It's not often that a city discovers that it owns 7.7 acres of undeveloped land that City Council members didn't even know existed.

That's what happened in Palo Alto two years ago, when the city received an offer from billionaire developer John Arrillaga to buy a former quarry site in Foothills Park, next to Arrillaga's property. Now, having rejected Arrillaga's offer and officially dedicated the land as "parkland," the council is preparing to figure out what to do with it.

The topic came up earlier this month in a joint session between the council and the Parks and Recreation Commission, whose members have toured the rocky and undeveloped site that currently includes little aside from an Acterra nursery. The conversation is expected to resurface in the coming months, as the city proceeds with a parks master plan and hosts meetings and tours to solicit community feedback.

At the Nov. 10 meeting, parks commissioners who have been exploring the site cited the numerous factors that constrain improvements. Commissioner Abbie Knopper noted that the property has served as a landfill for many generations. It served as a quarry and dumping ground for the spoils from the Lee family, which ultimately donated the land to the city in 1981.

In a memo to the city, the commission outlined some of the challenges the location faces. The site is surrounded by private property on three sides and its lack of fencing makes security tricky. It also includes Buckeye Creek and development is restricted within 50 feet of the creek. Furthermore, only the flat 2.1-acre portion of the 7.7-acre site was deemed as "viable usable space" by the commission.

"As you can see, the 7.7 acre parcel presents several physical and legal challenges that will constrain future improvements," the commission's memo stated. "While it is exciting to add this new acreage to our parkland inventory, any future plans for the site must take into account current conditions and the potentially significant costs of restoration."

A few dozen residents have already toured the location last month as part of a series of ranger-led tours, Knopper said. Three themes emerged from the meetings: People would like to see the land restored; they would like to see Acterra retain its nursery; and they would like to see new amenities at the site.

Exactly what these amenities should be will be the subject of a community meeting next year involving the council and the Parks and Recreation Commission. The commission's memo listed a campsite, a picnic area, a structure for special events and an off-leash dog area as potential options.

At the Nov. 10 meeting, council members offered some preliminary ideas of their own. Councilman Greg Schmid noted the site's history as a quarry and suggested that the city explore whether it can sell or use the sand, rock and gravel at the 7.7-acre site.

Councilman Greg Scharff asked staff how much it would cost to build a fence around the area so that it would be secure enough to allow access to the public in the near term. He was told it would cost about $10,000.

"It would be nice to have it open to the public as soon as possible," Scharff said, adding that he would hate to wait two years before letting the public access the new parkland. "Ten thousand dollars seems like a small amount of money to open it to the public."

Councilman Pat Burt advocated against planting trees or grass at the site. Instead, he said the site could be used as riparian corridor and a "natural habitat."

"I can see it being a really wonderful natural meadowland," Burt said.

Burt also argued that opening the area to the general public before coming up with a plan for it would be "premature." Currently, he said, the site is a "dirt area" on which not much can grow.

Everyone recognized at the meeting that for the location to be truly usable, much work will need to be done. Councilman Larry Klein said that when the public sees that 7.7 acres of land in the foothills is now parkland, people think "it's like the rest of Foothills Park." The public, he said, ought to know "what the real facts are" and how difficult it will be to make it usable.

"I'm hoping that pretty soon you'll be able to come up with some estimates on what this could possibly cost to put into shape so the public can really use it," Klein said.