A two-lane configuration for Palo Alto's California Avenue Business District was approved Wednesday night (Jan. 12) by the city's Planning and Transportation Commission.

Banking on an inexpensive way to spruce up California Avenue's retail district, the commission voted unanimously to recommend approval of an environmental "negative declaration" for the controversial California Avenue Streetscape Project, including reducing the roadway from four lanes to two.

If the City Council agrees, the project would receive $1.2 million from a Santa Clara Valley Transportation Authority (VTA) grant for transit-corridor improvements, including pedestrian and bicycle access. Palo Alto would add $550,000 in a local match.

The $1.8 million-total project can now go before the council to decide if it can begin the design phase. A negative declaration, required under the California Environmental Quality Act (CEQA), allows the city to move the project forward without a cumbersome and expensive environmental review, since city staff has determined the project would have little negative environmental impact.

But some businesses are unconvinced and fear a significant economic impact. Despite 399-page traffic study, which found no significant delays due to reducing the lanes, many business owners fear that reducing lanes could damage their businesses.

The plan does not consider the negative impact of construction and the lane reductions will have on their livelihoods, they said.

There is no requirement under CEQA to consider economic impacts, staff told the commissioners.

California Avenue could lose an anchor store, Mollie Stone's Market, one of its owners, David Bennett, warned in a written statement in a petition opposing the proposed lane reductions, signed by several residents and businesses.

The lane reductions "would put the market in a difficult position with reduced access. Fortunately for Mollie Stone's, we are the owners of the property and are not subject to any third-party lease if our business goes below the point of necessity. Our plans would be to develop the property to a different use than a supermarket," he wrote.

Earlier on Wednesday, before the commission hearing, Tony Montooth, owner of Antonio's Nut House, said his biggest concern is parking. Parking is already at capacity during lunch hour and many businesses don't have rear entrances for deliveries, he said.

"Traffic will stop in the middle of the street. It's going to stop dead," he said.

But Jaime Rodriguez, the city's chief transportation official, said loading zones have been figured into the plan, and alleys off California are also to be used for deliveries.

Montooth and others said construction is another major concern.

"I have mixed emotions. I'd love to beautify California Avenue but at what expense? During construction, it would really hurt, especially in this economy."

But some business owners said they just want the street to look better.

"I don't see why changing from two lanes to one will make a traffic problem, especially if there is more parking. I don't see that many cars," Josephine Montoya, owner of Montoya Jewelers, said.

"What they're saying is fine with me -- to make the street more attractive."

Jessica Roth, whose family has owned the European Cobblery for four generations, said she grew up on California.

"Small business is so hard. In Palo Alto, our rents are so high, When they were redoing the sewer lines it was really hard on our business. It's been episode after episode. (of construction).

"People are finicky about their time and convenience, Six months of construction is going to just kill my business -- just kill my business," she said.

Curtis Williams, director of planning and community environment, said staff would work out a plan to limit construction impacts on businesses, such as phasing the work and making sure entrances remain clear.

Roth said she worries that lane reductions would cause backups and that would turn off people traveling up El Camino who might intend to shop on California.

"People going by will have a bad thought in their heads: That street is a mess. I want people to come to my street. It just does not make sense to me," she said.

In a Weekly news poll, 227 were against and 127 were for the changes.

Resident Terry Holzmer, president of the Palo Alto Central condominium complex, told the commission that the city should not base its decision to reduce lanes on a requirement for getting a grant. The VTA grant is contingent on the lane reductions, city staff told commissioners.

Businesses and residents agree that California needs improvement, he said, but "where the devil is, of course, is in the details.

"It's clear that (people) don't want to narrow to two lanes."

Despite businesses' fears, Commissioner Samir Tuma said he "did not see any data that supports traffic congestion or hazards to bicycles."

Vice Chair Lee Lippert said street improvements in Menlo Park enticed several Stanford Shopping Center businesses to move to Santa Cruz Avenue.

"They're eating our lunch?" he asked.

He also did not buy the argument that narrowing the lanes would clog California with traffic from cars looking for parking spots, buses or delivery trucks. A traffic study found that California has about one third or less the traffic volume of other area retail districts, including University Avenue in downtown Palo Alto.

"This is not an arterial. If anything, this is really a shopping center. … It's a way to get from the Caltrain station to El Camino Real," Lippert said. The goal is to make the retail area a destination point, he said.

That assessment was confirmed by Tommy Fehrenbach, the city's economic development manager, who said the plan would add parking and create a sense of place, making the area more attractive and improving business.

Some residents on Wednesday night said they support the changes.

"I think it will be a great revitalization," College Terrace resident Robyn Duby said.

Some residents dismissed the four-lane road as a throwback to the 1950s, which no longer has relevance.

Roger Carpenter and Ted Black, residents of the adjacent Evergreen Park neighborhood, said they approve of the plan. Other retail districts where lane reductions have taken place, such as Castro Street in Mountain View and Santa Cruz Avenue, are "great places and highly trafficked. It will be great for business." Black said.

The commissioners are concurrently reviewing the broader California Avenue Area Plan, and they wanted to know if the traffic study included any impacts of those eventual developments, which could include high-density housing.

Julie Caporgno, chief planning and transportation official, said staff doesn't anticipate that any future development would have a significant impact on traffic. Any residences that go in there would be transit-oriented," she said.