Residents warn proposed Fair Oaks Plaza redevelopment would strip neighborhood retail

Sunnyvale planning staff and a developer described a 4.22‑acre mixed‑use proposal for 911 Dwayne Avenue Tuesday night that would add 67 homes and retain roughly 10% commercial floor area, but residents and several commissioners warned the plan would eliminate most ground‑floor retail that neighbors rely on.

Principal planner Norin Khiv Lepe told the Planning Commission staff would retain the Speedy’s Taco building at the corner and add a new two‑story, 15,635‑ft² retail building. Lepe said the project team is pursuing the city’s 2025 Retail Preservation Incentive Program, which reduces below‑market‑rate housing obligations in exchange for providing a 10% commercial floor‑area ratio. Lepe also disclosed staff missed a statutory deadline and that, under SB 330 and related permit‑streamlining rules, “the project is deemed to be consistent with the city’s development standards,” a change that reduces the city’s ability to require or deny requested waivers and concessions.

That legal timeline galvanized commissioners and members of the public. “If you’re saying these are now…we now have to rubber‑stamp [it] due to something the commission had no control over, honestly I don’t even know why we’re here,” Commissioner Payne said, pressing staff for the letter or timeline that established when the application was deemed complete.

Commissioners asked staff and the developer to provide project‑specific justifications for each requested deviation from objective standards — for example, the under‑eave projection, undergrounding of utilities, solar‑shading impacts and parking layouts — rather than relying on generic cut‑and‑paste explanations. Staff said it had sent a letter listing identified waivers but nonetheless missed the 30‑day consistency deadline required by state law, and that some safety‑related requirements can still be enforced as exceptions.

The project team, represented by Paul Muer of Wood Rogers and owner‑representative Nick Garrett, described the evolution of the plan. Muer said early submittals did not include the commercial corner parcel; Garrett said the owner purchased the corner parcel to preserve an existing tenant and to support neighborhood retail. Garrett said current vacancy at the center is elevated — staff recorded roughly 43% vacancy — and that some longtime tenants have struggled to remain viable. “We’d like to relocate the existing tenants,” Garrett said, adding that new rents would be market rates and that the developer is trying to balance grocery, restaurants and smaller retail needs in a constrained footprint.

Public comment stretched for more than an hour and a half and was dominated by opposition to the scale of retail reduction. Residents and neighborhood advocates repeatedly said the draft plan would cause a “food‑access” loss and warned of longer car trips, more traffic during commute hours and loss of neighborhood gathering places. “The total retail allocation needs to be increased and the grocery space needs to be more meaningful,” a public commenter said. Speakers cited seniors, people with disabilities and low‑income households who walk to the plaza and argued a two‑story retail box would not replace existing ground‑floor grocery functions (loading, refrigeration, customer access and affordable rents).

Speakers also raised environmental and public‑health concerns tied to demolition, including legacy contamination from a former dry‑cleaning operation and potential asbestos abatement needs. Residents asked staff to require a robust traffic and vehicle‑miles‑traveled (VMT) analysis that accounts for removing existing retail rather than treating the site as a greenfield development.

Commissioners emphasized the tension between city policies to preserve neighborhood retail under the Village Center master plan and state housing laws that restrict discretionary review. Multiple commissioners asked staff to return to the public hearing with clearer documentation on the missed deadline, a complete solar‑shading analysis keyed to the final building footprints, precise parking and EV‑charging counts, and project‑specific justifications for each deviation. Staff said a public hearing date has not yet been set and that it will prepare a staff report addressing those items.

Next steps: staff will prepare a public hearing packet with clarifying analyses and a formal staff recommendation; a hearing date will be published once the packet is complete.