The plaza, located in Palo Alto's Duveneck/St. Francis neighborhood, has been largely deserted for the past seven years, since the Albertsons grocery store closed. It took years for the developer, Sand Hill Property Company, to reach an agreement with neighborhood residents on a plan to renovate the plaza on Channing Avenue. The plan that the city approved last fall allows Sand Hill to build 10 homes at the plaza in addition to a new grocery store.
Sand Hill was also required to rehabilitate two historical buildings — built by developer Joseph Eichler — one of which was to be refurbished at its present site while the other would be disassembled, refurbished and reassembled at a different location in the plaza.
That plan, however, fell apart in September when the developer's contractor completely demolished the building that it was supposed to disassemble. The demolition, performed without a city permit, threw the project into turmoil and left the council with a quandary: how to penalize the developer without forcing the neighborhood to suffer through years of construction delays.
After much debate, council members agreed on Monday that while the developer should pay for its error, the project should move along for the sake of the community. The council voted 6-3, with Karen Holman, Gail Price and Greg Schmid dissenting, to allow Sand Hill to proceed.
"Our citizens who live in that neighborhood are suffering right now," Councilman Larry Klein said. "It's not fun to have a big project in your neighborhood."
Developer John Tze of Sand Hill Property Company apologized to the council for the unauthorized demolition, which he said was performed without his permission, and for breaking his promise to the community. The construction company hired to work on the rehabilitation demolished the building on its own initiative after discovering the building was "not repairable," according to the company's historical consultant, J. Gordon Turnbull.
"The demolition wasn't authorized by me or by the city but occurred because of the failure of my organization," Tze said. "I'm sorry it happened, and I take full responsibility."
Most council members agreed that, while there should be a penalty, the project shouldn't be held up any longer than necessary. Members asked staff to return at a later date with a proposed fine, an amount that would consider the economic benefits of building the new houses at Edgewood Plaza. In the meantime, Sand Hill will be allowed to proceed with the construction.
Before the council's vote, some residents urged that the project be allowed to move along, while others called for the council to hold the developer accountable. Area resident Robert Smith said he doesn't consider the destroyed building "historical."
"I think it's an example of '50s commercial architecture — strip malls and so on," Smith said. "It was a failure."
Jeff Lewinsky, who also lives near Edgewood Plaza, called the demolition a "breakdown of the PC process in Palo Alto," referring to the controversial "planned community" zoning that allows developers to exceed city regulations in exchange for negotiated "public benefits." In the case of Edgewood Plaza, the main public benefits are a new grocery store and rehabilitation of historical buildings.
"This would be the most egregious example yet for a PC being violated," Lewinsky said.
By law, the city can issue a fine of about $10,000 for the illegal demolition, though the fine can be raised significantly for a demolition of a historic structure. The council agreed that $10,000 falls far short of what the city should ask for. Sand Hill will also be required now to perform a supplemental Environmental Impact Report to account for the changing nature of the project.
Price opposed the motion, favoring more severe consequences for Sand Hill.
The council's decision means that construction of the Edgewood Plaza grocery store remains on track. Fresh Market, a North Carolina-based chain, plans to open its first West Coast store at Edgewood Plaza in May.