The beloved JJ&F Food Store will remain in Palo Alto's College Terrace neighborhood, but it will soon have a new building and a host of new customers.

The City Council voted 8-1 Monday night to approve the College Terrace Centre, a controversial project that includes a new JJ&F market along with close to 40,000 square feet of office space, 5,580 square feet of other retail and eight units of affordable housing.

The vote followed months of public hearings on the dense development, which pitted the neighborhood's desire to keep the beloved grocery store in College Terrace against its opposition to adding a dense new office complex on the block.

The extensive debate concluded Monday night after hours of discussion when the council ruled that the new office space is a price worth paying for keeping JJ&F around.

"This is a council that's worked to treasure and keep our hometown businesses and community organizations," said Councilman Sid Espinosa, who proposed approving the project. "I think the council worked hard to keep JJ&F."

Vice Mayor Jack Morton, who in the past has been critical of dense new developments, also praised the project as one that offers a major public benefit -- the continued operation of JJ&F.

"I think we owe to this community to move forward with this project," Morton said.

Councilman Larry Klein said he was skeptical about the agreement between property owner Chilcote Trust and the JJ&F owner John Garcia. Klein added a condition to the approval mandating that the two parties sign a lease that would be enforceable against each party.

The lease must also assure that the grocery store remain in continuous operation at the site. It would have to be approved by the city before any building permits are issued.

Councilwoman Yoriko Kishimoto voted against the project, calling the office space excessive.

"As we're saying that this is moving toward a mixed-use zoning, but we're moving away from mixed-use to one that is much more tilted toward office use," she said.

The council approved the developer's request for a Planned Community (PC) zone, which allows greater density than the city's zoning ordinance allows. In return, the developer is expected to provide "public benefits" -- in this case a neighborhood grocery store, affordable housing and a $5,000 contribution toward planting of trees at the site.

Applicant Patrick Smailey said the project has evolved and improved over its long crawl through the city's approval process. He called the final product "absolutely superior" to the one originally proposed.

John Garcia, owner of JJ&F, said he was excited and relieved after Monday night's vote. He noted that his current store on College Avenue would remain in operation while design work is finalized for the store's future location.

"We have a project, program and design that carefully balances the needs and desires of the College Terrace neighborhood and the city as a whole," Smailey said. "College Terrace Centre will be an exemplary mixed-use project that preserves an invaluable institution, JJ&F."

"It is the right project at the right time."