An ambitious proposal to build a dense office complex next to the AOL building on Page Mill Road in Palo Alto received a cool reception Wednesday night from the Planning and Transportation Commission, which directed the developer to come back with a stronger package of public benefits.

If approved by the City Council, the new office buildings proposed by San Francisco-based Jay Paul Company would occupy a site that under existing zoning regulations is already at its limit for development density. To enable the project, the city would have to rezone the site to "planned community," a designation that allows developers to exceed regulations in exchange for "public benefits," which are typically negotiated between the council and the developer over a series of meetings.

The biggest public benefit in this proposal would be a new public-safety building, a prize that has long eluded Palo Alto officials. City officials have been struggling in recent years to find a suitable site for the public-safety building and a way to pay for the structure, which is expected to cost around $40 million. The existing police headquarters, housed in the City Hall building, has been found to be too small and seismically unsafe for the Police Department by various city officials, consultants and citizen commissions. The Infrastructure Blue Ribbon Commission, which in 2011 reviewed the city's infrastructure needs, called the existing police building "unsafe and vulnerable" and urged the council to make a new public-safety building a high priority.

The Jay Paul plan would build the new police station at 3045 Park Blvd. It would be attached to a large parking garage, which would include spaces for both officers and office workers. Planning commissioners acknowledged Wednesday a police station would be a huge benefit, though some wondered whether it's enough to compensate the city for the types of exemptions it would grant the developer -- most notably, permission to build about 311,000 square feet of office space.

The Jay Paul proposal is the latest twist in the city's long, tortuous and thus far fruitless path toward a new police building. A few years ago, the city had considered purchasing two parcels on the 2700 block of Park Boulevard and building the public-safety headquarters there. But the council decided to drop the city's purchase option on the properties in 2009 because of uncertainty over funding for the new police building.

Now, these Park Boulevard properties may be back in play. Jay Paul has recently acquired the two Park Boulevard sites, and Commissioner Arthur Keller suggested that the developer throw these sites into the mix when coming back on the next go-round. Building a stand-alone police building would be a better alternative to attaching one to the giant garage, he said, because this alternative would make the police building less vulnerable to domestic terrorism -- a concern expressed by Commissioner Alex Panelli and land-use watchdog Bob Moss.

"I think more creative work will happen out of that redesign," Keller said.

The commission voted 4-0, with Michael Alcheck and Mark Michael absent, to continue the item to a later date, at which time the developer would return with a fresh proposal.

The Wednesday meeting also gave some area residents a chance to express their concerns about the Jay Paul proposal. Lauren Brown, whose company Park City Leasing is a partner in a group that owns two properties immediately south of 3045 Park Blvd., urged the commission to reject the application, which he claimed is far too big for the area. The new commercial proposals will leave the area "inundated with cars coming from the public-safety building and the Jay Paul project."

"Adding 2,000 cars to the neighborhood will just blow this area apart," Brown said.

David Adams, who lives on Olive Avenue, near the project site, also urged the commission to reject the proposal. Park Avenue, which the city plans to turn into its next "bike boulevard" is already a dangerous route for bicyclists in this area, he said, and adding thousands of cars would add to that danger. He also predicted that the new development would exacerbate the area's parking problems.

"I'd like to remind the commission that the current City Council's priorities are to solve the parking problems, not to create them," Adams said, adding that the "public benefit comes at a high price for local residents."

Commission Chair Eduardo Martinez shared some of these concerns and urged Jay Paul officials to downsize the office development.

"To me, as an architect and urban designer, it just looks like too much building crammed on this site," Martinez said.

Ray Paul of Jay Paul Company said he understands that traffic is a "major concern" but argued that this issue will be dealt with in a forthcoming environmental-impact report (EIR), a state-mandated analysis that the company would undertake once the rezoning process is initiated.

"Our feeling is that these issues will be studied in the EIR process," Ray Paul said. "The way to answer these kinds of questions is with data and the data collection will be associated with various studies."

Panelli sided with the residents and said that traffic and parking concerns will loom large when the project returns to the commission. The commission's decision to continue the item to a later date is a good thing for the developer, he said.

"We see a piece of coal that can be a diamond," Panelli said. "It's just not quite there yet."