The long, zigzagging history of why housing doesn't already exist on the Fry's Electronics site is a portrait of one of the city's saddest planning failures of the last half-century.
For more than 45 years, one City Council after another embraced the need and benefits of rezoning the 12-acre site to housing, only to have future councils back away out of fear of losing valuable sales-tax revenue.
In the late 1990s and into the 2000s, Fry's was one of the largest retail stores in the city, generating an estimated half-million dollars in tax revenue annually for Palo Alto city services. As city budgets came under financial pressures, councils were wary of doing anything that might push the store to leave the city.
In 1984, years before Fry's moved in and with the site largely empty, a wise 5-4 majority of the City Council agreed to re-zone the property to residential in hopes of attracting as many as 374 units of housing, something the neighborhood strongly supported. Instead of just changing the zoning, which would allow existing uses to continue indefinitely, the council also agreed to force the conversion to residential by giving the owners of the property until 1999 to terminate all commercial use. It was a zoning action, called amortization, that had been used occasionally to force out businesses in areas where the city wanted to see redeveloped with different uses. Property owners were typically given 10 or more years to make the change in use.
In 1991, with full knowledge it would need to vacate just eight years later, Fry's opened a Palo Alto store at the location. It was an immediate success and became a popular destination for the entire region as well as tourists, who could often be found taking photos of themselves in front of the western-themed entrance.
Instead of working with Fry's to find a new location within the city by the 1999 deadline and sticking with the housing plan, in 1995 a financially spooked City Council voted 8-1 to grant the property owners a 20-year extension until the end of 2019. The lone dissenter was then-Mayor Joe Simitian, who cited the need for more housing and argued that "to suggest that there's no place in Palo Alto for a 40,000-square-foot store, I think, is unbelievable."
Had that council action remained in force today, no more commercial uses would have been allowed on the parcel beginning next year and only housing could have been developed by the property owner.
But in 2006, with a deteriorating city financial picture, strong community support for Fry's and an infatuation with "mixed-use" developments that combined retail, commercial and residential space, the council voted unanimously to repeal the forced change in use to residential.
Meanwhile, after four years of delay, the city last year finally started a long-anticipated community visioning process for the entire North Ventura area, including the Fry's site.
With last week's surprise announcement by Fry's that it would close the store in January, yet another council has the chance to achieve the long-anticipated conversion to housing, this time unimpeded by a popular and tax-producing tenant. But early enthusiasm for a developing a North Ventura coordinated-area plan is now waning. A 4-3 split on the council on Aug. 19 narrowly approved keeping the process alive by spending an additional $367,000 on the consultants.
The Sobrato Organization, which bought the property in 2011, announced last year it was not interested in pursuing a housing development under the current zoning, which imposes a 35-foot height limit and only allows 30 residential units per acre, limitations Sobrato says make housing development infeasible. An added wrinkle is the recent finding that the cannery operated at the location from 1918 to 1949 met historic criteria that, while not precluding the building's redevelopment, has raised questions over how to honor what was the third-largest largest cannery of fruits and vegetables in the world in 1920.
Maximizing housing on this site, which the city has already included in its adopted Housing Element plan, is more important than ever. The city needs to immediately begin working with Sobrato and neighbors to proactively negotiate and design housing development alternatives and incentives that can result in a win-win for property owners, neighbors and the broader community.
We've let this opportunity slip away for almost a half-century. Fry's is gone, the neighborhood is anxious to see improvements, and the property owner has vast development experience. There is no better time to model a fast-track process that doesn't take the usual 10 years of study and talk to complete.