BY DAVE PRICE
Daily Post Editor
A construction project that covered the First Republic Bank building in Palo Alto with scaffolding and black netting is forcing the year-old market on the ground floor to close, one of the store’s owners said Sunday (Jan. 5).
“The construction killed us,” said Chris Khoury, one of five brothers who owns the Khoury’s Market. “It was supposed to take a month but it’s taken seven months.”
Khoury said the scaffolding and black netting has caused people to think the market had closed, and sales were down by more than half.
“I even had people in the bank (who work on the upper floors of the building) tell me they thought we had closed,” Khoury told the Post.
Khoury said he felt the market could have survived had it not been for the seven months of construction.
The date the market will close hasn’t been determined, but the closure will leave at least eight people out of work. Chris Khoury and his brother Mark run the store. He said they both have families with children to support, and now they’ve got to find new jobs.
“I love working here. I love the people of Palo Alto,” he said.
The landlord, Jason Oberman of Blox Ventures, couldn’t be reached yesterday.
Second market to close
This was the second market to close at that location in two years.
In July 2017, the College Terrace Market opened and closed six months later. The market’s operators, Chris Iversen and Addison Wright, were later sued for unpaid rent and other expenses totaling $460,000.
The scaffolding and black netting was the latest obstacle to be faced by a retailer in that location. The other problems include:
• The city painted the curb in front of the store red, discouraging would-be shoppers traveling along El Camino from stopping. Parking is located underground, and shoppers reach the store via an elevator.
• The city allowed the building’s main tenant, First Republic Bank, to open a cafeteria for its employees, reducing the potential customers for the market.
City fines possible
Once the market closes, Oberman will have to find a new grocery store operator. If he doesn’t have a new tenant in six months, his company, Blox Ventures, will have to pay $1,000 a day for every day there isn’t a grocery store.
City Council, when it approved the development agreement for the building in 2009, said it wanted a $2,000-a-day fine, but council didn’t change the code enforcement ordinance to allow such a fine, leaving the maximum penalty at $1,000 a day.
After the first market closed in January 2018, and the six-month grace period ended, the city began fining Blox $2,000 a day.
The fines reached $344,943 before the Khoury family’s grocery opened in January 2019. But Blox contested the $344,943 penalty.
The city’s administrative hearing officer, Alan Seltzer, heard both sides of the case and in May reduced the amount owed to $139,250.
Seltzer said that such “code enforcement” fines are capped at $1,000 a day. He said that if the council had wanted to impose $2,000-a-day fines, it should have raised the code enforcement limit to $2,000.
Seltzer also reduced the fines by $25,000 because Oberman had made a “good faith effort” to replace the first grocery store.
The story over the market dates back to 2008 when City Council approved plans for a 58,000-square-food development in the block fronting El Camino between College and Oxford avenues, where JJ&F Market had operated for more than 60 years.
At the time, the market was run by three members of the Garcia family, Dennis, Lloyd and John, whose fathers, John, Joe and Frank, started the store. JJ&F came from the first initials of the fathers’ names.
In 2010, the Garcia cousins put the grocery business on the market because of declining sales and the unionization of their butchers, which they said pushed wages to unaffordable levels. The business was bought by members of the Joe Khoury family, who own a market in San Francisco.
The store closed when construction began on the 58,000-square-foot College Terrace Center, whose main tenant was originally going to be Yelp but later turned out to be First Republic Bank.
In July 2017, the College Terrace Market headed by Chris Iversen and Addison Wright opened.
Six months later, on Dec. 30, 2017, College Terrace Market announced it would close.
In July 2018, the landlord, an investor group headed by Brian Spiers, sold College Terrace Center to Blox Ventures, headed by Jason Oberman, for $78.5 million.
In January 2019, Khoury’s Market opened.