But commissioners also imposed several conditions Thursday on Oakland-based Browman Development Co., ordering the company to preserve historical artifacts and potentially incorporate some of them into the new building's design.
Downtown activist Frank Goulart, a Hayward Area Historical Society board member, said Friday that he is thinking about appealing the decision to the City Council.
"It's demolition by neglect," Goulart said. "They neglected the building so long that it looks so bad that everybody's willing to tear it down."
Many downtown merchants have been supportive of the Browman plans because the vacant building is considered an eyesore on the prominent downtown corner of Mission Boulevard and B Street.
"In our view, (the Browman project) will improve the overall look of B Street and help reduce the number of vagrants that congregate in this area," wrote Jim Wieder, owner of the nearby Hayward Ace Hardware store, in one of several letters local business owners addressed to city officials before the hearing.
Browman, a retail developer that built the adjacent Lucky shopping center, acquired the Palmtag in 2003.
The company announced in spring 2006 that it hoped to restore the deteriorating structure and had signed an agreement with Peet's that would make the coffee shop a centerpiece of the rehabilitated building.
But the developers came back to the city this year and said the two-story building was in such poor shape that restoration was not economically feasible. They proposed taking it down and putting a more conventional one-story retail building in its place.
Goulart said he has no doubt that Browman took a serious look at restoration, but wonders if the company could have found "more money" from county or state preservation grants. The city had already committed a $500,000 grant to Browman to help fix the exterior, and Goulart said the owner also could have benefited from a 10 percent tax break if the city had the building placed on the historic register. Thirteen buildings in Hayward are registered as historic.But neither city planners nor historical society officials deemed the building of historical importance. While it is one of downtown's oldest buildings, it has been altered so many times over the past century that it hardly resembles the ornate Victorian structure that appears in old photographs.
As a condition of approval, commissioners on Thursday said Browman must work with the historical society to designate architectural fixtures and "features of interest" that can be reasonably removed and donated to the society.
The commission also encouraged Browman to incorporate some of those "elements" into the new building's design, and pay for and erect a plaque describing the history of the Palmtag Building.
It was not entirely clear from the commission's statements if incorporating historical "elements" meant keeping physical artifacts at the site or designing brand-new flourishes inspired by them.
Goulart agreed there are many features, such as a spiral staircase, that are worth saving, but he doubts downtown's cramped history museum has room for them.
He said the buildings themselves are what make Hayward's storied downtown district unique. The basement, which he hasn't seen, was once an underground saloon, he said.
The building also housed Hayward's first telephone exchange and was a post office for a time.
Commissioner Christopher Thnay asked how likely it would be for Peet's to be successful with competitor Starbucks Coffee just across the parking lot. The developer responded that marketing research found that more businesses in an area draws more commerce. He said the entire building has a fully signed lease, with a bank as another major tenant.
Commissioner Al Mendall suggested that a two-story building would be a better design, but the developer said that constructing and renting out a second story would not be cost-effective.
Although Thursday's vote was unanimous, two of the seven commission members Mary Lavelle and Julie McKillop were absent from the hearing. The decision is considered final unless appealed.
No members of the public spoke up in favor of the project at the meeting, and Goulart was the only person to speak against it.
Goulart has also appealed a proposed 44-unit condominium complex that the Planning Commission unanimously voted to approve in July for the corner of C and Main streets. The City Council will make a final decision Tuesday to approve or deny that project.