Edgewood Plaza builder loses $94,200, wins green light

After inadvertently destroying a physically decrepit but symbolically precious piece of Palo Alto history, the developer behind Edgewood Plaza will have to pay a fine of $94,200, the City Council ruled Monday night.

With a 7-1 vote, the City Council on Monday gave the developer, Sand Hill Property Company, the final green light to complete the long-awaited construction project at Edgewood Plaza. The development at 2080 Channing Ave. includes a renovated grocery store, now occupied by Fresh Market, two commercial Eichler-style buildings and 10 homes. Sand Hill will also have to pay for an illegal demolition, though the amount will be far smaller than two council members deemed appropriate.

The council had initially approved the proposed “planned community” zone change to enable the development in March of 2012. As part of the agreement, which granted Sand Hill the right to exceed zoning regulations, the developer was required to provide a series of public benefits. These include the grocery store, a small park and preservation of the two smaller commercial buildings, which were designed by A. Quincy Jones and constructed by iconic developer Joseph Eicher.

As part of the council’s approval, one of the buildings was to be rehabilitated at the site. The other was to be taken apart and reassembled at a different location. When the council learned in September 2012 that Sand Hill’s contractors had demolished the building they were supposed to disassemble, members weren’t happy. Councilman Marc Berman said he was “heated” when he first heard about the demolition — so heated that would’ve signed off on a $1 million or a $2 million fine. He’s had “six months to come down off that point,” Berman said.

His colleagues seemed to reach the same level of forgiveness. With Mayor Greg Scharff absent and Councilwoman Karen Holman dissenting, the council granted Sand Hill a fresh approval, though instead of reassembling the commercial building the developer will have to reconstruct it out of new materials. Sand Hill will also be required to install replicas of original wood window frames and contribute $94,200 to the city for a cause to be determined.

The decision largely adhered to recommendations from the city’s Historic Resources Board and Planning and Transportation Commission. Both advisory bodies agreed that the demolition, while highly regrettable, shouldn’t impede the long-awaited reconstruction of the long dilapidated plaza, which once housed a Lucky’s supermarket and which had fallen into disrepair in recent years.

It helped that that the city’s historical consultant had assessed the building as badly damaged before the demolition. In fact, the city’s decision to retain it had less to do with its condition or appearance and more to do with its style and character. The shopping plaza, which was constructed in the mid-1950s, is a very rare example of an Eichler-style commercial building. The modern style, common in many areas of Palo Alto, is characterized by post-and-beam construction, sliding doors and large windows.

The big dilemma for the council had to do with deterrence. Developers of “planned community” projects haven’t always been scrupulous about providing the agreed-upon public benefits (in several cases, for example, plazas that were supposed to be public were appropriated by nearby businesses). In this case, Sand Hill didn’t simply skimp on a public benefit, it bulldozed it. What’s to stop the next developer to do the same thing, council members asked?

Holman argued that it would take more than $94,200. Given Palo Alto’s astronomical land values, she said, future developers could just look at such fines as “the cost of doing business in this community.”

“The demolition of the building, for whatever reason, was a violation of CEQA (California Environmental Quality Act), the PC zone ordinance, the project approvals and the provision of public benefits,” Holman said. “That’s a lot of violations to have happened.”

Holman also argued that Eichler was for Palo Alto and surrounding areas a “real engineer of social change,” a developer who had built affordable homes middle-class Americans and who allowed no discrimination on the basis of race, color or creed at his homes during a period of tense integration. She argued that the fine for demolishing an Eichler commercial building should be about $170,000, roughly half of the estimated increase in Edgewood Plaza’s value. Councilman Greg Schmid agreed and reasoned that replacing a historical resources isn’t the same thing as retaining it.

“I think sharing the increased valuation between the developer and the city makes sense,” Schmid sense.

After the rest of the council rejected the larger fine, Schmid joined the majority in approving the staff-recommended fine of $94,200, which is about 10 percent of the total construction cost. The Planning and Transportation Commission had also recommended a $94,200 fine, which was at the high end of the penalties initially proposed by staff.

Berman stressed that the penalty in this case should in no way be seen as a precedent for future fines.

“I like it being an X factor,” Berman said of the fine. “If another developer does this, I’ll be happy to sign off on a payment four times this amount.”

The developer chalked up the demolition to an unfortunate misunderstanding. John Tze of Sand Hill said the company’s contractor heard the assessment from the consultant about the building’s poor condition and proceeded to knock it down of his own accord.

“We had no intent to disregard a known public benefit,” Tze said. “There was no advantage to us for demolishing the building.”

Tze apologized for the act.

“We made a mistake and I take responsibility,” Tze said.

The council didn’t make any decisions Monday about how the money would be spent. The two most popular proposals that were kicked around by the planning commission last month involved spending it on a historical-rehabilitation project elsewhere or building a sidewalk on one side of West Bayshore Road, between the plaza and East Palo Alto. The council agreed to save that discussion for a future meeting within 90 days.

In the mean time, neighbors have a reason to celebrate. After years of negotiations and revisions to the development plans and the unexpected demolition, the plaza is finally on its way to getting completed. Gail Olsen, who has lived near Edgewood Plaza for 46 years, said she and her neighbors are excited about seeing the site’s revitalization.

“After years of living around the corner from this blighted shopping center, it was a thrill the day that Fresh Market opened,” Olsen said.

“I’m really looking forward to seeing the rest of the shops and services that will go in there,” she added.

Councilman Larry Klein, who made the motion to fine Sand Hill $94,200, echoed her enthusiasm.

“It’s certainly a big improvement over the derelict shopping center we had there for many years,” Klein said. “I look forward to the rest of it being complete.”