A divided City Council voted late last month to sell a prime slice of Seaside for a price well below its assessed value, and a fraction of what the City’s redevelopment agency shelled out to acquire it three years ago.

The City sold a four-acre empty lot at the corner of Fremont Boulevard and Broadway Avenue to Orosco and Associates, a Monterey-based developer, for $1.9 million.

An independent assessment values the land at $3.5 million, while the City paid $6.2 million three years ago to buy it, clear it, and relocate its former tenants. Under the new contract, Orosco, the company that built Seaside’s Costco complex, is charged with creating a 42,000-square-foot commercial complex that includes a bank, restaurants and a neighborhood supermarket—for which Shopper’s Corner from Santa Cruz is the front-runner tenant.

Sal Randazzo, owner of Trading Post Pawn Shop on Broadway Avenue, thinks the whole deal stinks.

“Something’s wrong there,” says Randazzo while smoking a cigarette with one hand and playing online poker with the other in his shop, located within shouting distance of the site. “If market value is $3.5 million, then why not sell it for $3.5 million?”

Seaside Mayor Ralph Rubio offers an answer. He defends selling the vacant lot because, as he puts it, a “trade-off” is involved. City officials are betting that the new commercial center, which should be up and running by November of 2006, will become the heart of an upscale downtown corridor that transforms a glimmerless city center into a job-creating, revenue-producing development magnet.

To make the deal profitable for the developer, Rubio explains, the City agreed to sell the land for less than it’s worth. In return, the city gets the type of commercial space it’s been craving for some time.

“We want something that is architecturally exceptional and that will define the city,” says Rubio, who took office early last year. “Previous to Orosco’s plan, we received a proposal [from another developer] to build a grocery store with basically a parking lot around it, which isn’t what we wanted. Then someone else came to us with an idea for a strip mall with a parking lot, which we also rejected.”

The architect’s drawings for the Broadway-Fremont Project look like nothing else in Seaside. They feature a row of shops, each with unique façades that butt up to the sidewalk along the two main streets. A 270-space parking lot dotted with trees sits in the interior of the property, behind the buildings.

Besides Shopper’s Corner, Rubio confirmed that Hula’s Island Grill of Monterey has expressed interest in becoming one of the center’s first tenants.

“From a retail standpoint, this will be a significant milestone as far as putting Seaside on the map,” says developer Chris Orosco, son of the company’s president Don Orosco, and a major player in making the deal happen.

But not everyone is gung-ho about the project, on which construction is slated to begin in March.

Councilman Don Jordan cast the lone “no” vote against the sale at the Sept. 30 council meeting. Fellow Councilman Darryl Choates says he would have done the same if he hadn’t been away on official business.

“I think it’s a costly project for Seaside,” Choates says. “The City put out a lot of money to get the property and projections show the city is only going to get about $80,000 a year in sales-tax revenue. At what cost do the citizens really want that corner developed? We have to make good business sense when we do these things.”

In addition to the sales-tax dollars, city officials project that the new commercial center will provide $147,000 in annual property-tax revenue for the city’s redevelopment agency. That comes on top of about 200 new jobs, which doesn’t count local union-wage construction jobs, Orosco says.

Rubio shoots back at criticisms from council members, stressing that the property—which housed the Del Rey Theater until 1989, as well as several stores and homes torn down by the City three years ago—couldn’t wait for development any longer.

“There’s a time to take action and that time is now,” Rubio says.

The proposed development has also become a target for a different kind of criticism from Seaside business owners and residents. Some say that Seaside’s population—including its large chunk of Spanish-speaking, immigrant families—won’t sustain an upscale shopping center.

“Stand out at the corner of Fremont and Broadway and look at what the people look like,” says Mary Youngbar, a lifelong Seaside resident. “It’s a poor-person’s town.”

Rubio doesn’t buy it.

“The demographics in Seaside are changing,” Rubio says. “Yeah, we’re a working-class town and I’m proud of that. But more and more people are moving in from Pacific Grove, Carmel and Monterey, and they’re used to certain types of retail options. That’s what this project is about: giving people a choice.”

One choice the commercial center isn’t giving Seaside residents is any new housing. The idea of mixing retail and housing is being pushed, here and elsewhere, as a way to provide much-needed housing, and also to bring vitality to downtown areas.

Seaside did not give much consideration to these “New Urbanism” concepts.

Orosco says adding residential units on top of the commercial ones isn’t economically feasible to the company, primarily because of construction costs which are already estimated at $14 million. Limited parking spots would also be a problem, he added.

If the commercial center proves profitable, that would send a loud-and-clear message to future investors, Don Orosco says.

“The retail development industry is basically a show-me type of industry,” says Orosco, whose company also built the Stone Creek Village shopping plaza, just up Fremont in Del Rey Oaks. “Until the City starts showing commitment to these kinds of projects, quite frankly, the development community will tend to hang back. What’s happening now, I believe, is the City is showing exactly that commitment.”

This development’s ultimate success weighs heavily on the future of Seaside, which for three straight years has been running a $1.5 million deficit—about 9 percent of its $16 million budget.

Rubio says success here might mean more development projects along Broadway Avenue, including widening the sidewalks and reducing a lane or two of traffic to make it more pedestrian-friendly. Higher rents along the corridor is also a goal.

For his part, pawn shop owner Randazzo doesn’t believe hype from city officials. “We’ve been hearing promises come out of their mouths for 20 years,” he says.

While Randazzo isn’t in favor of what’s going to be built at the corner of Fremont Boulevard and Broadway Avenue, he admits some sense of relief that something is finally happening there.

“I don’t blame them for developing it,” Randazzo says. “Right now it’s just a bare-ass corner.”