P.A. may weigh redeveloping neighborhood around Fry's

By Dan Stober

Mercury News

With car dealers leaving town and landmark hotel Hyatt Rickeys closing, Palo
Alto is keen on keeping happy one of the city's biggest generators of sales
tax revenue: Fry's Electronics.

City Manager Frank Benest is exploring an idea to turn the area around
Fry's, along El Camino Real a couple of blocks south of Page Mill Road, into
the city's first redevelopment zone.

Benest said the designation might give the city the flexibility to help
Fry's renovate or rebuild its sprawling store at 360 Portage Ave., or gain
more visibility to drivers on busy El Camino Real.

The redevelopment idea, which Benest stressed was preliminary, is part of a
special effort to support the relatively few businesses that supply the city
with the bulk of its tax money, he said.

The city council would have to declare the area around Fry's ``blighted''
for it to be declared a redevelopment zone. Redevelopment critics have
questioned whether any part of wealthy Palo Alto could accurately wear such
a tag. But Councilman Bern Beecham said the city should not let that seeming
contradiction stand in the way of redevelopment if it would prove
beneficial.

Manny Valerio, a spokesman for Fry's corporate headquarters in San Jose,
said the redevelopment talks were news to him. But in general, he said, ``My
understanding is that we're pleased to be in Palo Alto.''

The giant Fry's store is not only ``probably as important as any retailer in
town'' when it comes to sales tax revenue, said Beecham, but its rows and
rows of every conceivable electronic widget have made the store a cultural
landmark.

``We've had people visit from Japan, and the one place they wanted to see
was Fry's,'' he said.

The Palo Alto store was one of the first of the company's 29 outlets. Each
has its own decorative theme -- Palo Alto's is the Wild West.

Benest and his staff are exploring whether a redevelopment plan for the area
near Fry's would generate enough additional property tax money from new
development to make the program work. If the plan looks good, he may bring
it to the city council within the next few months.

Redevelopment agencies operate on property tax funds generated in
redevelopment areas. The money often is invested in roads, parking lots and
other infrastructure that aid businesses, Beecham said.

Redevelopment also could bring affordable housing -- a city priority -- to
the area, Benest said.

School districts often question the formation of redevelopment zones because
they restrict the amount of property tax money funneled to schools. The city
is aware of that problem, Beecham said. ``We need to make sure that we
protect our school district.''

Palo Alto has a redevelopment agency but has never had a project. Benest
pushed for a redevelopment zone for Edgewood Plaza, an aging shopping center
near the Embarcadero Road exit off Highway 101. But a number of
complications, including neighborhood opposition, killed the idea in 2003.

The blocks around Fry's crowded parking lot contain a Mercedes-Benz dealer,
car repair shops, a granite dealer and Gryphon Stringed Instruments, sellers
of guitars and banjos.

On the northern and southern edges of the area are neighborhoods of small
homes, dotted with a few much larger new homes.

Lakiba Pittman, a member of the city's Human Relations Commission, lives on
one of those streets. She said Friday that her first reaction to a potential
redevelopment zone was to wonder whether the city would use its power of
eminent domain to buy homes from residents unwilling to sell.

``For me, I would like it to be a neighborhood,'' she said.

Years ago, the city declared that the Fry's property should be used for new
homes by 1999. But in 1995, the city council reconsidered, finding it
difficult to vote to close the store seen as an electronics heaven to many
denizens of Silicon Valley.

The council extended the deadline to replace Fry's with housing to 2019, but
that would presumably have to be reconsidered if the redevelopment plan
takes shape.

----------------------------------------------------------------------------
----
Contact Dan Stober at dstober@mercurynews.com or (650) 688-7536.