Fry's to be rezoned out of Palo Alto?? Palo Alto Issues, posted by Douglas Moran, a resident of the Barron Park neighborhood, on Jul 21, 2006 at 11:04 pm Douglas Moran is a member (registered user) of Palo Alto Online
Be prepared to say "Goodbye" to Fry's if the City Council approves the City Manager's recommendation for rezoning that area (technical name: Pedestrian/Transit Oriented Development Combining District, or P/TOD).
Under the P/TOD zoning, the absolute maximum space allowed for retail on the site would be less than half what Fry's is seeking (87,500 sqft vs 190,000 sqft), with staff estimating the probable amount to be 30-45,000 sqft (16-24% of Fry's target). The calculated maximum is based on retail that requires less parking than Fry's and does not include practical considerations such configurations of buildings.
My sources: The City's report and testimony by the property owner (see Web Link and see the intro and the section on Fry's)
Question: Hasn't the City said that it is important to retain Fry's, both for sales tax revenue and as a service to residents and local businesses?
Answer 1: The City is committed IN PRINCIPLE. However, practice is a different matter. When they talk of the desirability of using the current Fry's site for housing, and you ask where they anticipate relocating Fry's to, they have no concrete answer, just the hope that something big enough will turn up or that Fry's will accept a small store. Hope is not a strategy.
Answer 2: Figuring out how to retain Fry's was a "top priority" item when City Manager Frank Benest arrived over 6 years ago. Currently Stanford Shopping Center is taking precedence over retaining Fry's. City Council attempted to create an high-level Economic Development position on staff to help move things along, but Benest rejected it. For anything that has been intentionally neglected for this long, it is impossible to call it a "top priority" or to believe that it will not continue to be ignored.
Answer 3: The claim is bureaucratic/political spin: The information from normally knowledgeable sources is so varied that my assumption is that those sources interpreted euphemisms for non-progress as reporting actual activity.
Question: How can the City be so clueless on economic development?
Answer: Practice, practice, practice. The City has a long history of regarding University Avenue and Stanford Shopping Center as the only retail areas worthy of attention. Neglect of other retail areas included not only allowing sites to be converted to (more profitable) housing, but forcing that conversion. For example, the old Sun site at San Antonio and 101 would be a prime site for a big box retailer or an auto mall (easy freeway access, large acreage, nearby shopping destinations,...). Hard to imagine any city other than Palo Alto deciding to convert such a site to housing.
Note: Multiple sources report that the owner of Fry's has not responded to the City's attempt to contact him. Speculation falls into two categories: (1) he is so fed up with past City conduct that he sees no point in talking, and (2) the City's current position is an obvious non-starter, so he isn't wasting his time.
Status: Council will be discussing the PTOD on Monday 7/24. They listened to public testimony last Monday and will NOT be accepting any more testimony at the meeting. However, you can e-mail comments to them at City.Council@CityOfPaloAlto.org (capitalization optional). I got no sense which way Council is leaning on this matter.
Posted by Bill Leikam, a resident of Another Palo Alto neighborhood, on Jul 22, 2006 at 12:42 pm
I recently wrote to the City Council and received the following from John Barton
Thank you for your message.
I share your concern about Fry's, but the proposed PTOD zone will have positive effects for Frys. The Fry's site is zoned RM 30 (housing) and thus their use is non-conforming. A previous council required that Fry's come into conformance by 2019 - in short we would lose Fry's then to multi-family housing. However under the PTOD overlay, Fry's would be allowed to stay and could be as large as 190,000 SF. Thus the PTOD is good for Fry's and the revenue you wrote about.
Please contact me again if you have further questions on this or any other topic.
Posted by Douglas Moran, a resident of the Barron Park neighborhood, on Jul 22, 2006 at 4:49 pm Douglas Moran is a member (registered user) of Palo Alto Online
Clarification: 190,000 sqft is in two different ways in the staff report and this can cause confusion. It was provided in testimony by staff as a rough guestimate of the size Fry's was looking for (Attachment E, page 29, line 34, Web Link ). This passage also shows that staff and the property owner do not know Fry's requirements.
The other use of this number was as a first approximation (labelled "theoritical" of what would be allowed on the site (Attachment D, page 11, Web Link ). The 87,500 sqft max comes from the next page of the staff report where it is presented as incorporated adjustments that professional experience indicated were needed (for example, having streets within the 12-acre property). Recognize that the allowances for retail are dependent on the site being redeveloped as "mixed use", which creates the additional complexities and constraints. I cited the practical number and ignored the "theoretical" number in an attempt to avoid creating confusion.
Aside: trying to tease this information out of the staff reports and the meeting presentations is very frustrating. Should Council be deciding such a critical issue with such incomplete and potentially confusing info?
87,500 sq. ft. is larger than the the current 60,000 sq ft Fry's footprint, but not by much for such a successful store that has much larger locations. Fry's may also have to accept that the square footage will not be contiguous.
2. No Place to Go During Fry's Site Redevelopment
Does Fry's stay open during the PTOD redevelopment of its current site?
Can a 60,000 sq. ft. thriving business successfully negotiate around development on a site that will only allow 87,500 sq ft?
Is there a temporary facility in Palo Alto to hold Fry's in the interim? If so, will Fry's take it?
Will Fry's long-standing Palo Alto presence deter them from moving to a new, more desirable ready-made site in another community during this interim?
In all cases, I believe the answer is "Probably not."
3. PTOD Mixed-Use Site Is Not Compatible With Fry's
Even at a "mere" 60,000 sq. ft., one of the smallest of all its locations, Fry's is a big box store with high ceilings, an open feel, and a large parking requirement for over 12 hours a day.
In a potential Fry's big-box mixed-used scenario, where will the residential parking go? In a multi-story outside garage, which many retailers don't like and which blocks views? Or in an underground parking structure from which upper-floor residents must navigate through a shopping-center-like maze?
You can put residents above large stores in San Francisco and New York, but can you, and do you want, to do it here?
I think not.
4. What's Best For the Owner May Not Be Best for the Tenant
It is true as stated in the City Manager's Report, that Robert Wheatley, whose company owns the Fry's site, indicated a general acceptance toward PTOD at this location in his initial comments. (CMR:295:06, Attachment P, pp. 21)
This is neither surprising nor necessarily encouraging; property owners and developers love options, and PTOD includes a broad set of possibilities.
However, in follow-up questions from Planning & Transportation Commission Chair Patrick Burt and Vice Chair Karen Holman, Mr. Wheatley stated that the retail FAR was probably "not adequate" to meet Fry's needs (pp. 22), and then corrected himself to say "there was enough for Fry's to be in there" but it would require "a creative approach (pp.29-30)."
These were carefully chosen words from a successful property owner, who is not necessarily invested in retaining Fry's, especially if housing and/or a broken-up retail in a mixed-use development can bring in a greater return.
It is this city's job to be invested in keeping Fry's and creating the proper zoning and incentives to do it.
So How Does Palo Alto Save Fry's? ...
... and beyond that, how do we build on the strength of this magnet and revenue stream to further enhance our flagging sales tax revenues.
A. Do Not Include Fry's In PTOD
For reasons stated above.
B. Rezone The Entire 12.6 Acre Fry's Site Exclusively For Commercial Retail
Yes, we would lose housing on this site, but we have plenty in the pipeline and retaining Fry's and expanding retail is a huge priority.
C. Plan for Redevelopment Of the Site As Single Story "Big, Medium, and Small Box Retail"
This would include the current 200,000 to 250,000 square feet of office, retail, and warehouse space on the entire 12.6 acre site that contains Fry's and other adjacent businesses.
D. Develop Half the Site While Fry's Stays Open
This would be the northern end (i.e., the one closer to Page Mill.
E. Move Fry's Into As Much of the Completed Half as It Wants
F. Complete the Redevelopment for the Side on the Original Fry's Site
G. Allow Fry's First Option For Additional Space On It's Former Side.
H. Bring In Other Retailers to Fill Space In This Magnet Site
In this way we can save Fry's, continue a vibrant business and sales tax stream during a transition, and provide not only for Fry's growing future in Palo Alto but also for other retail business in an area that is already a magnet and will be adjacent to all the amenities along Park Boulevard and over toward California Avenue.
Posted by Jeremy Loski, a resident of the Ventura neighborhood, on Jul 23, 2006 at 1:05 am
Why can't a 60,000 sq. ft. thriving business successfully negotiate around development on a site that "only" allows 87,500 sq ft? I think you and Doug Moran are reading too much into self-defined constraint, and not giving Fry's and the city the benefit of the doubt, or the benefit of working together.
Doug Moran says that the P/TOD will cause us to lose Fry's. How does he know? How can you or Moran be sure of Wheatly's intentions, or desires for the property? YOu're attributing negative intentions to Wheatly.
Why make developers the enemy, right out of the chute? Remember what happened to the Hyatt/Rickey's site because of constant harping on "concerns" like the ones your raising? It's this kind of paranoia that has led to Palo Alto's current retail woes.
What does defeat of the PTOD mean for the California Ave. Corridor, with planned streetscapes and upgrades? Doug Moran wants to throw a wrench into this at the last minute. This sure seems like last-minute thinking to me, and just the kind of thing that keeps commercial development from happening in this city.
Last, who says residents don't want living spaces above large stores, say, like Snatana Row? What's wrong with that? Just because you or Doug Moran don't like it doesn't mean that others wouldn't. This would be an ideal mixed use possibility for retail in the PTOD. I know many people who would love to do something like this. Why not? Why do you make the assumption that Palo Altan's don't want Santana Row-like projects?
In all, I think Doug Moran's FUD about Fry's is just that, FUD. Fry's will take care of itself. Does Doug Moran want Palo Alto to coddle Fry's as Fry's negotiates with neighboring municipalities for the best race-to-the-bottom deal?
Rather than muck up the works, Doug Moran should let the PTOD go forward and stay on top of the process as it unfolds. If adjustments need to be made, the city will make them. Give developers and citiizens who want something other than the same old boring Palo Alto status quo something to be excited about.
Posted by Art Liberman, a resident of the Barron Park neighborhood, on Jul 23, 2006 at 7:27 am
Much of the discussion about the possible PTOD blanket rezoning has centered about whether Fry's will or won't stay afterwards. And justifiably so, because this business attracts a technologically oriented clientele, provides significant revenue to the city and the site and surrounding area - including the auto dealership - is perhaps the last one where large retail outlets are able to flourish in our city.
The city staff, no matter how well intentioned, is just not in a position to make blanket statements about the size of viable retail outlets in the name of the retail marketplace. Finding out what Fry's would really do in case this rezoning goes ahead is vital, and is just common sense. Yet I've not seen anything directly from Fry's themselves about their interests and their needs for the future. The stakes are too high for the city council to just go ahead on Monday and adopt this sweeping proposal without it.
Posted by Jeremy Loski, a resident of the Ventura neighborhood, on Jul 23, 2006 at 1:35 pm
Oh, oh...here we go again - more last minute citizen activists looking for "guarantees", and issuing dire warnings of what change will mean.
So here we have a few people telling Fry's, the City Council, California Street merchants, developers, landlords, etc. and many local citizens who already approve the PTOD that they know better (adjacent neighborhood associations support the PTOD).
I hope our City Council takes to heart the memorys of Hyatt/Rickey's, Alma Plaza, and other boondoggles that were been tied up for years by NIMBY's and others who claimed to have all the answers.
Where are all those answers now, when our city is struggling to generate sustainiable commercial and housing development? This - and past, naive City Councils - is the crowd that helped lead us down the path to where we are now - i.e. seriously challenged.
I sure hope the City Council has learned its lesson, and takes this plan forward. The PTOD is designed for flexibility - let's keep it that way, and make the necessary adjustments as we go along. Anything else is pandering to the ill-adaptive meachanism called the Palo Alto "process".
Posted by Bob Gardiner, a resident of the Midtown neighborhood, on Jul 23, 2006 at 5:21 pm
I highly doubt Frys wants to leave Palo Alto. Look at the evidence, Best Buy moving into East Palo Alto, and now on the PA border in Mt. View. Palo Alto is a highly affluent area, with a huge appetite for consumer electronics. Frys will NOT find this demographics in the bay area, let alone anywhere else in the state.
As for mixed housing and retail, again look at the disaster which the planning commission and councel created with the same located at the island (el camino and east meadow). It is a traffic nightmare, and highly dangerous place to drive, let alone navigate without a car for protection. It is a disaster soon to happen.
I cannot imagine any Palo Altan wanting to create this dangerouos situation for anybody, Palo Alto residents or other.
Posted by pat, a resident of the Midtown neighborhood, on Jul 23, 2006 at 8:24 pm
I sent the following message to to the city counci:
I just read the front page article in today's (Sunday) PA Daily regarding Fry's. Apparently there is major disagreement as to whether the proposed "pedestrian and transit oriented development" zoning would force Fry's out or would entice Fry's to stay.
Just a couple of stupid questions:
1. I thought the city is in a desperate quest to keep businesses here. Why, then, is WSJ Properties given the "option" to keep up to 190,000 square feet of commercial development on the site? What if WSJ decides to convert all its property to housing? Even Curtis Williams, our new chief planning and transportation official, says there's no guarantee that WSJ won't build housing.
2. Why is the zoning proposal so incomprehensible that city council members have diametrically opposite views of what it means? Kishimoto wants to exclude Fry's from the zoning district because she's concerned about "creating some new incentives that might hurt Fry's." Beecham, on the other hand, thinks it sends a positive message to Fry's, though he waffles by saying, "It's not the right answer, but it's not the wrong answer." Now there's a definitive pronouncement!
3. How hard would it be to actually sit down and talk to the owners of Fry's and find out what will keep them in town -- as Doug Moran has suggested? And why wasn't that done a long time ago, before any proposals were written? If I were the owners, after reading today's Daily, I'd be looking for space in Mountain View.
Kishimoto says, "There's pretty unanimous consent that we want to keep Fry's in Palo Alto but there's been no discussion about how we might do that." Why on earth is so much time being wasted on zoning ordinances without that discussion -- with Fry's!! -- having taken place?
Posted by Jeremy Loski, a resident of the Ventura neighborhood, on Jul 23, 2006 at 10:00 pm
oh boy, the neighborhood know-it-alls are coming out in droves for this one, led by their fearless leader, Doug Moran.
It's an old story, really - castigating the City Council, landlords, developers, and city staff. It's also an old, tired mantra of obfuscation and delay.
for your reading pleasure, here's a reality check...
1) WSJ owns the property. Does the market rule, or not? Why do you want to take the right of a landowner away?
Do you REALLY believe that Fry's presence here will be decided by a P/TOD vote tomorrow? If you do (it sure seems like others do), I'd like to know what you're smoking.
Fry's lease isn't up for quite a while; the market for electronic goods - the kind of things that Fry's sells - is changing rapidly. Do you really think that Fry's will need even as much space as it CURRENTLY uses, as consumer electronics retail environments change? Maybe it will; maybe it won't. Let Fry's and the city figure that out in good time, when the need to REALLY sit down and negotiate appears.
You, Doug Moran, Fred Balin, and probably 10 others who are making all the noise are fixated on the wrong things. 10-1 the same crowd was crowing about this at City Hall last week.
Do you for a moment think that Fry's would lock itself in to that site NOW? C'mon, they're not that dumb, Pat. 10-12 years is a LONG time in the consumer electronics business.
Fry's could be having discussion about being rolled up (bought) for all you know. Do you think for a minute that Fry's CFO and Board wants committments outside 10 years on a lease in a city like Palo Alto? Think like Fry's, Pat - think loooooong term. You umight find yourself coming up with different answers.
2) People interpret many things differently. Why shouldn't they interpret the staff report differently? Every Council member brings different experience and perspectives to the Council. They aren't mindless drones - although one would never know it by reading the condescending tone of the posts from Doug Moran, you, and some others about their intentions and interpretations.
3) As to why the city hasn't been negotiating with Fry's recently, or even now, see what I wrote above.
Seriously, the criticisms I've seen of the P/TOD on this thread mostly show an egregious lack of understanding of Fry's business, and the flexibility needed to run that business. those criticisms also illustrate an assumed distrust of commercial property owners and business that THEY run. This is really ironic, because all the 'advice' is coming from people who aren't even in business, or large-scale landlords, etc.
You have an incomplete and inaccurate view of the variables involved. This is par for the course here - i.e. pick something (usually one or two things) that one doesn't like about a project, and then go raise holy hell about it. What has that wrought? And what has past City Councils listening and acting on all that blather in the past wrought? Stalemate.
Leave the P/TOD alone; it's DESIGNED for flexibility. About Fry's, if you and others want to keep Fry's or any other enterprise here, BUY STUFF HERE.
I've been around for a while, and usually the people I see come out and raise hell about this or that retail store or commercial environment going away are the same ones who DON'T shop in those places in the first place. They just like to talk, and act like they're protecting the holy grail every time our city tries to move forward.
If you don't believe me, just ask some retailers - including Fry's.
Posted by Fred Balin, a resident of the College Terrace neighborhood, on Jul 24, 2006 at 10:19 am
A few elaborations and follow-ups to earlier posts on this blog:
1. The question raised in the initial post is whether it is in the best economic interests of this city for a new proposed Pedestrian and Transit Oriented Development (PTOD) "overlay" zone to be applied to the 16-acre site that includes Fry's. Or in other words, would the PTOD overlay encourage the retention of Fry's in Palo Alto, or not?
2. The roots of PTOD are in Palo Alto's Comprehensive Plan, which calls for high-density housing within an approximate 2,000 foot distance of the city's train stations. Fry's is just outside that distance, and Staff has recommended it be added to the PTOD zone. My comments on this blog relate only to the suitability of PTOD on the Fry's site.
3. PTOD is an overlay or combining zoning. It would be made available to property owners as an option in addition to the current zoning on their land.
4. PTOD is part of the City's Zoning Ordinance Update, a protracted process designed to implement the goals of the Comprehensive Plan. The current Comprehensive Plan was completed ten years ago and aspects of the Zoning Ordinance Update such as PTOD have still not reached the council. If this part of the "ill-adaptive mechanism called the Palo Alto process" Mr. Loski refers to, then we have some common ground.
5. As slow as the PTOD concept has been to reach the public and the Council, it might still be on a back burner if the Council had not decided last Fall to remove housing as an option from one of the commercial zones in our city (i.e., the "GM," General Manufacturing district). This action was in response to a rising concern over a trend to convert commercial sites to residential and the impact that could have on sales taxes and other public benefits generating from those properties. In Palo Alto, practically every commercially-zoned site also has an alternate residential zoning (RM-30) that the owner can exercise. Two GM-zoned properties near the California Avenue train station, 195 Page Mill and 2785 Park Boulevard, had their plans for housing stopped through this council action. To allow these developers to continue their projects as well to avoid a potential lawsuit, PTOD became a priority. PTOD would put the housing option back into the GM-zoned properties near the California Avenue train station, while bringing in all the other interesting PTOD options of mixed use, pedestrian orientation, context-based design, etc. Thanks to this circumstance, PTOD appears to be one of the fastest-moving elements of the Zoning Ordinance Update to travel from conception to Council.
6. While PTOD encourages housing, it is an ironic fact that the sole zoning for Fry's is already residential (RM-30). Fry's and other businesses on the site have operated as a "non-conforming" use since the early 90's. From this perspective, PTOD adds retail as a possibility for this site and at a slightly larger 87,000 square-foot allotment (although probably not all contiguous). Possibly as Mr. Loski writes, Fry's can stay open during redevelopment. Maybe 87,500 square feet is sufficient. Maybe the market and/or business model for Fry's business will change. Maybe a Santana Row-like development with housing above retail can work. Some of these questions Fry's management or the city can answer, some no one can. My belief is that when Pal Alto re-zones the site of a very important big-box, sales tax generating business once every 50 years, PTOD is not the answer that best aligns with a goal to retain and enhance that business. But in the end that is ultimately a job for the City, and, yes, its process. In that regard, as we move into tonight's Council meeting, insufficient evidence has been presented to make the case as to why PTOD is the city's best next step for this site.
Posted by Jeremy Loski, a resident of the Ventura neighborhood, on Jul 24, 2006 at 12:54 pm
Mr.Balin say that
" Maybe the market and/or business model for Fry's business will change. Maybe a Santana Row-like development with housing above retail can work. Some of these questions Fry's management or the city can answer, some no one can. My belief is that when Pal Alto re-zones the site of a very important big-box, sales tax generating business once every 50 years, PTOD is not the answer that best aligns with a goal to retain and enhance that business. But in the end that is ultimately a job for the City, and, yes, its process. In that regard, as we move into tonight's Council meeting, insufficient evidence has been presented to make the case as to why PTOD is the city's best next step for this site. "
I respect Mr. Balin's detailed knowledge about the process that led up to the PTOD. This doesn't change the fact that he and Doug Moran have come out saying that the PTOD is or is not the best process for moving our city forward.
Why do I find this troublesome? Because the PTOD has been CAREFULLY vetted through merchant associations, neighborhood associations, etc. etc. Also, Mr. Balin skips over my earlier point about the FLEXIBILITY built in to the PTOD, and the PREMATURE concerns about losing Fry's at this point.
The phrase that really gets me is Mr. Balin's claim about "insufficient evidence has been presented to make the case as to why the PTOD isi the city's best next step for that site".
It's that last phrase- stated by Fred Balin, and essentially supported by Doug Moran - that feeds into the seemingly never-ending and interminable kind of delay and obfuscation that has plagued Palo Alto for the last two decades.
I would ask Mr. Balin and Doug Moran to think hard about the way business REALLY works, especially a big business like Fry's. I would also ask them to check their general assumption that somehow the city staff and others involved in this don't know what they're doing - that's presumptuous, especially from someone's who are not privy to deep detail on the process, or Fry's business.
What's really ironic about all this is that Fry's are probably letting Mr. Balin and Mr. Moran start their forward negotiations for them. Think about this from Fry's perspective - from the perspective of a company that uses ALL persepctives to its advantage. If there's a perception of such grave concern that losing Fry's would seriously endanger our city's future (which it wouldn't, btw - that's another misperception), and that perception is "bought" by our City Council, then Fry's has a negotiating advantage.
I would urge Mr. Balin and Mr/ Moran to think about these things before publishing articles entitled in such a way as Doug Moran entitled this thread, which is to raise unecessary fear and uncertainty, and project a sense of mistrust to city staff and community process that - in this case - has been overly thorough.
In sum, we have had ENOUGH diligence on this. Let's use the flexibility that;s built into the PTOD to deal with Balin's and Moran's concerns. Anything else is throwing the baby out with the bathwater.
Posted by Jeremy Loski, a resident of the Ventura neighborhood, on Jul 25, 2006 at 11:17 pm
I hope that our community remembers Doug Moran and Fred Balin led the fight to have Fry's excluded from the PTOD, especially if either one of them decides to run for public office - and most especially if Fry's either jumps town, leaving a once-promising mixed use plot of land, unplanned - or, as we watch Fry's negotiate PA to the bottom, as we give concession after concession to keep them here. Opportunity costs, anyone?
If I'm a location manager at Fry's, I'm licking my chops right now thinking about how 1) the mixed use development has been taken off the table, so PA is more locked in to negotiating with me than prior (with less options); and 2) how Palo Alto has put more eggs in my basket, giving me far more leverage in negotiations than I had before Monday evening. Now I can go to other municipalities and work my best deal, knowing that two more PA negotiating cards are face up.
Come negotiation time, we are now at MORE disadvantage than before..unless another City Council reverses this giveaway.
What we succeeded in doing last evening is taking negotiating options off the table and AT THE SAME TIME limiting the mixed use development options of the people who own the land.
So again, we have mucked up and modified something that city planners, neighborhood associations, and merchants in the immediate vicinity had heartily endorsed, and in so doing weakened our negotiating position with a retail entity that will use our temerity to its advantage, and Palo Alto's disadvantage.
Why on earth the flexibilitythat was built into the PTOD wasn't stressed, in relation to the Fry's question, is beyond me.
Now we're going to have to sit around and wait for Fry's to decide to make the next move, or give them more advantage by asking what they want, first.
Anyone having done business with Fry's, or shopped there, shuold know that Fry's knows how oto extract a good deal from suppliers. Just watch them when they go to work on their landlords.