The Palo Alto City Council kicked off a community discussion on the fate of Cubberley Community Center Monday when members backed a set of principles to guide the discussion.

The principles will also be considered by the Board of Education as the two bodies contemplate the possible joint use of the 35-acre site in the future.

In the decades since Cubberley High School closed in 1979 due to falling enrollment, the school district has rented the campus to the City of Palo Alto for use as a community center, garnering about $7 million a year in lease revenue for schools.

That lease is up for renewal in 2014 but, this time, school officials have indicated they may need to take back at least part of the campus because of rising school enrollment, particularly in the southern part of town.

A San Francisco architect has drawn several "conceptual plans" for a future Cubberley, several of them showing shared use between schools and community groups.

Officials stressed those sketches are nothing more than informal concepts to see whether multiple interests could be accommodated in the 35-acre space, eight acres of which is owned by the city.

The guiding principles and concept plans will be discussed Friday in a meeting of a Cubberley "policy advisory committee" on Cubberley, consisting of three City Council members and two school board members. The Cubberley discussion also will be augmented by a "community advisory committee" consisting of representatives of more than 20 community groups.

After hitting a wall earlier this year, developer SummerHill Homes scored a major victory Wednesday evening when its bid to build houses on a coveted south Palo Alto property earned the backing of the city's Planning and Transportation Commission.

SummerHill's proposal, which the commission swiftly approved by a 6-0 vote with Arthur Keller absent, is far less ambitious than the one the City Council unanimously struck down in May. At that time, the builder requested a zone change that would enable construction of 23 townhouses -- far more than the zoning typically allows -- at 525 San Antonio Road.

That proposal faced heavy opposition from the community and was panned by both the planning commission and the council. The new plan, which calls for 10 homes and no zoning changes, sailed through the commission hearing with little discussion and no neighborhood opposition.

The property, located near the Mountain View border, has been the subject of much debate in recent years, with SummerHill, the Palo Alto Unified School District and the surrounding neighborhoods offering disparate visions for its future. While SummerHill has consistently maintained that the site's proximity to the Caltrain station at San Antonio Road makes it ripe for dense housing, residents have argued that their area is too crowded and has insufficient services to accommodate an influx of new houses. The school district, meanwhile, has been eyeing the site -- which abuts Greendell School and Cubberley Community Center -- for a possible school expansion.

The 2.64-acre site was most recently used by the Peninsula Day Care Center, which closed in June after 35 years of operation.

The commission's approval of SummerHill's request could deal a blow to the plans of the school district, which earlier this month formally announced its interest in buying the site. This week, however, school Superintendent Kevin Skelly sent a letter to the commission saying that the district remains undecided about the possible purchase. He also stated in the letter that the district's expression of interest in the site was not related to SummerHill's most recent application.

"We again wish to emphasize that the PAUSD Board has made no formal decision to acquire the site and is still in the exploratory phase," Skelly wrote. "We understand that SummerHill Homes, Inc., remains under contract with the property owner, A&D Protocol, Inc., to purchase the property."

"Should development on the property be proposed by any party, including the owner or SummerHill, we again wanted to emphasize the fact that PAUSD has not made a decision to acquire the site. The City should remain free to process any applications for development as it otherwise would."

The new proposal calls for 10 single-family lots, five on either side of a cul-de-sac. Lot sizes would vary but would average about 9,700 square feet, said SummerHill Vice President Katia Kamangar. The cul-de-sac would be surrounded by a five-foot sidewalk. SummerHill has also agreed to include a public easement at the end of the cul-de-sac to allow future pedestrian and bike paths to Cubberley and Greendell, according to the project application.

The commission approved the project with few questions and little discussion. Commissioner Greg Tanaka said the project "seems to be heading in the right direction," while Commissioner Samir Tuma lauded the new plan for adhering to feedback from commissioners, council members and neighborhood residents, who overwhelmingly demanded a more modest proposal. He said he is very supportive of the new plan.

Foothill College's prospects for building a major education center in south Palo Alto suffered a fatal blow Tuesday morning when the City Council decided not to sell a portion of Cubberley Community Center to the college.

For the second straight meeting, the council held a late-night discussion that dragged on past midnight and featured comments from community members urging the council not to sell the Cubberley land. But unlike on June 27, when the council asked staff to consider sending a "letter of interest" to Foothill, on Tuesday members decided that the city's best response to the college district is, "Thanks, but no thanks."

The council decided to send the Foothill-De Anza Community College District a letter stating that it is not interested in selling the Cubberley site, but indicating the city's willingness to work with Foothill on exploring other sites for Foothill's use. The council reached its decision not to sell the land after a wave of protests from city residents and former elected officials, most of whom argued that the Cubberley space would be needed for a future school.

Their arguments proved convincing. Instead of negotiating with Foothill, the city will now work with the Palo Alto Unified School District to come up with a new plan for Cubberley.

Larry Klein, who supported sending a letter of interest to Foothill two weeks ago, quoted Kenny Rogers in explaining why he now proposed sending a letter of non-interest.

"Like the old country song says, 'You got to know when to hold 'em, know when to fold 'em.'" Klein said. "To put our staff, ourselves and the community through a useless exercise just doesn't make any sense."

The council voted 8-0, with Gail Price absent, to direct staff to work with the school district on creating a plan for the busy and dilapidated community center at Middlefield Road. The city owns an 8-acre parcel of Cubberley; the school district owns the rest.

In recent weeks, school officials took a stronger stance on the Cubberley land, which they see as a potential site for a new school. On June 28, one day after the council voted 6-3 to direct staff to draft a "letter of intent," the school board passed a resolution stating that it believes the district "will need the 35-acre contiguous Cubberley site to provide high quality and comparable K-12 educational services to all students in all neighborhoods."

"We also believe that working together with the City of Palo Alto to define and address our joint Cubberley interests will produce effective and mutually beneficial decisions for the residents we serve," the district's motion stated.

The council's decision Tuesday morning still leaves room for the city to negotiate a land deal with Foothill some time in the future, though given the lack of available land it's unclear what such a deal might look like. Foothill, which already has a campus at Cubberley, is seeking to build a new state-of-the-art Education Center and intends to make a decision on the site of the new center later this summer. The college district is eying a site in Sunnyvale and has issued a request for offers to private parties.