The San Mateo City Council approved plans Monday night for a housing and commercial development that would lead to the demolition of Bay Meadows racetrack.

The council voted 5-0 in favor of a development agreement, which would put about 1,250 homes, 1.25 million square feet of offices, 15 acres of parkland and 150,000 square feet of stores and restaurants on the property that is now home to the racetrack.

Although the plan is expected to be approved during a second reading on Nov. 21, Bay Meadows' fate ultimately may not be decided until San Mateo's residents have their say. A spokeswoman for a group that has long opposed the redevelopment, Save Bay Meadows, has promised to launch a referendum to overturn the council's action.

During Monday's meeting, council members expressed concern that if they didn't approve the project, the city may face more pressure to expand gambling on the 83-acre site, which has been a racetrack since 1934. Bay Meadows Land Co. has argued that horse racing will not be economically viable in the future in California because, unlike many other states, slot machines are not permitted at racetracks.

Council members also pointed to additional parklands, affordable housing and potential mass transit usage coming from the project.

"A city must change if it is to thrive," said Councilwoman Carole Groom.

Monday night's session was the third council meeting regarding Bay Meadows since the city's Planning Commission voted in September in favor of the proposal. Public hearings had been held earlier so no residents took the microphone Monday night.

But after the meeting, Donna Bischoff of Save Bay Meadows scoffed at the threat of more gambling, calling it "casinos of mass destruction," and said her group would try to gather more than 6,000 signatures and force an election over Bay Meadows' fate.

"This is a tragic, tragic day in the history of San Mateo," she said.

Christopher Meany of Wilson Meany Sullivan, the property manager at Bay Meadows, said the development would take years to build. Racing is expected at Bay Meadows for at least the next couple of years.

"We still have years more of process," Meany said, "but this is a meaningful milestone along the way."

One new element at Monday's meeting was that Bay Meadows agreed to donate $1 million toward public art projects.

The development also includes projects to improve traffic flow, including the construction of underpasses beneath the Caltrain tracks at 28th and 31st avenues and the extension of Delaware Street south to Pacific Boulevard -- the latter alteration providing another route through the city that parallels El Camino Real. Delaware Street would also include a three-block stretch of restaurants and shops.

A closure of the track would end live horse racing in San Mateo County, but off-track betting would shift to the neighboring San Mateo County Expo Center, which would keep any profits.

Over the years, Bay Meadows has featured such horses as Seabiscuit, Citation and Cigar, and such jockeys as Bill Shoemaker and Russell Baze.