College Terrace Centre market operator named

Grocer Miki Werness not to be part of community market

The convoluted evolution of the College Terrace Centre and the market that will replace the beloved JJ&F Market took another turn on Wednesday night when the property's manager named a member of the Chavez family as the potential grocer.

Miki Werness, owner of the now-defunct Miki's Farm Fresh Market at Alma Village, previously had announced that he was planning to run the market when it is built. But on Thursday he confirmed he has pulled out of the project.

Uriel Chavez, a member of the Chavez family of grocers, is being brought on board, property manager James Smailey told members of the College Terrace Residents Association Wednesday night. Chavez has more than 25 years of experience operating his family's markets, including Chavez Family Markets, La Hacienda, Mi Rancho, Artegas and Mi Pueblo markets throughout Northern California and the Peninsula.

The new store will be called College Terrace Market.

College Terrace Centre includes 40,000 square feet of office space, 13,000 square feet of retail and eight below-market-rate housing units. About 8,000 square feet of retail is reserved for a market. Construction is contingent upon securing a market comparable to JJ&F, which was part of the 2009 approval of the site's planned community (PC) zone. The agreement guaranteed the store would be a "public benefit" in exchange for denser development.

Chavez said he will have a 20-year contract to operate the store, which will be owned by Smailey, who does not have experience running a market. Chavez's family owns 40 stores with an estimated gross revenue of more than $200 million per year, he said. The sizes range from 8,000 to 30,000 square feet, he said. The College Terrace Market will have a delicatessen, grab-and-go meals, a kitchen for freshly made foods and an outdoor seating area.

"It would have more of a Draeger's selection with a limited size," he said.

College Terrace residents at the meeting urged him to consider a price structure that would not be as high-end as Draeger's, noting that many college students and workers would be coming to the market, as well as local families.

"It's definitely not a Draeger's," Chavez said of the price points. The store would offer household products such as paper towels and toilet paper along with comestibles, he said. Chavez said he has geared his community markets toward customers' needs. A market in Menlo Park on Menalto Avenue includes more organic items and a taqueria and items for the Latino clientele who frequent the store, he said. He said his stores are clean and service-oriented.

Reached by phone on Thursday morning, Werness said he chose not to be part of the project about two weeks ago.

"I have my reasons," he said, without much elaboration. "I think it will be a wonderful market. I love the location; I love Palo Alto. It just has to be made a total shop. There's a lot of good foot traffic. ... I just didn't feel I would fit in with the group."

The City Council must approve the new grocer before construction can begin.

On Wednesday, Smailey brought in well-known developer Jim Baer as a project consultant. Baer said he would be assisting with the approval process, but he did not have a financial stake in the project.

Residents were skeptical at the College Terrace meeting. The 13-page "vision and values" handout Baer and Smailey brought to the meeting was the equivalent of a public relations piece that did not detail the actual lease agreement or how the project would ensure the grocery store would be there "in perpetuity." Residents and board members said they do not want to see the grocery store fold in six months after the center's construction is completed and for the Smaileys and the developer, Brian Spiers, to walk away.

Resident Bill Ross criticized Baer and Smailey for failing to supply the association with a 15-page summary and an unredacted copy of the lease agreement that has now been submitted to the city. Not bringing the documents prevented any meaningful discussion at the meeting, he said. The project team also failed to bring a 100-page booklet of exhibits.

Smailey and Baer said they would email a copy of the project narrative to the association.

Neighborhood association board members' and residents' concern over the project have been amplified by a confusing chain of ownership and responsibility related to the development. Smailey's father, Patrick Smailey, was the on-record developer under the company name Twenty-One Hundred Ventures, LLC (also called Adventera Inc.). But the younger Smailey revealed on Wednesday that he and his father are no longer the developers.

Funding for the project was in jeopardy in March 2013, with the project receiving a one-year extension for its planning entitlement permit. A $40 million construction loan was eventually secured, but the lender wanted a different developer, Smailey said. Spiers was chosen, and the Smaileys are to become the center's managers after it is built, he said. The property is owned by Joseph Oeschger and Eldora Miller under The Chilcote Trust, which has held title since the 1920s. The owners are now in their 80s, he said.

Smailey said the landlords have guaranteed the payment of leases if the grocer should not be able to make payments, so the lease cannot be defaulted. The lease would be $22,500 a month with the first three months free and the next three at half the rental cost, he said. After the current landowners die, the family trust would take over the lease-payment guarantee.

But Ross wanted to know if the lease guarantee stipulates the use and occupancy of a grocery store. Without a letter of credit or a performance security, the agreement would be meaningless, he said. Smailey did not confirm if such a provision exists.

Ross pointed back to the failure of Miki's Market after just six months. He questioned if a fund could be set up that would have cash available for maintaining a grocery store in the same way a city has funding to maintain a park.

Baer called the lack of such a guarantee a recurring flaw in the city's drafting of planned-community zoning ordinances.

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Like this comment
Posted by anon
a resident of Monroe Park
on Nov 7, 2014 at 4:44 pm

Once more Jim Baer to the rescue

"On Wednesday, Smailey brought in well-known developer Jim Baer as a project consultant. Baer said he would be assisting with the approval process, but he did not have a financial stake in the project."

5 people like this
Posted by Steuart
a resident of Charleston Meadows
on Nov 8, 2014 at 8:02 pm

Another example of the failed Planned Community here. I sincerely hope Chavez is very successful and thrives, but after Smailey gets his gross PC variance and develops the site, the development stays put whether the grocery fails in a few months or flourishes for many years. There is no downside for Smailey. Chavez and the neighborhood bear all the risk; the hallmark of the Palo Alto Planned Community.

8 people like this
Posted by Terrrence
a resident of College Terrace
on Nov 8, 2014 at 10:04 pm

I lived near the old JJ&F and I fail to see why there is such a fuss made over it; it was a lousy grocery store - it offered nothing comparable to Whole Food, Draeger's, Trader Joe's, or Molly Stones\'s (the places where I would shop instead) and I don't miss it at all.

Yet, the loss of many 100s of various high-paying jobs which are going into the offices of the award-winning project (Silicon Valley Business Journal's Best Mixed-Use Project for all of valley in 2014) are something you really shouldn't want to lose (not to mention the surrounding businesses as well).

I am sure the developer has put millions into the project attempting to satisfy the community and it's wholly inappropriate to squabble over this small store. It says in the article they are received a fraction of normal market rent. Why doesn't Palo Alto want to give entrepreneurs a chance?

3 people like this
Posted by Resident
a resident of Another Palo Alto neighborhood
on Nov 9, 2014 at 7:50 am

This market sounds just like a neighborhood convenience store with perhaps a destination appeal to those who want Mexican take out or supplies.

We still desperately need a full service, one stop, grocery store in Palo Alto.

6 people like this
Posted by Kim
a resident of College Terrace
on Nov 9, 2014 at 10:59 am

The posting directly above complains that Palo Alto doesn't have a "full service, one stop, grocery store." Less than 1/2 mile from the old JJ&F is Mollie Stones Market. They are a fantastic grocery store but they have 23,000 sq ft. That's a small store in modern terms but still 3 times JJ&F's old store. I miss my corner market but I don't expect a full service grocery to exist in such a tiny amount of space.

1 person likes this
Posted by Wont Miss JJ&F
a resident of Evergreen Park
on Nov 9, 2014 at 7:06 pm

Sorry but I won't shed any tears over the farewell to JJ&F. I stopped shopping there after I pointed out a pricing mistake where I was overcharged and their response was a curt "Have a nice day!". Never had that happen at any other store I've ever shopped at.

Good riddance!

3 people like this
Posted by Me Neither!
a resident of Evergreen Park
on Nov 9, 2014 at 9:58 pm

The last two owners turned me off completely to JJ&F's. It was dirty and had nothing of any value to me.

Moldy bread and sticky floors--yeccchhhhh!

1 person likes this
Posted by Terrence
a resident of College Terrace
on Nov 10, 2014 at 9:38 am

In any case, I think whatever grocery store that will go there will be a welcome and upscale place. I just wish they'd hurry up. The place has been empty too long.

2 people like this
Posted by Enough!
a resident of Community Center
on Nov 10, 2014 at 10:32 am

Another expensive market.

6 people like this
Posted by grandmakk
a resident of Midtown
on Nov 10, 2014 at 11:07 am

To those complaining about the JJ&F ... I think those who miss it are speaking of the OLD JJ&F. It was a shame that the Garcias allowed the new owners to use the name. Old JJ&F was a neighborly, friendly, old-fashioned family-run store with the best strawberries on the planet.

Unfortunately, time marches on and the farmers supplying the strawberries sold their land for condos,the family got older,and the inevitable happened.

But some of us remember a good place to shop in the neighborhood.

1 person likes this
Posted by curmudgeon
a resident of Downtown North
on Nov 10, 2014 at 1:16 pm

[Post removed.]

1 person likes this
Posted by Ben
a resident of Barron Park
on Nov 10, 2014 at 2:12 pm

"Another expensive market."

I hope so.

Like this comment
Posted by Neighbor
a resident of Charleston Meadows
on Nov 10, 2014 at 2:30 pm

Another example of a developer's deal gone bad for the residents. We will be stuck with the traffic/parking of the new office space in exchange for a grocery store that will fold within a year. Can we please stop making deals like this. Where are these guy going to park? College Terrace has permit parking and it better stay that way.

3 people like this
Posted by member
a resident of College Terrace
on Nov 10, 2014 at 3:02 pm

Bring in a Peet"s Coffee, wine, beer, bread, cheese and meat shop, organic and delicious food deli, salad bar, and some basics. We do have Molly Stone, Safeway, Whole Foods and good old Country Sun, not to mention farmers markets all near by. Where in that stretch between Stanford and Page Mill on the west side of El Camino is there any nightlife, place to meet friends... we don't need more grocery stores, we need community .. bring in Common Ground to sell flower!i

2 people like this
Posted by Neighbor
a resident of Old Palo Alto
on Nov 10, 2014 at 5:55 pm

I thought I've read recently that Mi Pueblo is either in bankruptcy or is in deep financial trouble. The developer is still trying to pull a fast one on us.

1 person likes this
Posted by Agenda
a resident of Another Palo Alto neighborhood
on Nov 10, 2014 at 6:07 pm

Neighbor-- you thought you heard something and then proceed to cast aspersions on the developer.
Will this story change your mind:

Web Link

Agree with resident about the need for a full service store, but it will never happen

Like this comment
Posted by jm
a resident of Evergreen Park
on Nov 10, 2014 at 6:54 pm

The question is, how do you force a commercial enterprise to stay in business for the life of a building? Especially one as risky as the tiny grocery store space the owner's representative and developer, Mr. Patrick Smailey, offered to house JJ&F Market.

This is the problem the council faced when approving Patrick Smailey's application to build the College Terrace Centre. A development well over twice the size the zoning allowed. The council admitted that designating a business as a public benefit, let alone a specific business, was a dodgy financial proposition. So construction was contingent upon a genuine long term market lease with JJ&F Market. And if not JJ&F Market, then another experienced grocer offering the community equivalent goods and services. And the lease had to come to the council for approval.

Now, instead of JJ&F Market, Patrick Smailey, proposes his son, James Smailey, lease the market. Who is James Smailey? A builder with no experience in the grocery business. James Smailey in turn proposes a non-binding contract with someone else to manage the store. And the expensive fittings will only be leased.

Patrick Smailey stated from the outset he would not set aside more than 8,000 square feet for the market because doing so at all was a huge financial sacrifice. A big loss to his business plan. Since public benefits had never been monitored, perhaps replacing the market with a more profitable tenant down the line was planned. Especially as Patrick Smailey has now written to the city, as part of his son's lease submission, that he knew JJ&F market would never be able to raise the money to lease the space.

Which reminds me of the “I love JJ&F and only I can save JJ&F” campaign Patrick Smailey, with the help of a PR firm, orchestrated to whip up public support and persuade the council to approve his development. Apparently knowing JJ&F could never raise the money. Bait and switch?

Like this comment
Posted by jm
a resident of Evergreen Park
on Nov 10, 2014 at 11:25 pm

Just learned that the city has no way to enforce the existence of a grocery market. So this PC is a joke. Just another example of the pro-development planning department and council majority ignoring the city's comprehensive plan and giving the gift of extra big profits to developers.

1 person likes this
Posted by Nora Charles
a resident of Stanford
on Nov 10, 2014 at 11:44 pm

Maybe I didn't absorb it all, but why was JJ&F not allowed to return to the space?

Also, I must say in my experience the owners who took over from JJ&F were polite, nice, and helpful. They always greeted me pleasantly and asked if there was anything I needed. They ordered items for me that were out of stock, and when I saw a suspicious vehicle in the dark parking lot they walked me to my car. The place was in bad shape, but they knew it would be torn down, so obviously couldn't put money into it. I just hate seeing them get a bad rap.

2 people like this
Posted by Jayne
a resident of Adobe-Meadow
on Nov 11, 2014 at 5:57 am

It's time Palo Alto moved into the 21st century and allowed decent sized grocery stores, 20,000 sq. ft. is simply not enough. We need grocery stores twice that size. I shop at Safeway in Mountain View because it has the selection and I quite often meet my south Palo Alto neighbors shopping there too.

Sorry, but further commenting on this topic has been closed.

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