The 320,000-sf store was expected to bring in at least $1 million in much-needed sales tax revenue to the city annually, in addition to producing several hundred jobs during construction and then operation.

Community members have opposed the project since it was first proposed, protesting at several city council meetings that the furniture chain would overwhelm the city with traffic. The community expressed a strong interest in building something that would benefit the city's residents, such as a supermarket, which the city has not had since the 1980s. City officials argued that no supermarket chains have shown interest in the property.

At a previous city council meeting, more than 100 people spoke out, both for and against the project, delaying the meeting until well past midnight and IKEA the decision until this week. City residents have also submitted petitions with thousands of signatures asking for a recall election for three council members.

At Tuesday's city council meeting, the vote was 2-2, with East Palo Alto Mayor Myrtle Walker and Councilwoman Donna Rutherford voting to not uphold an earlier decision by the city's Planning Commission to approve IKEA. The proposal was effectively dismissed.

"We're quite disappointed," says Pat Merwin of IKEA, adding that IKEA will assess what the vote means. Mayor Walker says the city will go back to the drawing board, reopening the planning process for the parcel.