The city council has approved a residential and retail project on the property.

Previously, a hotel had been slated for the site, but its approval expired during a slumping hotel market.

In November 2004, Pinn Brothers, a San Jose development company, sought city approval for a 29-condominium project. After reviewing the request, the city council asked the company in January for a plan that included fewer residences and more commercial space.

At the council's March 1 meeting, Pinn Brothers returned with a revised--planning commission­recommended--plan for 23 condominiums and more than 2,300 square feet of retail-only space.

After a two-hour discussion, the city council approved Pinn Brothers' plan in a split vote of 3-2, with Mayor Patrick Kwok and Councilwoman, Kris Wang voting against it.

At a Feb. 15 meeting, the city council also approved a Pinn Brothers project on De Anza Boulevard.

"We have to make land use decisions, even if it is difficult," said Councilwoman Sandra James in voting for the project. "And one of the things we have to do is meet our state-mandated housing allocations," she said. The state requires Cupertino to plan for a certain number of residences, 15 percent of which have to be offered at below market rates.

The proposed residences for the project would be primarily one- and two-bedroom units. The retail space will occupy the ground floor fronting Stevens Creek Boulevard, an important component of the council's decision since it increases the likelihood of commercial success on the unusually narrow site.

The overall look of the project will be "a high-end type of development in the early California [Mission] style," said Pinn Brothers. The Adobe Lounge will be demolished.

"It's better than what's there today and generating no sales tax," said Vice-Mayor Richard Lowenthal, who voted for the project.

"Certain places are good for infill housing, and this is one of them," said Councilwoman Dolly Sandoval, pointing out the site's central location. "It encourages people to walk."

Even so, two council members and three residents speaking at the meeting remained against it.

"I am still not convinced," Kwok said. "I am opposed to the project on density and the changed land use," he said, pointing out the site's previous designation as a commercial property.

"The whole process is confusing with fuzzy numbers," said resident Bob McKibbin, who spoke at the meeting. "The bottom line is it is a residential development with a negative impact on the city's revenues and the schools. We are sacrificing the future health of the city for the developers."