The developer of a long-delayed mixed-use project on the site of the former JJ&F Market is asking the city to approve his son as the owner-operator of the required replacement grocery store and allow construction to begin.
The Palo Alto City Council will decide Monday night whether that arrangement meets the requirements of the special deal it struck with the developer in 2009, when the council approved a much larger development than the zoning allows in exchange for the preservation of the popular JJ&F or a successor neighborhood market.
It is yet another example of the problems that arise under Palo Alto's so-called planned community (PC) zoning process, which grants zoning exceptions in exchange for "public benefits."
The developer, Patrick Smailey, received city approval for the project in exchange for agreeing to include an 8,000-square-foot space for JJ&F. The bulk of the site, however, will be 40,000 square feet of commercial offices, plus eight units of "affordable" housing. The space for JJ&F was guaranteed through a signed 30-year, subsidized lease agreement between Smailey and the Garcia family, who had owned the market for more than six decades.
Smailey was able to win council approval of the project by leveraging the loyalties of long-time College Terrace customers of JJ&F for the well-liked Garcia family. Without their support, the project would not have won approval.
The development agreement stipulated that if the grocery tenant was other than the Garcias, the operator would be subject to the city's approval, which "shall not be withheld unless the City reasonably finds that such proposed grocery tenant is not likely to be comparable in quality of products and service as JJ&F as it existed and operated on December 7, 2009."
As some had feared at the time, within a year of the project being approved, the Garcia family decided to sell the market to a Redwood City grocer, who struggled to keep the deteriorating store viable during the last two years. The market closed for good last September in preparation for the demolition of the site. With the Garcias and venerable JJ&F out of the picture, the trade-off of more commercial development for an unknown market now doesn't seem nearly as appealing.
Having finally obtained financing and demolished the site, Smailey's company is now seeking a building permit. But instead of finding an established grocery operator to run the market, Smailey's son James has formed a company, J&A Family Market, which proposes to operate the grocery store under a lease with his father substantially the same as the lease signed with the Garcias.
The Smaileys refused to divulge to the city detailed information on the market's financial and business plans, arguing it is proprietary. So the city engaged a consultant with grocery industry experience to confidentially review detailed information from the developer. Based on its review, the consultant has told the city it believes the plan is as solid as any small grocery store plan can be in today's grocery environment.
This process has inappropriately carved out the public and the city staff from any meaningful review of the ability of the proposed market to actually meet the requirements imposed as part of the project's approval. It delegates analysis of key data, such as the adequacy of the team James Smailey will rely on to operate the market and the financial capabilities of the operation, to an industry consultant.
That is not good enough.
Smailey opted for and assumed the risks associated with offering a public benefit for the right to build a much larger office project than allowed under the zoning. Indeed, the public will be stunned when they see the size of this building rise from the site, and the council's decision to grant this special zoning will be roundly second-guessed.
While the city can't renege on the basic development agreement, it can insist on public review of the details needed to determine if the proposed market will indeed be viable and comparable to JJ&F.
Once a building permit is issued the city will lose what little leverage it has, as there is no remedy if the market fails other than fines against the developer for code violations.
We have no choice but to hold our nose over this already approved PC project, but we should insist on a real public review of the promised and required grocery operation. The idea of allowing a consultant with no accountability to the public to conduct the city's review is a bad precedent and should be rejected.