A portion of the former Fry’s Electronics site in Palo Alto could eventually be home to affordable housing, and the city may be able to get the Metropolitan Transportation Commission to help pay for it.
The Palo Alto City Council voted 6-1 Monday to designate the property, which is about a half mile from the California Avenue Caltrain stop, as a so-called Priority Site for the development of transit-oriented affordable homes. The city was facing a Sept. 30 deadline to make the designation to be eligible to receive up to a $5 million grant from the MTC to help develop such housing on the site.
“This is our biggest issue, to get the resources we need for the housing we want to build,” Councilmember Vicki Veenker said at the council meeting.
Last week, the City Council unanimously approved a development agreement with site owner The Sobrato Organization for the entire Fry’s property, which is located at 340 Portage Ave. and includes the historic Bayside Cannery. Fry’s store operated out of the old cannery building for more than 30 years before closing at the end of 2019.
Mountain View-based Sobrato plans to demolish about 37% of the approximately 230,000-square-foot cannery structure and replace it with 74 market-rate townhomes. Most of the rest of the cannery building would remain what it’s been in recent years — a research-and-development facility — but some 2,600 square feet of it would be reserved for retail space.
As part of the development agreement, Sobrato is giving the city 3.25 acres of land on the eastern side of the property that’s currently a parking lot. The city plans to set aside 1 acre of that land for 75 affordable residences while building a public park on the rest of the donated tract.
The MTC has $28 million in grant money available for communities around the nine-county Bay Area to use for affordable housing. Sites awarded grants from the regional agency can expect to get at least $3 million of that money to use to pay for architectural and engineering services, permitting and entitlement, or land acquisition, Palo Alto city staff said in a memo to the council. The MTC will award grants of up to $5 million for sites if construction can be completed within two years, city staff said in the memo.
The development agreement with Sobrato has proven controversial in part because of the historic nature of the former cannery. Built in 1918 by Chinese tycoon Thomas Foon Chew, the cannery, which canned apricots, pears and fruit salad, was once one of the largest such operations in the country. Many of the detractors of the Sobrato proposal were unhappy that part of the structure would be destroyed and sought to preserve Chinese-American history.
“This is more than just a dollar project,” Palo Alto resident Terry Holzemer said at last week’s council meeting. “It’s really about Chinese-American history, and that’s very important to this country.”
The council tried to address community concerns
The City Council was sympathetic to notion of preserving the former cannery’s cultural and historical significance. The city tried to address such worries by attempting in the development agreement to have Sobrato preserve the original and more architecturally significant parts of the cannery, including its roof. The agreement also calls for historical information about the cannery to be displayed inside the retail portion of the building and for the public to be able to see through the retail space to the building’s historic roof and supports.
Additionally, at its meeting last week, the council floated the idea of having a permanent exhibit about Foon Chew put on display at the Palo Alto History Museum. The tycoon’s family members were receptive to that idea.
Still, councilmembers noted that the city could have lost all the pubic benefits from the development agreement — including the land for affordable housing and the park — if its deal with Sobrato collapsed.
“No one goes away completely happy and that’s the way we do the hard work of the city, respecting the past while moving forward,” Councilmember Julie Lythcott-Haims said at the council meeting last week as the city finalized the development agreement.
Despite the development deal, Sobrato isn’t compelled to build the market-rate homes it has planned for the portion of the site it’s keeping. The city will get the 3-acre tract regardless, assistant city attorney Albert Yang said at the council meeting last week.
“They were unwilling to enter into a commitment (to build the housing) because they are unable to predict market conditions,” Yang said.
Mayor Lydia Kou cast the lone dissenting vote Monday against designating the Fry’s property a Priority Site, taking issue with lack of notice and outreach to the community from city staff.
The Palo Alto Fry’s site was one of five stores the San Jose retail chain operated in Silicon Valley. In the wake of Fry’s shutting down its business two years ago, the owners of those store sites have been putting in place various plans to redevelop them.
