But neighbors think McNellis' additions from last year's Palo Alto City Council study session are not enough to make up for the feeling that their neighborhood shopping center is being taken away.
Both sides will have a chance to make their points Thursday before the Palo Alto Planning Commission, in the latest round of debate over the fate of the half-century-old shopping center.
"The city is decrying our loss of retail, and here we have a 4-acre retail site that we're thinking of giving away to market-rate housing," said Sheri Furman, chair of the Midtown Residents Association and member of Friends of Alma Plaza, a neighbor group that has circulated a petition calling for the plaza to remain "primarily retail."
Furman called the teachers' housing and the community room -- which the apartment dwellers and local groups could use -- a "smoke screen" for the lucrative subdivision of 39 single-family homes behind it. She said the below-market-rate residences should also be single-family homes instead of segregated into apartments.
"Why wouldn't teachers want to live in houses? Why would teachers want to live in two-bedroom apartments?" she said.
McNellis came forward with plans for the 4.2-acre neighborhood center on Alma Street near East Meadow Drive a year ago. He proposed the same number of homes but 5,000 square feet less retail space.
McNellis calls the apartments his "charitable contribution to the city," because it would cost him about $3.5 million in in-lieu fees to the city if he decided not to build the required affordable housing, but will cost $6.5 million to construct the apartments.
Palo Alto Unified School District teachers would have priority to rent the 14 apartments, two of which are two-bedroom and the rest are one-bedroom, he said.
Despite the "public benefits" of the community room, apartments for teachers and park, some neighbors think McNellis' plan is essentially the same as before.
"It doesn't look as though it's changed very much," said Len Filppu, a member of Friends of Alma Plaza who lives two blocks away from it.
"This area is just booming with new families and with children, and it's really a good area for a decent kind of retail environment," he said.
McNellis plans to build 24,000 square feet of retail with a two-story, mixed-use building fronting Alma Street and a small, separate building behind it.
The mixed-use building would have a small grocery store, a coffee shop, a dry cleaner, underground parking and apartments.
The entire property has been near-vacant since Albertson's closed its grocery store two years ago. The few retail stores in the center have gradually followed suit, closing or moving to another part of town.
To supports its cause, Friends of Alma Plaza started a petition last year to keep Alma Plaza as "primarily retail."
Petition-starter Marilyn Keller said the group has collected almost 700 signatures. Neighbors who have signed the petition say they'd like to see a "quality, affordable" grocery store, along with a post office, an ATM, a coffee shop, a dry cleaner, a bakery and a sewing service.
McNellis has been talking with small, Italian grocers to fill the 10,000 to 18,000-square-foot retail space, including Sigona's Farmers Market, Zanotto's Downtown Market and Bianchini's Market.
"At this point, I don't know who the market is going to be," he said.
Furman said that Midtown residents, when polled, favored the idea of an Asian grocery store over another type of market.
If the Planning Commission were to approve the proposal Thursday, both the commission and the city's Architectural Review Board would then review the plans more in-depth before the proposal would appear before the council.
But if the Planning Commission does not give its approval, it will automatically go before the council in April, according to city planning staff.