The developer of College Terrace Centre on El Camino Real raised eyebrows earlier this year when he disclosed that his son will be in charge of the center's grocery store, but Palo Alto officials believe the new store could be as good as or better than JJ&F, the venerable market that once did business there.
On Monday night, the City Council will consider a recommendation from city planners to approve J&A Family Market as the grocer tenant of the mixed-use development at 2180 El Camino. The controversial, block-long development was approved in January 2010 after a series of tense community meetings and concerns from the surrounding College Terrace neighborhood about the project's size and density.
Monday's discussion will focus on the grocery store, which is the primary public benefit of the "planned community" (PC) development.
In lobbying for the project, which required the flexible PC zoning, the development team pitched its bid as a way to "save JJ&F Market," a grocery store that operated near the corner of El Camino and College Avenue for 65 years. In addition to the new 8,000-square-foot grocery store that was supposed to give JJ&F more visibility, College Terrace Centre provides 38,908 square feet of office space; 5,580 square feet of other ground-floor retail; and eight below-market-rate apartments.
Though the council approved the development, it did not "save JJ&F" after all. Just months after the vote, the Garcia family -- the longtime, original owners of the store -- sold the business and left Palo Alto, thereby also leaving open the question of who would occupy the store once the development is built.
That question was seemingly answered earlier this year, when it was revealed that James Smailey, son of center developer Patrick Smailey and member of the development team, will run the new grocery. If the council on Monday approves this plan, the store will be called J&A Family Market.
The revelation raised some questions, particularly given that James Smailey has no experience in the grocery industry. In order to allay neighborhood fears of an inferior market replacing JJ&F, the council's 2010 approval of College Terrace Centre included stipulation that the grocer tenant "shall be subject to the prior approval of the City of Palo Alto." Further, the ordinance regulating the development stated the city will not withhold its approval unless the city finds that the tenant "is not likely to be comparable in quality of product and service as JJ&F as it existed and operated on Dec. 7, 2009."
In May, College Terrace resident Fred Balin raised the issue at a council meeting and questioned whether the developer's son is the best person to man the grocery operation. He noted that it would be up to the building owner to enforce the lease conditions of the grocer tenant.
"How enforceable will the lease agreement be that is between father and son?" Balin asked. "How likely is it that a grocery owner with no experience will run a market comparable to JJ&F? Those are key questions before the city now."
But for city staff, James Smailey's lack of experience is not a barrier to approval. The city had hired a consultant, Sutti Associates, to review Smailey's business plan and advise the city on whether the new store will be viable. The consultant's report, which the city publicly released Wednesday afternoon, answers enthusiastically in the affirmative. Lawrence Brucia, president of Sutti Associates, wrote in the Aug. 4 report that while his company "cannot guarantee long term success for J&A Family market," it believes that the market "has the retail team and strategy to be successful from its opening day and into the future."
"J&A Family market will be comparable, if not superior, in quality of products and services to JJ&F market," wrote Brucia, whose company has been involved in designing and building grocery stores since 1976.
There will, however, be some differences, largely reflecting the changing tendencies of modern shoppers. According to Sutti, J&A plans to have more "grab-and-go" products than JJ&F, a larger deli section and a smaller meat department. It will have less produce inside the store than JJ&F did but will have an open market outside, facing El Camino Real.
The report from Sutti Associates also tries to assuage the concerns of Palo Alto's planning staff and residents about James Smailey's lack of experience. The planning department report states that staff believe he is "proposing a store with products and services comparable to JJ&F" but note that "the only outstanding issue is whether the grocery store will be a financial success and remain in operation, unlike other small grocery stores in the area that have failed."
For staff, this is worrisome for several reasons. The city's approval of College Terrace Centre doesn't specify what would happen if the grocery store goes out of business or its quality diminishes after the development is constructed. Though the development would then violate the "planned community" ordinance, the ordinance does not specify a particular remedy or fine, according to Wednesday's report from city planners.
Furthermore, even a "comparable" business won't necessarily be a successful one. After all, despite its popularity, JJ&F left Palo Alto just months after the project was approved. Another grocery store, Miki's Fresh Market, opened at Alma Village amid much fanfare in 2012 only to close down six months later.
City planners note that the financial success of the new grocer is "a particular concern because the tenant has not been willing to share information about the personnel with grocery experience who would be engaged to help operate the business."
In reviewing the plans, however, Brucia concluded that James Smailey's team of advisers have "qualified credentials to participate in managing and advising the owners of J&A Family market." The market's co-manager and CFO is someone with "extensive experience in the grocery business" who worked for his family grocery business, owned his own store and has worked with distributors and vendors. Another adviser has "extensive experience in retail stores," Brucia wrote.
He concluded that given the store's management team, advisers and a new building with new equipment, "the expectations regarding the environment of the store are high."
"A new store will have a fresh start, which represents a clean, well-lighted store and should be maintained by a qualified management team," Brucia wrote.
The new store is scheduled to open in August 2015, according to the business plan provided by Smailey. The plan states that the store's new location, fronting onto El Camino, will bring with it the benefit of exposure to about 60,000 drivers daily. It also boasts of "an all-new building and premises, a history of neighborhood support and a growing client base as Stanford University continues to add residential units to the immediate area."
"With the prospects of growing demand, the opportunity of success for this full-service grocery in a community with exceptionally high barriers to entry is very strong," the business plan states.
The City Council meeting will be held in Council Chambers at 250 Hamilton Ave. on Monday, Aug. 11, starting at 7 p.m.