FILL-UP—This busy Arco station at the corner of Tierra Rejada and Madera roads is planning for $1 million in improvements. WENDY PIERRO/Acorn Newspapers Demolition and construction work has commenced on the new Target store going in at the former Kmart site, long considered a blighted corner on the western end of town.

The store, at the northwest corner of Madera and Tierra Rejada roads, is scheduled for an October 2010 opening.

The Arco gas station at the intersection may have a makeover by then, too, thanks to an interest-free loan from the city.

During its Nov. 16 meeting, the City Council approved entering into a loan agreement with the owner of the busy station to help finance a slew of public improvements.

The owner of the Arco, Leonard Elbaum, wants to renovate the dated 1980s-era fuel station and requested the city grant him a $500,000 no-interest loan from the Community Development Agency to fund improvements he said are necessary because of road construction related to the new Target.

Target is required to widen the west side of Madera Road from Strathearn Place south to the Target driveway. The corporation must also widen the section from the Target driveway south to the Arco station property line; however, this phase of work cannot be completed until the gas station frontage is constructed.

While property owners typically bear the cost of street improvements along their frontages, the council agreed to Elbaum’s request because of the community benefit.

Councilmember Glen Becerra said the owner of the Arco isn’t required to redevelop the site and could continue operating as is, leaving the city with a new Target but a “troubled” intersection.

“We are very appreciative that we have a willing landowner who wants to improve their site,” Becerra said.

Chuck Cohen, attorney for the Arco owner, estimated the busy station would be closed for at least six months during construction and even with the loan, the onsite work would still cost Elbaum about $1 million.

“The only way we can get that full widening done, which is very much a community benefit, would be if the Arco station was to come in with a proposal for redevelopment,” City Manager Mike Sedell said. “They can’t make that cost-effective to do unless they have this loan from the CDA.”

The city has not yet agreed to the terms of the loan, though Elbaum’s lawyer proposed a term of 10 years with repayment to begin in year six and the loan paid off in five equal annual payments.

Mayor Pro Tem Barbra Williamson said it’s important for residents to understand that “the city is not in the banking business” and doesn’t give out loans to just anybody.