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San Leandro’s Bayfair Mall is a lot more than a shopping center. The 100-store complex is the city’s biggest employer and largest source of sales-tax revenue. It is also reportedly one-quarter empty at the moment, which explains why the city has been taking an active role in its redevelopment.

Located at East 14th Street and Fairmont Boulevard, the mall has just seen a complete renovation of the Wards department store there, which anchors the mall. The mall’s owner, Delaware-based Bay Fair Limited Liability Corp., is making other improvements.

Topping it off, a 16-screen, 58,000-sf Century Theatres cineplex will be completed next spring, and Alameda County has also secured $2 million in federal funding to improve linkage between the nearby Bayfair Bay Area Rapid Transit train station and the mall.

The work is in large part thanks to a $7 million, 15-year commitment by the city of San Leandro that was spurred by the 1994 near-loss of Macy’s as the mall’s other anchor tenant. San Leandro contributed $3 million to persuade Macy’s to remain at Bayfair, and is paying the mall’s Chicago-based managing partner Heitman Retail Properties $4 million for current and future upgrades.

Macy’s used the $3 million for upgrades to its Bayfair store, including new carpeting and reconfiguration of its women’s apparel section. As part of the deal, it signed a 10-year operating covenant. The commitment spurred Wards to spend $3 million of its own funds on an exterior and interior renovation.

Alas, according to recent reports, the mall remains 25% empty. Though city officials are optimistic that the recent improvements will tighten vacancy, time is running out. The 10-year operating covenant with Macy’s ends in 2004. The city’s payout to Heitman ends in 2013.

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