Those who destroy history are bound to restore it.

So decreed the Palo Alto City Council on Monday night as it voted to use a penalty from an illegal demolition at Edgewood Plaza to fund a future restoration of a historical building.

By a 7-1 vote, with Karen Holman recusing herself because of prior connection with the Palo Alto History Museum and Pat Burt dissenting, the council voted to use the $94,200 fee from the developer Sand Hill Property Company to finance a restoration project, which could include repainting the historic downtown transit station; replacing the bricks at the Lucie Stern Community Center; supporting the remodeling of the Roth Building or rehabilitating the downtown post office, should the city succeed in its bid to purchase the site from the U.S. Postal Service.

The council agreed to impose the $94,200 penalty last month to punish the company for its demolition of an Joseph Eichler-style commercial building at Edgewood Plaza, a recently approved "planned community" project that includes a grocery store (now occupied by Fresh Market), two commercial buildings that were constructed in the 1950s and 10 homes. The developer was charged with rehabilitating one commercial building at its current site and reconstructing the other one on a different site, using the same materials. Instead, Sand Hill's contractor illegally demolished the building in September 2012, effectively destroying one of few examples of an Eichler's commercial building.

During subsequent hearings, the council and the city's planning boards downplayed the impact of the demolition, noting that the destroyed building was badly damaged and that Sand Hill will build a new structure that will very much resemble the one built by Eichler. They also agreed, however, that Sand Hill must pay a penalty for violating the terms of its "planned community" agreement, which exchanges zoning concessions for negotiated "public benefits," which in this case included historical preservation. Last month, the council set the penalty at $94,200, about 10 percent of the construction cost.

This week, they considered how to spend the money. One option was using it to design a new sidewalk on West Bayshore Avenue, stretching from Channing Avenue plaza to the San Francisquito Creek on the East Palo Alto border. The project has an estimated price tag of $473,000 and the money would have been used for design work.

Councilman Pat Burt favored this option, arguing that the penalty funds should be spent on a project near the impacted site. Others argued that while the project is laudable, it should be pursued through the city's regular capital-improvement process. Councilman Larry Klein argued that there hasn't been enough outreach done (the city's survey brought back only six responses and there were only two public speakers for this item at Monday's hearing).

"Clearly, we do not have the attention of the neighborhood and I think we need to do a lot more work before we start spending money on it," Klein said.

He joined the council majority in supporting historical restoration as the best use for the funds. Councilman Greg Schmid suggested this approach, calling historical restoration of a project "as close to the site as possible, makes a lot of sense." Councilwoman Liz Kniss concurred.

"This isn't a great deal of money. This isn't even $100,000. But given that it's a mitigation for historic demolition, it should be given for historic restoration," Kniss said.