SOUTH SAN FRANCISCO (Map, News) - Home Depot, which recently shelved plans to construct its first store in San Francisco, has also canceled plans for a new location in South San Francisco after more than two years of negotiations with city officials.

The store, planned at the former Levitz furniture store site on Dubuque Avenue, east of U.S. Highway 101, was approved by South City in 2006 and would have brought the city $400,000 in sales-tax revenue.

However, after working on the project with the city for two years, the nation’s largest home-improvement retailer pulled the plug.

“This decision is based on many factors, including the continued risks and costs associated with the project, our timetable and our focus to reinvest in our existing stores,” said Home Depot spokeswoman Kathryn Gallagher.

Last week, Home Depot ended a seven-year effort to open its first San Francisco location on the border of the Bayview and Bernal Heights neighborhoods, blaming falling sales and the state of the economy.

The 30-year-old hardware company announced that last year’s sales fell almost 7 percent and a further 5 percent decrease is expected this year.

South City’s proposed 101,171-square-foot Home Depot would have been located adjacent to Lowe’s, a competing home-improvement store that opened last month.

Assistant City Manager Marty Van Duyn said Home Depot’s decision did not have anything to do with Lowe’s proximity. He said the city is not upset about losing a home-improvement store, but regrets losing the revenue it would have brought.

“Because we have Lowe’s, our home-improvement needs are being met,” Van Duyn said. “Home Depot is generally a fairly good sales-tax generator, so it was important to the city. The sites they looked at were targeted for a more regional customer, so we’ll miss that because that would bring business to our community.”

Although Lowe’s representatives did not comment on the benefits of not having a competing store next door, Van Duyn said he hoped Home Depot’s decision turns positive for Lowe’s.

There are three Home Depot stores in the northern Peninsula, including one in Daly City’s Westlake and two in Colma.

“We would have loved to have been a part of South San Francisco and hope to be someday,” Gallagher said.

Meanwhile, the chain is looking to sublease the site on Dubuque Avenue, which would first have to be approved by the city.

The only new Home Depot in the Bay Area will open in San Jose on Thursday.

svasilyuk@examiner.com