Maybe the Santa Clara Appeals Court will overturn this money grab by the City of Palo Alto. I can imagine that Jim Keene is drooling over what to do with an additional $5,000 per day into the city coffers. Check the wants ads...I'm sure there will be new jobs available in an already bloated city government......or maybe some pot holes will be filled?......nah.

YES!

I guess rich and powerful politically connected developers just think
they can do anything and laws do not apply to them, but a contract
is a contract, and consistent bad work and bad faith will catch up
with them at some point thank goodness.

Our society is suppose to consist of free enterprise. This Judge I can only assume is one of the activist Judges that makes up the law as he goes. He is a nut. If I was Sand Hill, I would certainly require the fines to be paid over time with the rent.

The landlord agreed to supply a grocery store and certainly should have understood the penalties that could be inflicted. He is an experienced landlord.

In 2015, I did not want to penalize the landlord, expecting that he would meet his obligations. I was wrong. He had no intent to provide a grocery store until it suited all of his objectives, and was paying scant attention to his obligations to the community. The city had no choice to fine Sandhill in order to change the landlord's priorities.

This was a slam-dunk case from the view of the judge.

I do think that it is time for the city to stop using the PC ordinance and other means to make "deals" with developers. Once the buildings have been built, we will continue to find that the developer does not want to follow through.

Palo Alto seems to have been the last community on the bandwagon, realizing too late that they were dealing with a company with a long, bad history of disreputable actions.

Looks like the courts are finally catching up with them.

At the rate that other communities are legislating and suing, Sand Hill Properties will be out of business soon.

However, there is really nothing to prevent them from re-organizing and coming back under a different name!

Anyone taking bets on how many days it will take Sand Hill to miraculously find a grocery tenant now that they are on the hook for $5,000 per day?

I've always found Sand Hill's justification based on the lease peculiar, and I wish newspapers covering this story would dig into it more. In this article, for example, we're told that Sand Hill says (it's not clear whether this is a quote or a paraphrase) that "Fresh Market's 10-year lease agreement allows for the market to 'go dark' and remain as a tenant in good standing. There was no provision for Sand Hill to take over nor provide or use the premises as a grocery store if The Fresh Market pulled out."

Maybe there really is such a provision (we don't know; the lease hasn't been made public), but surely that provision can't be the full story. Saying that Fresh Market has the right to keep giving money to Sand Hill in exchange for nothing might answer some questions, but it raises the much bigger question of why on earth any company would choose to do so. Is there some other provision in the lease that forces Fresh Market to remain as a tenant? Is there some peculiarity about sublet or replacement tenant provisions? Is Fresh Market getting some kind of leverage out of keeping the space vacant? Whatever the reason, it doesn't make sense that a company would choose to keep paying rent for no reason at all.

I'm sorry that so much of the reporting has repeated this rationale without trying to make sense of it. Has Palo Alto Weekly attempted to get in touch with Fresh Market to see what if anything they have to say about this provision?

By Sand Hill Properties writing a contract that allows the grocery to remain dark they fundamentally violated their agreement with the city. That along with "accidentally" bulldozing one of the historic buildings they promised to preserve. They should be banned from doing business in Palo Alto for blatant violation of contracts with the city. Under no circumstances should the City of Palo Alto allow them to develop another property here.

Fastest way to get another grocery store in there - hold up any and all Sand Hill projects until there is an operating grocery store. Then they need to stop the commuters parking in the lot and taking the shuttle downtown...

@MAttAustern, you raise some very good points that have had many of us scratching our heada for a while. The answers to these questions remain unknown; however, we do know that our colleagues in the press as well as ourselves have attempted to reach out to these companies for answers. The closest we have come has been a conversation that I personally had with Andronico's CFO Cheryl Hughes when we thought that was a possibisity. She would only say that there were still some terms to work out, but she was optimistic...

Ironically, it may be this very lack of transparency that potentiated the ruling in the City's favor. Judge Bayer (who did not receive a copy of the lease terms per our understanding) stated in his ruling: "Respondent's own actions in negotiating the terms of the lease made it significantly more difficult to replace the grocery store."

In an email to me dated May 18, 2016, John Tze of SHP stated (paraphrasing) that
the Fresh Market was seeking MORE in sublet rent than they themselves pay. What is the strategy behind this? Is this even true? No one knows. However, one theory is that it's actually FRESH MARKET that is playing hardball with Sand Hill: perhaps they're hoping that SHP will buy them out of the lease in order to avoid the mounting penalties and subsequent steep decline in Cap rate of Edgewood Plaza that SHP is now facing...

Maybe Mr. Keene can use that money as a rebate to PA Utility customers instead of giving us less service for more money. The city's ridiculous fees, taxes and surcharges are now up to more than 25% of our bill and equal tens of millions of dollars funneled from us into the city's General Fund.

Correct to financially penalize the developer Sand Hill Properties for not meeting the terms of their agreement with the City of Palo Alto - a special agreement wherein they realized an immediate multi-million dollar profit in exchange for certain terms they agreed to -- to provide a grocery store at the plaza. I have zero sympathy for Sand Hill.
-- from a nearby resident

The issue of the lease with Fresh Market and whether or not that represents an impediment to finding a new grocer is an interesting point. We simply do not have all of the necessary information to determine what may be happening.

Several points:

1. John Tze has intimated several times that there was no problem with subleasing the property from Fresh Market. He repeated this at the meeting last November before the city council as he attempted to justify his efforts to finding a new tenant. He said that both Andronico's and Lucky's had been close to signing but then they backed out for reasons independent of the location or terms. He also said that he was then dealing with another smaller group at the moment. We should note that the PR person at Sandhill just said this week that things were moving forward.
2. While we don't know what Fresh Market may be doing, it would appear that most of the business reasons would suggest they would be anxious to sublet. Businesses sometimes hold onto leases to keep a competitor from moving in, but that is almost certainly not the case, given that they have left California entirely. It is certainly possible that Fresh Market wants more money to sublet than they are paying, especially if they think that John Tze is now desperate.
3. Whatever situation John Tze is in with Fresh Market is not only not our business (as he has made clear by not sharing the details), it is not our problem. He has an obligation to us and if he has to pay to be able to fulfill it, I am sorry about that but he is a big developer and needed to have a plan for meeting the public benefits. It appears that the only plan he had was for dropping the public benefits altogether after having sold the 10 houses for $30M.
4. I don't think we can trust John Tze anymore. I am inclined to discount much of what he said during the recent hearings, especially anything about problems with Fresh Market. The reason for my loss of trust is his argument that he did not have an obligation to provide a real, functioning grocery store, but an empty building (which he largely controls!) would be a sufficient "benefit" to the community. This is sophomoric sophistry to put it politely, and we should be very insulted by this.

I also want to emphasize that John Tze campaigned hard for this deal. He had many meetings with the community where he showed various drawings of the center including a grocery store. He assured us that it was a great location for a store and he would have no problem finding grocers with his beautiful new store. He met before the city council with the same arguments. I was at these meetings as were many others.

I liked Mr. Tze and am now very disappointed with him for trying to renege on his deal. I don't think we should feel sorry for him.

Good for you judge. But when are people going to realize that no grocery store can function now in that location?
I live two blocks away. There is no parking! I am mystified that anyone thinks a grocery store could operate there.
Please clue me in to what I'm missing here.

LM

Without getting into a discussion of mr. Tze and what he has or has not done, the real reason that it has been so hard to find a new grocer for Edgewood is the fact that Grocers are not interested in undersized locations. Being low profit business, grocers want large full service locations ( look at the success of the two safeways on either side of Palo Alto, in Mello park and mountain view). Unfortunately Palo Alto has not gotten over the mentality that small, boutique stores are what residents want. Look what succeeded at alma plaza-- grocery outlet, a discount store ( and I am sure many of the Palo Alto elite are horrified by its existence in the city). Unfortunetky the ship has sailed on getting decent sized stores in Palo Alto-- the outcryfrom the usual suspects ( too large, too much traffic, not fair that piazzas/country sun/mollie stones will have to compete with a real store etc) is something that all companies know to avoid (build n the border and Palo,alt and residents will flock to shop).

@I shop in MV,

I agree with you that a small store is not a very good idea. I would never have wanted the deal that John Tze worked so hard to get, which committed him to operating a grocery store in that center.

However, many people feel that we have paid for a grocery store and should have it.

I shopped at the Lucky's, Albertson's, and Fresh Market during their existences, and I want the grocery store that we were promised. My daughter moved right down the street last year when it appeared that Lucky's was coming in, and she wants her grocery store. Others feel the same way.

The real problem here is the city's PC ordinance, which allows greedy developers to promise benefits that are unrealistic in return for overriding zoning. John Tze wanted his 10 houses and was willing to do what was necessary to get them.

@Lynne

what you are missing is that many of the cars are using it as a stop to carpool to downtown PA. If there was a grocer there they could enforce some time restrictions and clear the parking lot

Robert-- regarding people wanting their grocery store, I think that when a new store opens residents of surrounding neighborhoods should commit to spending a certain amount of money in this store, to make sure that it will succeed. Because if a new store fails due to lack the f business, I am not sure another grocer will touch it. Look,what happened with Mikis at alma plaza-- everyone was so excited about it opening- when it opened, no one shopped there ( I guess there is only so much $40/pound cheese one needs) and it closed.

I love the way everyone blames $40 cheese when it comes to grocery stores.

I personally love cheese and do buy expensive cheese, but never at a lb at a time. We buy probably 4 oz sized pieces and use for a cheeseboard for a special occasion, or for a bohemian style lunch with fresh bread and some salad garnish. We buy medium priced cheese to make cheese sauce to go with pasta or to crumble over a salad.

Good cheese is like good chocolate. Eat in moderation and eat the best you can find, otherwise, why bother?

This is why cc members like Tanaka needs to be seriously investigated so public confidence can be restored

It really should not matter what Fresh Market intended to do in terms of subletting ( if they are even allowed to)
The business decision to rent the building and how and at what rent and conditions is Sand Hills.
Get a market tenant in there ASAP, honor your contract with the city - in intent, and put playing games
about the cost aside.

I would assume that when the time left on the rent becomes close to the time any new market tenant is willing to commit to Sand Hill will consider leasing it to them. If Fresh Market could have sublet it, seems like they would have by now ... they are just paying a lot of money for space they never intend to use.

It seems like if Fresh Market was trying to twist Sand Hill's arm in some way Sand Hill would gladly blame them.

I think we all would like to know what is going on and what is the hold-up?

I could see for example, if a small chain was willing to try the space, and did not want to commit to a 10 year lease, that Sand Hill might figure they are gambling with a steady income from Fresh market for 10 years just to uphold their contract responsibilities ... thus the fine is important to make Sand Hill see the right thing to do.

But seriously, what IS going on here? Does someone want a change in the property ... like better parking?

@I shop in MV,

You are absolutely right that people asking for the grocery store in Edgewood Plaza should shop there! I have made this point to many neighbors.

We did about 80% of our shopping at Lucky/Albertson and about 45% at Fresh Market. Fresh Market needed to alter their stocks for this community, and their prices were high, but we really used them all that we could.

I personally think that an economical store would do more business, something like Lucky's. But I'll take what we can get.

Maybe they should sublet it from Fresh Market, divide the space in two and re lease one half to Milk Pail and the other half to a restaurant or multiple restaurants.

Sand Hill's website shows: Web Link
Sand Hill Property Co. Active Projects
3175 Hanover, Palo Alto
3251 Hanover, Palo Alto
3300 El Camino Real, Palo Alto
1050 Page Mill Road, Palo Alto [Construction of Four Two-story Office Buildings]
Edgewood Plaza, Palo Alto
Main Street Cupertino
The Grove, Los Gatos
Vallco Shopping Mall, Cupertino

This year they bought the Fox Theater in Redwood City.

2600 El Camino
Project Description:
Request by SHPDM, LLC c/o Allison Koo on behalf of the Board of Trustees of Stanford University for Preliminary Architectural Review for demolition of the existing six-story building and construction of a 62,616 sf four-story office building in the CS zoning district

How about SHP buy back the 10 houses, demolish them for parking spaces, and rent the space to whomever they want?

Reality is no grocer is likely to succeed there.

I too miss Fresh Market. It was convenient and carried a small but selection of good quality products. It filled a niche for me.

But reality is there were never very many customers in the store during my many visits. They could not have been even close to break even. And I was a guilty party too. I shopped there when lack of planning meant I needed to put a meal together or for some basics I had run out of. Most of my grocery dollars were still spent at TJs or Safeway.

Since Fresh Market left almost two years ago many grocery stores have looked at the site or been asked to. All have declined so far. The indication is pretty clear- there is not a business justification to locate at Edgewood.

Unless Pal Alto wishes to engage in Soviet style five year plans that defy actual markets and demand there seems to be no point in continuing to beat this issue to death.

Mike, according to Fresh Market they were making money. Though it seems
to me the let go a few people from when they initially started, and there were
some problems with produce in my opinion, they did OK. Maybe there were
enough late planners and slow-shoppers than they kept the parking lot full.
So, saying no market is likely to succeed there is unwarranted, unless you
are and experienced market owner and have access to the books.

It is quite possible that a market, such as Andronicos, that has more stuff
that people like would do better than Fresh Market, particularly if the rent
is fair, which is probably at the root of this problem, ie Sand Hill might not
think they can get as much as Fresh Market is now having to pay them for
their lease.

I still think a Ranch 99 would be best there.

I said all along and still feel that a full service market would do well there. Our Midtown Safeway is very busy and people come from East Palo Alto to shop there even since the Mi Pueblo opened near Ikea.

The fact that the site is so close to the highway would make it a good place for those of us (yes me included) coming off the highway on the way home to stop for groceries rather than fight the local traffic to get to Safeway or Piazzas.

I am pleased but surprised that the Grocery Outlet is doing well. Those I have spoken to who have used it say they shop there infrequently and many of my Palo Alto acquaintances admit to never going there although they had used the Lucky or Mikis. I think Grocery Outlet has its own niche but is not used by the Whole Foods or TJs crowd on anything like a regular basis.

There is a problem with grocery shopping in Palo Alto. We do like our own personal favorites, but a large percentage of people freely admit to spending most of their grocery budget at places like Costco and full service Safeways which of course are out of town.

Convenience works more than one way. For a whole lot of groceries and regular stuff, we want one stop shopping or bulk buying. For the convenience of picking up the makings of a week night dinner or staples we have run out of, then the local grocery store it is. I suppose that for the average family, having both options is what we want and expect.

Does anyone know exactly how much of the parking is taken by commuters?

The fine is a pittance to such a major developer.
Maybe SHP could use the fine to subsidize a grocer and get this problem off their backs,
and remove the dishonesty that pervades their reputation.

All future Sand Hill projects in Palo Alto should be halted until they find us a grocer to replace Fresh Market, esp. since they're still collecting rent from them!

Given the increasing difficulty in getting around town and crossing El Camino due to growing gridlock and traffic, the need for a grocery store there is even greater than ever.

If commuters are parking in the lot all day, blame the City Council and ticket /tow the all-day parkers so there are spots left for the shoppers.

"They" also said that Alma Plaza could never support a grocery store, especially with the disincentives from the developer. However, when they were unable to get the council to change their mind, they found Grocery Outlet, and apparently made a deal that allowed them to be profitable.

It is all about the amount of rent and the number of parking places Sand Hill is willing to make available for grocery shoppers. It is totally in the hands of Sand Hill and all about them meeting their contractual obligations.

They are pinning their hopes that the current developer-friendly city council will remember who funded their campaigns and agree to an alternative use. I hope they don't succeed. Thank you Palo Alto Online for continuing to shine the light of public examination on their shenanigans, that has so far kept this from happening.

It may be that a grocery of this size at this location cannot be profitable as a standalone business, at least at market rates. Perhaps Sand Hill needs to provide a significant discount on the rent to make it an attractive deal.

Presumably, Sand Hill made a huge profit on the sale of the homes and are collecting substantial rents from the other businesses on the property. Even if they need to offer a discount rate on the grocery, the venture as a whole might still be profitable.

But, you know what? It doesn't really matter. Sand Hill should have done their due diligence before signing the contract. And regardless of whether or not the numbers add up for them now, they did sign the contract.

They are responsible to provide a grocery in perpetuity, and it is in everybody's best interest for them to find a way to make it happen as soon as possible.

For those of you saying that Palo Alto should hat and ban all sand hill projects, remember that sand hill is doing business with private property owners, not th city itself. Once again people are pushing for a great overreach in the power of the city. I also support mandatory shopping at the new store once it is opened.

@Alexander,

You are right to point out that Sand Hill is working with private individuals.

Working with the community and the city benefits from having a level of trust.

I do think that Sand Hill has undermined its credibility in the community. Arguing that he did not have a contractual obligation to maintain a grocery store at Edgewood was an insult to the many people who supported the project based on the contract he made with the city and the many promises he made to community members.

When you undermine your credibility and trash your goodwill, you can expect people to be more dubious of your future ventures, and to not extend special deals to you that depend on trust.

I spoke for him and his plan for the center and feel betrayed.

$5000 per day is pocket change to the developer. Still it's so wonderful to see a city standing up to a corrupt developer that has wreaked havoc all over the bay area. Bravo to the city staff and city council.

The developer agreed to provide a grocery store. If Susanna Pau needs to cashier and Peter Pau needs to stock shelves, then so be it. It'll be healthy for them to leave their Atherton mansion for a while and spend some time in Palo Alto.

Abitarian:, well stated. Perhaps a grocery store in that location has to get free rent or even be subsidized. Whatever it takes. The developer should be smart enough to stop generating bad will if they ever want to do future projects in Palo Alto.

Will the developer-controlled Palo Alto City Council allow Sand Hill to weasel out of their obligation now that the developer lost in court? [Portion removed.]

Glad to see Palo Alto standing up to a greedy and manipulative developer like SHP. I wish other cities did the same; this developer has been getting away with too many excuses and bailing out on promises at lots of neighboring towns. Finally, met their match at Palo Alto. [Portion removed.]

I see that if a poster ever mentions a City Council member by name that the post ends up with [Portion Removed]. Come on now, calling out corruption should not be something that is censored.

It's amazing to see people defending SHPCO with the excuse of "well a grocery store is not viable." SHPCO certainly was well aware that that location wasn't a good location for a grocery store, but they wanted to build those houses very badly so they agreed to provide a grocery store. Perhaps they have to subsidize it in perpetuity, or at least charge only token rent. If they expected it to be a profit center then they were very naive. The only way out of it for them is to declare bankruptcy.

Previous:

Will the developer-controlled Palo Alto City Council allow Sand Hill to weasel out of their obligation now that the developer lost in court? [Portion removed.]

New:

Will the developer-controlled Palo Alto City Council allow Sand Hill to weasel out of their obligation now that the developer lost in court? Web Link

But according to some factions who flood these comments when one of theirs is criticized, the Palo Alto Weekly is totally in the pocket of the "residentialists" so how can that be?

Seriously, how are we supposed to be informed voters with all this censorship?

“The job of the newspaper is to comfort the afflicted and afflict the comfortable.”

Isadore-- if you have evidence [portion removed], then please present it. Otherwise your comments are just more of the same from the posters on this forum

Put Barnum- of course the weekly is in the pocket of the residentialists. However the have to remove blatant comments about certain CC members.

I find great enjoyment in reading the constant bashing of developers and certain CC members. The bashing is dne by a select number of TSF readers and is fed by the biased reporting of the weekly.

And why do you think most grocery chains will not touch Edgewood? It's the size. Most chains have no use for an undersized location. Palo,Alto,is reaping what it has sowed for decades. Only small stores are allowed so that the old JJandF would not have competition.

Alexander: I already provided the web link [portion removed.]

Here it is again: Web Link

And some more:

Web Link

Web Link

Web Link

All extremely pro-developer/anti-resident council members.

Yet the new "residentialist" council member somehow has no FPPC investigations. And to be fair, I didn't see any against the current mayor who is very pro-developer.

[Portion removed.]

Alexander:

It is irrelevant as to why chains are eschewing the Edgewood location. The developer agreed to provide a store as part of the community benefits in exchange for being able to make about $25 million in the sale of new homes. When the city approves a project and rezoning that greatly increases the value of a parcel they don't just give a gift of tens of millions of dollars to a developer, they extract some concessions. No one forced SHPCO to agree to provide a grocery store, they accepted the agreement knowing full well that Edgewood Plaza was not an ideal location.

They can make it work, but it won't be anywhere close to what Fresh Market was paying. It may be free rent, which is still better than paying $5000 a day in fines. Who knows? It's up to SHPCO to figure out how to abide by the agreement they signed.

[Portion removed.] The FPPC has made no final ruling on Kniss. Anyway, many residents see the PASZ members as the real anti-resident members. And remember that much of this antagonism is fomented by the weekly stirring the pot when th their fake news stories.
As far r the store at edgewood why would any grocery chain open in a substandard Palo Alto location when they would have to compete with real stores on the border. Anyway if a new store opens, I am n favor of mandatory spending by the residents in the area. After all having a local grocery is a two way street.
Feel free to come back with real evidence.

I'm as pro-residentialist as they come and I have yet to get a mailing from PASZ so I have a hard time understanding the constant attacks against PASZ when they don't seem to very active at all unlike the very well-organized, well-funded developer-backed members of Palo Alto Forward that dominate the city's commissions and now the city council.

Given the constant demonizing of PASZ it's not at all surprising that "many residents" see PASZ as the "real anti-resident" force.

Regarding the grocery store, what 2 way street are you talking about? The developers made a promise to provide one to Palo Alto residents as a condition of their contract. They have breached that contract.

If anyone's out there from PASZ, please start posting and campaigning because we really do need some help in countering the uber-density crowd and the council members savvy enough to withhold the info about their late developer contributions until after the election.

If there's an alternative to PASZ that wants to rein in the constant attempts to pick our pockets with additional fees, surcharges, give-aways to developers that build under-parked office buildings and hotels, I'd love to hear from you.