The Jay Paul Company has withdrawn its proposal to build an office complex at 395 Page Mill Road in Palo Alto and a new police headquarters for the city, a move that effectively kills the largest, most complex and most controversial development in the city's crowded pipeline.
The city announced Thursday that it had received a letter from the San Francisco-based developer, whose two proposed office buildings would have added 311,000 square feet of commercial space to a property that is already built to the limit of the zoning code. In exchange for the city's permission to go beyond the zoning limit, Jay Paul had offered an unprecedented public benefit: a new police station valued at more than $50 million.
Jay Paul's proposal to build the police station prompted great enthusiasm on the City Council, which has long been looking for a way to replace the existing police headquarters at City Hall. In April, the council's Infrastructure Committee agreed to expedite the review process for the Jay Paul application to align this process with the city's timeline for pursuing an infrastructure bond in 2014. Had the deal with Jay Paul gone through, one of the city's most pressing infrastructure needs would have been solved.
But sentiments turned against the proposal in recent months, as the traffic analysis that was scheduled to be completed in the fall was delayed after city staff disputed the consultant's methodology. And on Nov. 5, Palo Alto voters shot down Measure D, effectively killing a much smaller "planned community" project on Maybell Avenue. The vote prompted the City Council to launch on Dec. 2 a protracted community conversation over local development trends, the city's Comprehensive Plan and "planned community" zoning.
The November vote, which Measure D opponents framed as a stance against high-density zoning and planned-community projects, made new PC proposals of Jay Paul's scale a tough sell in the community. Former mayor Dick Rosenbaum was one of several speakers at the Dec. 2 meeting who urged the council to halt the Jay Paul application while the city re-evaluates its development situation. Councilman Larry Klein, a member of the Infrastructure Committee, disagreed and said, "There's no reason why we shouldn't consider the Jay Paul proposal." He acknowledged, however, that approval is not likely.
"I think the odds are, and they've been that way all along, that it's not going to work," Klein said. "I think the people think the council was all set to approve it. I don't think that's ever been the case."
Councilman Pat Burt, who at several meetings had criticized the project for being too massive, concurred with Klein's and said the proposal "is likely to go nowhere."
The project also proved to be a tough sell during two community meetings that Jay Paul held on Nov. 20 and Dec. 4. On both occasions, dozens of residents challenged Jay Paul's assertion that the project would not bring significant traffic to an already congested intersection of Page Mill and El Camino Real.
"There's simply no smarter way to provide this office space," Executive Vice President Ray Paul told a crowd of about 40 people on Nov. 20, referring to its location near public transit. "Every other way is less smart and is likely to cause more impact for the city for the same amount of square footage."
While Ray Paul argued that the traffic impact around the site would be acceptable (lowering the speed by 1 or 2 mph), the draft traffic analysis that the city released Thursday paints a more troubling picture.
The 151-page report lists several intersections where traffic delays would be "significant and unavoidable," including Page Mill Road and Foothill Expressway; and Page Mill and Ash Street. When the project is considered as part of a "cumulative analysis" along with other proposed developments and overall city growth, the list of troubled intersections grows: Oregon Expressway and Middlefield Road, Oregon and Bryant Street, and Alma Street and East Meadow.
The study by the consulting firm Fehr & Peers estimated that the Jay Paul project would generate 3,130 new vehicle trips daily, including 481 in the morning rush hour and 419 in the evening peak hour.
Given concerns over traffic and the public outcry over dense developments, Ray Paul this week sent a letter to Palo Alto's Planning Director Hillary Gitelman saying the project will be withdrawn.
"In view of the current political climate in Palo Alto, we have decided to withdraw our application for a Planned Community Development at 395 Page Mill Road/3045 Park Boulevard," Ray Paul wrote in the Dec. 16 letter. "At some future date, we will evaluate our options for the properties we own in this area.
"We appreciate the effort the City has made while we have been considering this project and look forward to working together in the future."
Jay Paul's decision also means that the city must now consider other revenue sources for a new police building. With recent polls showing that a bond for the project would be a tough sell with the voters (two thirds of whom would need to approve the bond), council members have been considering other ways to raise money for the project, including possible increases in the hotel- or sales-tax rates.
In a statement Thursday, City Manager James Keene emphasized that the city would not have made a decision based solely on the "public benefit" aspect of the Jay Paul proposal. Most council members had stated that their support would depend on the project's traffic analysis.
"We had always said the zoning decision would need to stand on its own," Keene said. "Fortunately, earlier this year the Council Infrastructure Committee began to explore other options to fund a public-safety building."
View an excerpt from the traffic study that grades the traffic at key Palo Alto intersections.