in the future vision of Horton Plaza. In that vein I humbly submit this letter in the hope that my voice will be heard. Please help me to make inroads with Stockdale and resolve my concerns for a positive outcome for all.

Respectfully,

Jim “Jimbo” Someck
Owner
Jimbo’s… Naturally!