First, they lost their neighborhood grocery store. Then, their patience.
Now, residents near Edgewood Plaza are hoping that a stiffer fine will finally prompt the developer, Sand Hill Property Company, to deliver the goods.
On Monday, more than a dozen came to City Hall to lobby the City Council for the higher penalty, joining dozens who made the same request by emails and letters in recent months. Many cheered after the council voted unanimously to more than double the fine from the existing level of $1,000 to $2,500 per day, with the possibility of raising it to $5,000 per day if the vacancy isn't filled soon.
By setting the higher fine, the council tried to achieve two things: fill a space that has been vacant since Fresh Market left in spring 2015 and send a message to other developers that violating “planned community” (PC) agreements comes at a cost. PC projects allow developers to exceed zoning regulations in exchange for negotiated public benefits.
In the case of Edgewood Plaza, the grocery store was the chief benefit. In exchange for providing it, Sand Hill was allowed to build 10 homes. Sand Hill was also required to rehabilitate one of two historical Joseph Eichler-developed commercial buildings -- a requirement that it violated in 2013 when it demolished the structure. The council responded by fining Sand Hill $94,200 for the demolition.
The departure of Fresh Market prompted another fine, which started at $500 per day in September 2015 and then escalated to $1,000 in October 2015. But with the space still vacant, staff had proposed last month raising the fee to $2,000 per day. On Monday night, the council decided to go a step further and make it $2,500.
Councilwoman Liz Kniss, who made the motion to raise the fee, noted that even if it doesn't immediately bring a grocery tenant to Edgewood, it could "light a fire under those involved so that you can get a grocery store."
"We share your frustration and I think we'll do the best we can in order to motivate the developer in this particular situation to provide a grocery store," Kniss said.
The council made its decision after hearing from more than a dozen residents, most of whom complained about the prolonged vacancy. Several argued that it would take a fine of $5,000 per day to make Sand Hill pay attention. Carla Carvalho, who lives near the plaza, lamented the “emotional ups and downs” of being repeatedly told by Sand Hill that they are close to signing a grocer (including Lucky's and Albertsons), only for the deal to fall apart in the end.
Carvalho said $2,000 would not suffice to get Sand Hill to comply. The fine, she said, should be $5,000 per day.
“Please make Sand Hill to think about a shiny new deli counter, the smell of fresh-cut roses and essentials of a healthy Palo Alto diet every time they write a check for $5,000 a day,” Carvalho said.
Bob Smith, who last year encouraged the council not to penalize Sand Hill, said he has since had a change of heart. When Sand Hill was requesting the PC zone, Smith said, the developer was extremely confident that he'd be able to fill the store. Now that the 10 homes have been built and sold, it's a different story, Smith said.
“One gets the feeling that the developer comes in to get the PC, the zoning override, the 10 houses, and then it's hard. ... I was patient a year ago. I lost my patience.”
A few residents countered that penalizing Sand Hill might not be the best way to win a grocer. Cheryl Tsui, who lives near Edgewood, pointed to a similar situation that had happened at Alma Plaza in 2013, when Miki's Farm Fresh Market closed after less than six months of operation (it was replaced by Grocery Outlet).
“Of course I miss Fresh Market and of course I know how wonderful it is to have grocery store in my neighborhood, but I try to look at the other side of story,” Tsui said. “I understand it might be a little challenging to find or to run a grocery store in the neighborhood.”
John Tze of Sand Hill Property told the council that his company and Fresh Market (which retains the lease) have reached out to 65 grocers about renting the space and had about a dozen visits. After two serious prospects and a various “close miscues,” Sand Hill is now trying to reach a deal with a family-owned grocer, Tze said.
“We'll do everything we can to make the deal work,” Tze said. “No one wants a grocer at Edgewood more than Sand Hill, and we're determined to fill it as fast as we can.”
But council members agreed that they're tired of waiting. Cory Wolbach was one of several council members who characterized the vacancy at Edgewood as an indicator that Sand Hill hasn't held up its end of the bargain.
“While I'm generally not in favor of government in general -- and this City Council in particular -- micromanaging what business goes into what place, in this case there was a commitment made, a commitment broken and the community and this council has run out of patience,” Wolbach said.
The council adopted the higher fine as part of a broader update of Palo Alto's fine schedule. The list also includes, among other things, new penalties for violation of transportation-demand management agreements and increased fines for demolition of historic structures.
The new penalty allows the council to set an initial fine of $2,500 per day and then to raise it by 50 percent in each of the next two days, so that by the third day the fine would be $5,000 per day.
It remains to be seen however, whether Sand Hill will challenge the decision. In a letter that he sent to neighborhood residents Carvalho, Jeff Levinsky and Lenore Cymes last week, Tze questioned the legality of the council's fines.
“We understand the community's desire to see a market operating again,” Tze wrote. “We want the same thing and are doing everything we can. The store can only be used for a market; we have no intention to change that. We leased it to a market; they are still a tenant even though they are not actively operating; we have fulfilled our obligations. While we are being fined, we believe that fine is not legally enforceable, but we choose not to contest to avoid a messy situation."
Even if Sand Hill were to challenge the penalty, the city has another instrument in its enforcement toolbox. As City Council candidates Arthur Keller and Lydia Kou pointed out in a letter to the council, the “planned community” ordinance empowers the city to review the project three years after the building is occupied to “ensure that conditions of approval and public benefits remain in effect as provided in the original approval.”
If staff finds violations, the applicant has 90 days to correct them. Failure to do so would lead to fresh reviews by the Planning and Transportation Commission and the City Council, which would then “determine appropriate remedies, fines or other actions.”