A city bid to retain sales tax revenue on an El Camino Real motel fell through last week when a private school announced it had bought the site.
The Keys School purchased the property currently occupied by the Mayflower Motel and will open a new middle-school campus there by 2009, school officials said.
By an earlier planning quirk, the El Camino site was zoned for residential housing until this spring. But the City Council voted to rezone it in April to retain future commercial uses and resulting sales-tax revenue from the site.
It is unlikely the school will provide such revenue, Assistant Director for Planning Curtis Williams said.
Yet the city won't lose much money from the motel's departure because it wasn't a thriving business, he said.
"It's just not a well kept-up motel with good business," he said, adding it is among the lowest sales-tax generating motels in the city.
The new, second campus set to open in 2009 will nearly double Keys School's size.
Current enrollment at its single Middlefield Road site is 174 students in kindergarten through eighth grades, according to its Web site.
But the new middle school will accommodate up to 160 students, according to a school press release. The Middlefield site will then be used only for elementary and enrollment in kindergarten through fourth grades could rise to about 165, according to Barbara Rosston, chair of Keys School's Board of Trustees.
About 30 percent of students are from Palo Alto, she said.
Mayflower Motel owners Charles and Grace Chien had been thinking about selling their 37-room motel for several years when the school approached them with an offer last spring, their daughter, Diana Chien, said.
"Keys School gave us a very good offer. My father said, 'Maybe it's time to move on,'" she said.
The motel's site at 3981 El Camino Real was valued at about $1.73 million in June, according to the Santa Clara County Assessor's Office, but the actual purchase price was not disclosed.
The school would have had to apply for a conditional use permit to build on the site under the earlier zoning but need not under the new "service commercial" designation.
Such permits are not usually denied but can contain restrictions on parking or operational hours, according to Planning and Community Environment Director Steve Emslie.
The zoning change made the site more attractive but wasn't a motivation to move to the site, Rosston said.
"It was favorable to us but that wasn't the reason that it was brought to our attention," she said.
The school contacted the Chiens shortly after the zoning change, Chien said.
"As soon as the zoning finished Keys School came and talked to my father. They said, 'If you build the school, you're doing the community a service,'" she said.
The Chiens did not even put the motel on the market -- the school had heard of the Chiens' earlier plan to sell, which her father cancelled for sentimental reasons, having owned the property since 1978, she said.
But the school likely figured the zoning change was a good opportunity to make a new offer, she said.
The school has planned a new campus for five years in response to increasing enrollment, Rosston said.
"Demand has been growing for a while," perhaps because Keys is one of the few non-parochial private schools on the Peninsula, drawing students from as far as San Jose and San Mateo, she said.
The school will retain its campus at 2890 Middlefield Road, which is under long-term lease from the First Christian Church, she said.
The board looked at several locations but liked the El Camino site because it is close to the current site and will allow the elementary and middle schools to interact often, she said.
Construction on the middle school will begin next summer, the school's announcement states.