After seeing a surge of housing in several south Palo Alto neighborhoods over the past decades, city officials are now poised to transform these areas near the Mountain View border into enclaves of industry and innovation.

Palo Alto's focus is on areas just west of U.S. Highway 101, including the neighborhoods around East Meadow Circle and Fabian Way, a quilt of small parcels along San Antonio Road and the area around San Antonio and Charleston roads, near the Taube Koret Campus for Jewish Life. These traditionally industrial and mixed-use neighborhoods have seen an influx of housing over the past decade, with large residential projects such as Altaire, Vantage and Echelon recently going up in the area.

This part of the city is one of two -- along with the California Avenue Business District/Fry's Electronics site -- that Palo Alto officials have identified as ripe for a major land-use changes. The city is putting together "area concept plans" for the two areas as part of its effort to update the Comprehensive Plan, the city's official land-use bible. While the planning effort still has a long way to go, the City Council on Monday night expressed support for the staff proposal to bring industry to East Meadow Circle and to lure large, revenue-generating businesses to San Antonio Road.

The council singled out the area around East Meadow Circle for major zoning changes out of recognition that this part of the city doesn't have the necessary infrastructure to support a housing surge. Council members cited a lack of neighborhood-serving stores, parks and amenities in this area and a shortage of public-transportation options, all of which would make it undesirable to allow additional housing to be built. At the same time, the council stressed the importance of industry to both Palo Alto's image and economic health.

"Our heartbeat has been research-and-development and innovation and to lose one of the last places in town with relatively inexpensive space of that kind is really unfortunate," Councilman Larry Klein said. "At the same time, we've been providing housing in a part of the community where it's difficult if not impossible to provide the same level of services as we do to other areas in the community."

Planning Director Curtis Williams said the proposal is to retain, enhance and attract high-end research-and-development and light industrial uses in this area.

The council endorsed this vision Monday by an 8-0 vote, with Councilwoman Karen Holman absent. Klein said the growth of housing and the diminishing of industry in this area was one of the reasons for his decision to return to the council in 2005. He called that the Echelon development a "mistake" and bemoaned the loss of industrial businesses in the area.

Though the concept plan would encourage industrial development, it would restrict the intensity of such developments near single-family residences. Vice Mayor Greg Scharff advocated targeting the East Meadow Circle area for incubators of start-up companies.

"I think as long as it involves innovation, we should allow it," Scharff said.

Williams stressed that while start-ups would be part of the picture, the city is also looking at other types of industrial uses. The point, he said, is to promote industry over "professional offices" such as attorneys and accountants in this area.

The San Antonio Road area, which is located southeast of East Meadow Circle and adjacent to Highway 101, would see changes of a different sort under the city's concept plan. The document aims to encourage large, revenue-generating businesses such as hotels or big-box stores east of San Antonio.

This, however, could prove complicated. Williams noted that this stretch includes about 66 parcels and 75 property owners. Bringing large developments such as hotels or major stores to this area would only be possible if some of these land owners consolidate their properties, which is far from a sure thing.

In the coming months, the city will analyze what types of incentives it could provide to the property owners to encourage this consolidation and create larger parcels, Williams said. Klein was among those who said they were skeptical about the prospect of consolidating lots around San Antonio.

"Are we going through a lot of effort to accomplish nothing?" Klein asked.

But he joined the rest of the council in approving the concept plan and directing staff to perform an economic study for the San Antonio Road section of the concept area. Councilwoman Gail Price said she was optimistic about the prospect of redeveloping this part of Palo Alto and called staff's concept plan a "very exciting opportunity" to achieve a "creative solution."

"This is an area that I think has languished, and if we don't have some structure and additional economic and community-development ideas devoted to it, it will continue to languish, which is not what we want for any of our areas in Palo Alto," Price said.