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.