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The Future of the former Fry’s Electronics Site at 340 Portage

Insights from the City Council Ad Hoc Committee on bringing opportunities to action

On August 1, the City Council held a public study session and prescreening to report on a development framework for 340 Portage Avenue (combined parcel of 14.65-acre site also known as the Fry’s site; addresses include 3201–25 Ash; 200–382 Portage; 335 Portage; 3250 Park; 3040 Park and 270 Lambert). This blog shares details on the experience of developing this framework from the perspectives of the Council Ad Hoc members, a summary of the proposal, and details on what’s next.

A Council Ad Hoc, formed in October 2021, consisting of members Vice Mayor Lydia Kou and Council Member Tom DuBois met almost weekly with City staff and a team from Sobrato since December of 2021 to negotiate a term sheet for potential future development at 340 Portage Avenue. Both sides wanted to avoid a possible lawsuit and find common ground for the future use of the site, and were guided by direction from City Council, NVCAP discussions and community feedback. In October 2021, at the time the ad hoc was formed, the City was reviewing nonconforming provisions of the Palo Alto Municipal Code that would affect the property, and the owner had applied for a new housing development based on Senate Bill 330 (SB330) and other state laws that limit City discretion. The site, located in the City’s North Ventura Coordinated Area Plan (NVCAP), is zoned RM-30, and is identified as a housing opportunity site in the City’s 2015–2023 Housing Element.

Council Ad Hoc Perspective

By Vice Mayor Lydia Kou and Council Member Tom DuBois

Going into our discussions, Sobrato had submitted a project under state housing law SB330 and disputed the interpretation of past council decisions that were made to keep Fry’s Electronics there as long as possible. The City Council was interested in developing housing as well as creating some new amenities for Ventura residents.

We agreed to meet as a small group to let both sides discuss issues and compromise more openly. As part of the city team, we hired an economic analyst to financially evaluate the value of various options.

We started by touring the buildings, seeing the current uses and discussing both Sobrato’s position and the City’s position on many issues.

We explored several concepts, including a retail promenade under the architecturally interesting and historic monitor roofs, part of the original cannery, with impressive skylights. We wanted a fully parked project and had input from the NVCAP Working Group, which had supported a coordinated area design that featured a large amount of open space and a naturalized creek. Our discussions went back and forth, with each side making several proposals in an attempt to avoid a protracted dispute that could include litigation over Sobrato’s SB330 application, the City’s interpretation of the municipal code, and amortization of commercial uses on the site.

Last Spring, the ad-hoc had a check-in with Council at a public meeting to get more input on what Council desired and supported. Many members of the public and council members spoke about the importance of open space and creek restoration.

We went through a large number of potential scenarios and ultimately ended up with the outline presented on August 1.

“No compromise is going to be perfect. Vice Mayor Kou and I both want to ensure that this will be a livable neighborhood and that key historic aspects of the building will be preserved, and its historical significance recognized. As you’ve heard, this project maintains the amount of R&D space currently in the “Fry’s” building. What it does is convert the square footage that was retail into housing — family oriented 3 and 4 bedroom townhomes, preserves historically significant aspects of the Fry’s site for the community to enjoy, supports future affordable housing, and dedicates land for parkland.” — Councilmember Tom DuBois

We struggled mightily with getting a big chunk of affordable housing in the project. We pushed Sobrato to provide deeper affordability as part of the townhomes. Ultimately, we jointly felt the best way to achieve the most affordable housing was to dedicate one acre of land to a 100% affordable housing project — this will enable the City with an affordable housing partner, to create housing with deeper affordability than would likely otherwise have happened.

We also got contiguous open space, as preferred by the community, to create a new park or a major extension of Boulware park with room for walking and bike paths and a bridge across the creek. Sobrato agreed to give this land to the City in exchange for converting the former Audi automotive repair location into a Research & Development space.

Sobrato will construct a new garage behind 340 Portage, replacing the existing surface parking that will be removed to accommodate the land dedication to the City. The townhomes will have garages and private streets. Sobrato has agreed that the project will be fully parked, accommodating the uses proposed. It needs to be noted that one of the agreed terms is that if there is a future Residential Preferential Parking (RPP) program in this neighborhood that these parcels will be excluded from participation in the future RPP.

Part of the planning aspects would also ensure that the local streets will connect to the new homes proposed and other amenities to create a cohesive neighborhood.

From a community perspective, we heard a lot about the importance of the historical preservation of aspects of the site and also the importance of housing. Access to the historic monitor roofs was an important focus of the discussions.

As part of the project, Sobrato will renovate the cannery building. This renovation would expose the monitor roof of the original cannery. Many of the historically significant aspects of the cannery will remain, and the portions of the building, including some areas that were added on later and that are less significant, will be removed to make space for Sobrato’s residential development.

We wanted as much retail as possible for both the tenants and the residents, potentially a promenade under the monitor roofs. After working with the City’s economic consultant, we couldn’t find a way to make that viable in a way that Sobrato would accept. There will be a cafe with historic artifacts and interpretive materials displayed that will be under the monitor roof so one can look up and see it. In addition, the art funds for the project could be used to emphasize the historic significance outside the building, near the outdoor patio with a statue of Mr. Thomas Foon Chew.

In summary, benefits of the proposed concept presented during the study session include 2.25 acres of parkland, one acre of affordable housing, $1 million for park improvements, which could support a pedestrian bridge, and $4 million for the City’s affordable housing fund.

Total uses proposed, include:

What’s Next

We only have an agreed outline at this point that both sides have said is acceptable to move forward as an actual project. This project will go through the City’s development processes, including environmental review. The Ad Hoc urges residents to look hard at the pros and cons and try to understand the compromises that were needed to get a viable project. We believe Sobrato’s plan is positive for this neighborhood and delivers on key aspects of what most people want — housing, open space, and means to manage potential traffic.

In terms of next steps, Sobrato will file an application​ for development, based on the plan as outlined at the August 1 Study Session. There will be public reviews of the application with the Architecture Review Board, Planning & Transportation Commission and the City Council of the Development Agreement​, Rezoning ordinance​, Subdivision Map​, Architectural Review​, and any Comprehensive Plan Amendments​. The project will require an Environmental Impact Report (EIR).

The Council received emails and letters from the public as part of the August 1 study session and we want to try to address some of the points raised, respecting the confidentiality of the process we just completed.

Historic preservation — The plan seeks to preserve and honor the oldest portion of the cannery, including one of its most distinctive character defining features, the monitor roofs, while also getting much needed housing. The end of the building that would be removed includes portions that were modified or added onto after Thomas Foon Chew (Bayside Canning Company) sold the property to Sutter Packing Company in 1933.

We made a judgment on tradeoffs. The work includes several benefits for the community to consider as the project goes through the City’s development review process.

Office Space-There is no increase in R&D use in the 340 Portage building. There is a small increase in R&D by allowing –R&D use of the Audi building. This deal didn’t convert 100% to housing, but the property owner has rights as well. If we wanted all housing, we could try to amortize out the R&D though we’d be starting from scratch and looking at likely a 10-year timeline before housing could be built.

Affordable Housing- We understand the community’s desire to integrate housing. This project will significantly increase the amount of affordable housing the City could receive if integrated into the project, will provide deeper affordability and the ability to create larger units for families as well. It will be an attractive place to live being located adjacent to a future park and naturalized creek.

Land for Housing and Open Space- We hope that the community will value 3.25 acres going to the city for housing and open space — we don’t feel many developers would have offered this much land. We believe Sobrato was truly looking for a win-win.

NVCAP Working Group Alignment- We really appreciate the work of the NVCAP working group and we think this project is closer to the option put forward by the majority of the group along with a funding source to actually accomplish it Council heard the interest in naturalizing the creek and lower density than was outlined in some of the other NVCAP options. We ended up with no new office constructed — a change of use from Audi to R&D. We believe there is still a critical role for the NVCAP Working Group through potentially overseeing or providing oversight of the Development Agreement.

In conclusion, we understand not everyone will agree but we hope the community will realize the opportunities and benefits made as part of this process, including maintaining the amount of R&D space currently in the “Fry’s” building, converting the square footage that was retail into housing, preserving historically significant aspects of the Fry’s site for the community to enjoy, supporting future affordable housing, and dedicating land for parkland.

We hope the community will stay engaged and participate as this project goes through the entitlement process and be proud of the results. — new dedicated parkland, future housing and preservation of a historically significant Palo Alto building for the Palo Alto community to enjoy.

Read the full staff report from the August 1, 2022 Council study session starting on page 5.

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