Defying calls from historic preservationists, the Palo Alto City Council approved on Tuesday, Sept. 12, a landmark deal with The Sobrato Organization that paves the way for the developer to replace a portion of the century-old cannery building on the site with townhomes.

By a unanimous vote, the council moved to advance the most complex and contentious development in Ventura's recent history, one that is poised to transform the neighborhood's largest property while settling a decades-long zoning dispute about land uses at the Portage Avenue site.

Under the deal, Sobrato Organization will be allowed to demolish roughly 40% of the former cannery at 340 Portage Ave., construct 74 townhomes on the Park Boulevard side of the property, and indefinitely retain the existing research-and-development uses in the cannery building, which is zoned for multi-family use.

As part of the deal, Sobrato will also donate 3.25 acres of land to the city in the interior of the site, near Matadero Creek, with the goal of having a future park and an affordable-housing development in that area.

The most contentious element of the development agreement pertained to historical preservation. The cannery building, which was occupied by Fry's Electronics for nearly two decades, was constructed in 1918 by Thomas Foon Chew, a Chinese entrepreneur who created a canning empire and whose innovation in asparagus storage earned him the moniker "Asparagus King."

Some residents and scholars argued in letters and public comments over recent weeks that demolishing a portion of the cannery would diminish Chew's contributions to Santa Clara Valley's agricultural history. The environmental analysis for the townhome project identified the loss of a historical resource as a significant and unavoidable impact of the project.

Dozens of residents made that point at the council's hearing on Sept. 5 and several reiterated it during the Sept. 12 discussion. At one point in the meeting, as council members considered ways to commemorate Chew with art and interpretive displays, they were interrupted by a speaker who demanded that they preserve the cannery.

"Token history is not our history," the speaker said, while numerous council members told her she was out of order.

Ultimately, the council approved the demolition but signaled its intent to change the name of Portage Avenue to Thomas Foon Chew Avenue as part of a package of measures designed to preserve the story of Bayside Cannery.

The development agreement that the council approved was negotiated behind closed doors by an ad hoc committee consisting of former Mayor Tom DuBois, who termed out last year, and current Mayor Lydia Kou. Both asserted Tuesday that they believed that the outcome is a suitable compromise that nets key benefits for the city.

Neither side got everything that it wanted, DuBois said, but each will benefit from the deal.

"Both of us were really trying to ensure that we'll have a livable neighborhood, that the key historic aspects of the building would be preserved and that historical significance would be recognized," DuBois said.

Community members who opposed the deal requested that the council consider "adaptive reuse" options that would preserve the entire cannery building but make it suitable for other uses.

One plan that had been floated by former Mayor Karen Holman and land-use watchdog Jeff Levinsky would retain the cannery but allow the townhomes to get constructed just north of the building, at a site where Sobrato currently plans to build a two-story garage.

Under the concept, instead of building the garage Sobrato would be able to use the cannery for parking.

Terry Holzemer, who last month filed a formal application to designate the cannery as a historical resource, urged the city to retain the cannery and rejected a recent economic analysis that the city commissioned showing that the development agreement would bring more than $25 million in economic benefits to each party.

"If (Thomas Foon Chew) was alive today he would be appalled at this analysis of what he accomplished," Holzemer said. "I think the accomplishments were something way beyond simple dollars and cents and I'd hope you remember that as you're doing that deliberation — that this is more than just a dollar project.

"It's really about Chinese-American history, and that's very important to this country," he said.

Local architect Remi Tan similarly complained that the city's financial analysis did not evaluate any alternatives that would retain the entire building and convert it to retail use, office use or lofts.

Like others, he urged the council to delay its decision and direct the developer to consider adaptive-reuse options that would preserve the entire cannery building.

"We didn't see anything on the financial about adapting reuse and saving that very historic building, which was the third largest cannery in the United States at that time and that was owned by a Chinese-American during the time of the Chinese Exclusion Act, so it's a very, very historic building," Tan said.

The lobbying proved unsuccessful. While council members all agreed that the history of Thomas Foon Chew needs to be recognized and celebrated, they suggested that this can be done without preserving the entire cannery.

Sobrato is already required to provide public art and interpretive signage that tells the story of Bayside Cannery. It will also construct a small retail space such as a coffee shop in front of the cannery, allowing visitors to view the cannery's most prominent architectural feature, its monitor roofs, through skylights.

Vice Mayor Greer Stone suggested going further and renaming Portage Avenue to Thomas Foon Chew, a recommendation that all of his colleagues supported. Kou and Council member Greg Tanaka raised the idea of also naming the new city park after the agricultural entrepreneur.

Council member Pat Burt pitched the idea of designating the new park as Asian Heritage Park, a place that celebrates not just Thomas Foon Chew but the Filipino residents who worked at the cannery, the Japanese residents who worshiped at local temples and who were forced to live in internment camps during World War II, and other Asian communities that played an important role in the city's history.

"I know we all would like to get everything in a negotiation, but this is a big deal," Burt said. "This would be the largest new city park added in almost 25 years, since Heritage Park."

Council members also acknowledged that their leverage over Sobrato is limited. The developer had previously applied for a townhome development while invoking Senate Bill 330, which requires an expedited approval process and prohibits the city from changing design standards or zoning requirements. (The application was placed on hold to allow negotiations over the development agreement to proceed.)

In the absence of a deal, Sobrato likely would advance that application, while the city would not get the land and financial dedications that the development agreement guarantees.

Council member Julie Lythcott-Haims said rejecting the project would both unravel all the work of the city's negotiators and open the door for Sobrato to pursue another project, as is its right.

Council member Vicki Veenker noted that without a deal, the city runs a risk of ending up without public access to the historic site, without $5 million in contributions and without the dedication of 3.25 acres of land for park space and affordable housing.

"To me it balances out that we should go forward with this agreement and go forward with celebrating Mr. Chew's accomplishments and innovations," Veenker said. "And we can insist on that."

The Tuesday decision puts to rest a land-use debate that has befuddled past councils for decades. Though the Portage site is zoned for multi-family zoning and has been viewed for many years as a possible housing site, city leaders made an exception for Fry's Electronics, an important tax generator.

City leaders approved in the early 1980s a temporary provision that effectively allowed the commercial use to continue. They then voted in 1998 to make that exception permanent, with the idea of granting Fry's long-term stability.

But since the store departed in December 2019, city leaders had discussed the prospect of amortizing the commercial use and restoring its function for housing, an idea that created uncertainty for Sobrato.

The development agreement gives assurance to Sobrato that its commercial uses would be retained. It would eliminate the existing housing zoning and create five "planned community" zones with uses that are specified in the agreement.

While the council had historically favored having some housing at the site, members agreed Tuesday that the development agreement opens the door to a future project consisting entirely of 100% affordable units. Council member Ed Lauing lauded the deal for granting the city land for both housing and a park.

"We know new land is scarce; it doesn't exist in Palo Alto," Lauing said. "The parameters around this are a mixture of parks and affordable housing close to Matadero Creek, but this acreage is now going be owned by the city, so no one can tell us what we can't build or what we can build except ourselves."

Lauing also lauded the many residents who pushed for historic preservation.

"You basically launched his past into our future, and I think we should all be grateful for that," Lauing said. "And thousands of people more for decades to come in Palo Alto will know that story, which is going to be in full display right there at the cannery and hopefully our own history museum.

"So part of the building will be gone but all of the story will not be gone, ever," Lauing said.