“All of those things together have added up to a huge increase,” said Fred Meyer spokesperson Melinda Merrill.

She said costs went up $8 million from initial estimates of $16 to $17 million three years ago.

Fred Meyer made its decision solely on construction costs — not the planning process or additional costs associated with the 29 conditions put on its permit.

“It’s not the process and the conditions,” Merrill said. “It’s the cost of building a new store.”

Fred Meyer proposed building the Homer store on CIRI land near the northeast corner of Main Street and the Sterling Highway, near the Petro Express gas station, in the Town Center development area.

Under an agreement with CIRI, Fred Meyer would build new roads and install utilities for its store and lease a six-acre lot. The new infrastructure would make it possible for CIRI and the city of Homer to further develop the Town Center, such as a new town hall.

Last month, a group of Homer citizens challenged the Fred Meyer permit. Acting as the Board of Adjustment, the Homer City Council was to consider that appeal, and could grant or deny the appeal or send the conditional use permit back to the planning commission.

The appellants have asked the Board of Adjustment to void the conditional permit, said Valerie Connor, a spokesperson for the group. In a letter sent by their lawyer, Peter Van Tuyn of Anchorage, to the city, Van Tuyn wrote that because Fred Meyer does not plan to build, it would be an academic exercise to pursue the appeal.

“This recent development takes away any case or controversy related to the appealed permit, and has made it unnecessary for the Board of Adjustment to expend its own or the appellants’ efforts on this appeal,” Van Tuyn wrote.

Van Tuyn argued that the permit would be valid only if sometime in the near future Fred Meyer built the exact same store on the same property.

Homer’s planning code doesn’t mention specific time limits for conditional use permits, said city planner Beth McKibben. A CUP lays out specific things a developer has to do to plan for construction, such as develop a traffic plan or get state and federal permits. A zoning permit allows a developer to start construction. A zoning permit is usually granted for one or two years, but can be extended. Fred Meyer wasn’t at the zoning permit stage in its construction process. It hasn’t withdrawn its CUP, McKibben said.

Fred Meyer’s CUP application specified a construction start in the spring 2007 and completion by fall 2007. Merrill said construction definitely won’t happen next year.

In a letter sent last Tuesday to Homer City Manager Walt Wrede, CIRI asked that the appeal go forward. Greg Jones, vice president of business development for CIRI, wrote that the appeal leaves unanswered questions about the city’s Town Center plan and Fred Meyer’s efforts to develop the first large building to fall under the city’s large-retail and wholesale zoning regulations.

“By filing that appeal, they’ve created a cloud,” Jones said. “What I’m saying is I want that cloud resolved.”

Merrill said Fred Meyer agreed with Jones.

“I would encourage the appeal to get resolved. That would allow you guys to move forward on the Town Center concept,” she said.

Connor emphasized that her group’s appeal isn’t about Fred Meyer — it is about upholding city standards, including the large-retail and wholesale code, the community design manual and the Town Center plan.

“We also feel like we need to follow through to the next step and see if the city is willing to uphold the standards,” Connor said. “The fact that Fred Meyer has stepped back doesn’t really answer our questions. In that light, we’re not quite finished yet. We need a few more answers.”

Jones proposed that if the appeal is denied and the permit upheld, the permit goes to CIRI. Part of the permit includes a plat for new roads and subdivided lots, but it also is specific to the Fred Meyer design, even down to details like construction materials.

Wrede said he didn’t know if such a specific conditional use permit could be transferred.

If the conditional use permit is upheld, that gives CIRI some bargaining power, Jones said.

“If I’ve got a permit in hand, I can go back to my board of directors, back to city hall and say, ‘What can I do to offer Fred Meyer an incentive to come back to Homer?’”

He believed the city’s planning process contributed to Fred Meyer’s decision not to build, Jones said. He said during the three years it took for Fred Meyer to get to the point where it had a permit, construction costs went up 50 percent.

Part of that delay was caused by a change in site plans, Jones conceded. Before Fred Meyer worked out a deal with CIRI, it proposed building its store at the corner of Lake Street and the Sterling Highway on land owned by the Waddell family. In September 2005, Fred Meyer announced it wouldn’t built on that site. In December 2005, it announced its deal to build on the CIRI site. Fred Meyer applied for a CUP in late March, and it came before the planning commission in June.

“It still took 14, 15 months. If the city of Homer had been able to accommodate a little faster, then the escalation would not have been as great. It’s simple cause and effect,” Jones said. “Time is money. Sure the cost was a deadly blow. But time is what caused the cost.”

Connor said the time spent on developing new retail standards and considering Fred Meyer’s application also resulted in a design closer to local standards.

“The community was asking for something different than the caliber they (Fred Meyer) had in other places,” she said. “This was about what the community of Homer wanted … That takes time to figure all these things out.”

CIRI and the city hope that the Town Center plan can go through, both Jones and Wrede said. Jones has talked about the Town Center as being a three-legged stool, with open space, a town hall or other civic building and a retail complex the three “legs” of the stool.

“We would like to find either a larger tenant or anchor,” Jones said. “One thing that would cause us to move forward with the city is a town hall.”

“The city for its part wants to move forward with city hall,” Wrede said. “This may slow us down a little bit, but I don’t think it’s the death knell by any means.”

Merrill said if construction costs improve, Fred Meyer might reconsider building.

“We’ll keep watching it. Things will probably change eventually,” she said.

Fred Meyer appreciates its supporters in Homer, Merrill said.