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16 Desk Item - Automotive Dealerships Study SessionCOUNCIL AGENDA REPORT DATE: April 17, 2006 TO: MAYOR AND TOWN COUNCIL FROM: DEBRA J. FIGONE, TOWN MANAGER SUBJECT: REMARKS: MEETING DATE: 4/17/06 OTHER BUSINESS DESK ITEM f (, CONSIDERATION OF A RESOLUTION EXPRESSING SUPPORT FOR AUTOMOBILE DEALERSHIPS AND DIRECTION ON ACTION ITEMS FROM THE AUTOMOBILE DEALERSHIPS STUDY SESSION The attached information was received after the report on this matter was finalized. Attachment 13 prepared at the request of Mayor McNutt. Attachments: 1-9. Previously Submitted 10. Letter from Nancy Bowen dated April 12, 2006 (2 pages). 11. Email from John Moore dated April 12, 2006 (4 pages). 12. Flyer provided by a council member from a member of the public (1 page). 13. Summary of Planning Permits (1 page). 14. Letter from Hoge, Fenton Jones & Appel, received April 17, 2006 (5 pages) 15. Study of Incentives & Policy Suggestions submitted by BT Commercial on April 17, 2006 (53 pages). N:\DEV\RANDY\Town Council\AUTO DEALERSHIPS\LGAUTODLR RPT 041706dsk.wpd PREPARED BY: BUD N. LOR _ DIRECTOR OF COMMUNITY DEVELOPMENT Reviewed by: Assistant Town Manager Attorney Clerk Finance Community Development Revised: 4/17/06 4:22 pm Reformatted: 5/30/02 Nancy R. Bowen P. O. Box 35660 Monte Sereno, CA 95030-0660 Phone 408-354-7414 Fax 408-354-7585 April 12, 2006 Mayor Diane McNutt Town of Los Gatos 110 East Main Street Los Gatos, CA 95031 Dear Mayor McNutt: R hD i APR 1 3 2006 fAYOR &TOWN COT1NCf' Enclosed is a copy of an article from last weeks Kiplinger Forecast Letter which, over the last 40 years, I have found to be quite accurate on business trends. It was with some reluctance that I extended the lease agreements for auto dealerships with my tenants, because I was not sure that the current structure of marketing cars will continue to be viable. The trend among the younger generation is to do their auto shopping on line and head to where they can get the best deal. 620 Blossom Hill Road was an eye sore when it sat empty for over 3 years. Now when Hummer moves to Milpitas, I fear the crowds coming to Vasona Park are again going to see empty buildings and a used car lot. This is Los Gatos? This council should be looking to the future and not be trying to save what is passing. My father was born on this property 105 years ago this month as was his father. He saw fruit trees that were no longer productive and had the property moved into the Town of Los Gatos during the 1950's. Grant Bishop leased the property and put in a Chevrolet Agency. Similarly Bill Stuart created a Pontiac/GMC dealership. Times had changed. Then the Town put up a great deal of resistance as the remaining part of the ranch became condos. We could not give the fruit away. Times have changed again. As I stated at the last meeting, I sincerely wish my tenants well. However, failed businesses are not good for anyone, but empty buildings are even worse. For the sake of the citizens of Los Gatos (and of Monte Sereno who shop here), please vote for Alternative 1 of the draft resolution. Sincerely, /0Z_;, /?,,,Zo' Nancy Roberts Bowen Property Owner of 16151 Los Gatos Boulevard and 620 Blossom Hill Road Enc. ATTACHMENT 10 he Kiplinger Letter - (March 31, 2006) The Kiplinger Letter FORECASTS FOR MANAGEMENT ©ECISIONMAK NG 1729H a NW Washington, DC20006-3938 • FCpii rFarecast&com • Val.83,140.13 MAT Personal finance Adviser • Mar. :;:itt' Search Back tSS:Ees Other Publications Herne Many GM and Ford dealers will close up shop in coming years, forced out by the ailing automakers, which want to cut marginal sellers with high inventories and poor service. GM and Ford are worried that the struggling dealerships will hurt weak brand names even more. Some multibrand dealers will consolidate sales locations. Prodded by GM and Ford with buyouts, they'll shutter several showrooms and bring weaker -selling car lines to lots with more -popular models... Buicks with GMC trucks or Lincolns and Mercurys with Fords, for example. Trimming dealerships won't be cheap or easy. Most are franchises, protected by state laws that mandate elaborate buyout procedures. More GM and Ford car outlets are slashiaa prices on their own, without any incentives from automakers, in a bid to perk up their sales. 3 / 51 a �D 6 Page 1 of 1 Patsy Garcia - Auto Dealership property From: "John Moore" <jymoore@moorevalue.com> To: "diane Mcnutt" <dmcnutt@losgatosca.gov>, "joe pirzynski" <jpirzynksi@losgatosca.gov>, "steve glickman" <sglickman@losgatosca.gov>, "mike wasserman" <mwasserman@losgatosca.gov>, "barbara spector" <bspector@losgatosca.gov> Date: 4/12/2006 4:32:34 PM Subject: Auto Dealership property Dear council members. At the bottom of this message is a link to an article that recently appeared in the Mercury News. Interesting how the approach of San Jose's council and staff is addressing the opportunity surrounding potential land use. Certainly the specific properties involved are much larger than the parcels in Los Gatos (except for the North 40) but the direction of San Jose to provide their residents with additional varied retail opportunities is a much better approach than limiting both your options and the property owners ability to maximize their return. I have no problem with being a contributor to our community, making it the best that it can be. For the past 50+ years our family has done exactly that. I urge the council to abandon the proposed resolution and take a proactive approach to bringing to our residents the retail shopping opportunities they deserve. http://www.mercurynews.com/m1d/mercurynews/businessil 431.5 08 7. htm John Moore Moore Buick Pontiac GMC 15500 Los Gatos Blvd Los Gatos, Ca. 95032 (408) 356-8111 jymoore_@moorevalue.com ATTACHMENT It file://C:1Documents and Settings\pgarcia\Local Settings\Temp\GW}00003.HTM 4/13/2006 MercuryNews.com 1 04/11/2006 12 parcel sales likely to boost retail shopping space in S.J. Page 1 of 3 .urn Nags Subscriber Services jccvcuvZhcillercurg News Mercy ryNews.corn FIND EMPLOYEES IN A WHOLE NEW WAY... Search o.. Recent News ._.'Archives '..! Web for Go 0 Jobs 0 Cars O Real Estate O Apartments O Local Shopping 0 All Classifieds • Create an Ad • Find an Ad • Pets O Dating NNews Opinion Business • Financial Markets • Technology • Personal Technology • Personal Finance • Drive • Real Estate Sports Entertainment Life & Style ONLINE EXTRAS Newspaper Ads Online Blogs Podcasts Photo / Video RSS Feeds Discussion Boards Traffic Reports Weather Past articles Newsletters Coupons Today's Front Page ITC ecowir`cc Back to Home Business Posted on Toe, Apr. 11: 2006 0 email this print this a reprint or license this 2 parcel sales likely to boost retail shopping space in S.J. By Jon Ann Steinmetz Mercury News San Jose's efforts to provide more shopping space are bearing fruit, so to speak: A former 74-acre orchard along Highway 85 is on track to be developed as a retail and industrial complex. Separately, an 18.7-acre parcel owned by Knight Ridder at 1-880 and Brokaw Road is under contract to be developed for retail uses as well. The projects would address issues raised in a 2004 retail study that concluded the city is "under -retailed" by about 25 percent, particularly in South San Jose and Berryessa. Both properties would require amendments to the city's General Plan to change their permitted land use. Nanci Klein of San Jose's Office of Economic Development said Lincoln Property, which is expected to close soon on its purchase of the Knight Ridder land adjacent to the Mercury News offices, has not decided exactly how it's going to use the land. Klein said the project could be one big -box store (Home Depot, Wal-Mart, etc.) or perhaps two large stores with smaller, free-standing stores on the property. "They're just beginning to talk to people in the marketplace about who specifically are the interested parties, but they definitely sound excited," she said. "I'd imagine Lowe's is interested ... but we'll see." Lincoln Property could not be reached for comment. A Knight Ridder spokeswoman confirmed the sale, but would not discuss details. Terms were not disclosed. The former orchard in South San Jose's Edenvale area is being developed by iStar Financial. It was part of IBM -- now the Hitachi campus -- when iStar bought it in June 2000 for more than $1 million an acre. TH M • San • Rea • Stat • Mec • Put • Ret, • iSta http://www.mercurynews.com/mld/mercurynews/business/14315087.htm 4/13/2006 MercuryNews.com 1 04/11/2006 12 parcel sales likely to boost retail shopping space in S.J. Page 2 of 3 Maps & Directions Yellow Pages Contact Us Feedback Site Map Advertise Print Services Jobs at MN.com Buy Photos Ethics Policy Its current zoning calls for 1.5 million square feet of industrial use, but iStar is seeking a General Plan Amendment for 1 million square feet of industrial and 450,000 square feet of general commercial use. The request comes before the San Jose Planning Commission on Wednesday. City planners are recommending approval. As proposed, it would become "a hybrid property that retains some of the industrial core," said Susan Walton, principal planner for the city. Klein said the iStar project is modeled after the adjacent Hitachi site, where the industrial portion is smaller to allow room for other uses on the property -- a boon for developers because they can lease the extra space for commercial uses. Of the 74 acres, 42 would be converted to commercial and 32 would remain as industrial. According to a city staff report, that could reduce the number of potential jobs on the site by 500 to 1,100. However, 495,000 square feet of industrial development would be reallocated to the New Edenvale Industrial Redevelopment area nearby, "so we don't lose any industrial capacity," Klein said. Further, the staff report says, the additional retail would meet the city's objective of providing more places to shop. To increase density, iStar is asking for a height increase to allow buildings up to 10 stories high -- 120 feet -- on the entire site instead of just a portion of it. Stores that could go on the property include home improvement, clothing, electronics or home furnishings. On the industrial side, it could house a large corporate headquarters or several smaller campuses for biotech, semiconductor, communications or other users. "There are a number of players in New Edenvale like Clinimetrics, Western Digital, IDT, that are already saying that in the not -too -distant future they're going to need some more space," Klein said. The shopping center, meanwhile, would draw from the 2,900 homes approved for the Hitachi transit village. GET HOME DELIVERY OF THE MERCURY NEWS • Clin • Kni! • Wal • Disi http://www.mercurynews.com/mld/mercurynews/business/14315087.htm 4/13/2006 MercuryNews.com 1 04/11/2006 12 parcel sales likely to boost retail shopping space in S.J. Page 3 of 3 r Ads by Google Startup Co. Office Space Ideal for startups - Full Service, Flexible Leases, Start -today! www.plugandplayrealestate.com South San Jose Home Find a Home You can Afford Map Search, Schools, Great Agents www.movoto.com San Jose Real Estate Search all San Jose homes for sale. See 1.4M photos & maps. Easy MLS www.ZipRealty.com REAL Cities e$' About The Mercury News I Mercury News Jobs I About the Real Cities Network I Terms of Use & Privacy St Copyright I RSS Feeds http://www.mercurynews.com/m1d/mercurynews/business/14315087.htm 4/13/2006 ALERT! AM.J RT! ALERT: T.P.-US COULD HAPPEN TO YOU COME TO THE TOWN COUNCIL MEETING MONDAY, APRIL 17, 2006 7PM THE SWANSON FAMILY MUST SELL THEIR AUTO DEALERSHIP PROPERTY AT THE CORNER OF BLOSSOM IJ.JLL AND LOS GATOS BLVD THE LOS GATOS TOWN COUNCIL WISHES TO MAKE THAT SALE IMPOSSIBLE Dear Property Owner: You are the owner of a property that has Commercial Zoning. Your property could be in danger due to unfair limitations placed on you by the Town. Be it known that the Los Gatos Town Council is considering placing a moratorium on all auto dealership properties in Los Gatos. By this resolution the only Buyer these properly owners could sell to would be one that could house an auto dealership. Section 3062 of the California Vehicle Code, "limits the ability of a franchisor to establish or relocate a dealership within are area where the same line -make is already represented. In doing so the section utilizes the term "relevant market area' which is in turn defined in Section 507 as being "any area within a radius of :10 miles from the site of a potential new dealership" (see Civ 231.95 Court of Appeal, Tlurd District, California Dec. 18, 1984 BMW North America. vs. New Motor Vehicle Board) The Swanson family have been forced to close their dealership due to a change in the economy. They have a willing Buyer who has committed. to following the current city codes and requirements in order to develop a muted use property with both retail shops and residential properties. If a moratorium demands that an auto dealer he a tenant in. that property, there will be NO BUYE.R because ALL AUTO DEALERSHIPS ARE INSIDE THE 1.0 MILE RADIUS. 'IBIS IS JUST WHAT COULD HAPPEN g'O YOU: 1n essence the Town of Los Gatos is discriminating against this property owner and any property owner who has an auto dealership as a tenant. This resolution or change actually imposes development requirements different than similarly situated properties. PROTECT YOUR RIGHTS AND SUPPORT THE RIGIHTS OF PROPERTY OWNERS. SPEAK UP AND TELL THE COUNCIL THAT THERE SHOULD BE NO CHANGE IN THE CURRENT CODES. IF THE TOWN •COUNCIL CAN TIE THE HANDS OF ONE PROPERTY OWNER, THEY CAN TIE THE HANDS OF OTHERS. THIS COULD HAPPEN TO YOU! Mrs. Grant Robert Bishop (MA TTACHMENT /Z SUMMARY OF PLANNING PERMITS April 17, 2006 Application Type Who Approves? Fee Scope of Review Architectural & Site Approval (A&S) Planning Commission $ 5,871.00 Evaluate architecture and site layout. Uses are not reviewed. Uses governed by Zoning Code. Conditional Use Permit (CUP) Planning Commission $ 4,069.80 Evaluate appropriateness of proposed use. Zoning Code identifies uses which may be approved at the discretion of the Planning Commmission (conditional uses). Evaluate the compatibility of proposed use with surrounding areas and establish conditions or standards for operation of the use. Planned Development (PD) Town Council $ 20,054.52 Zone change. Evaluate appropriateness of land use and general architecture and site layout of a proposed project. In approving a PD, Town Council establishes zoning regulations specific to the site. Requires Architecture and Site Approval for detailed architecture and site design after approval of PD. ATTACHMENT 13 N:\DEV\RANDY\Town Council\AUTO DEALERSHIPS\Summary Planning Permits 041706.xls p i I Hoge Fenton Jones & Appel Inc. Attorneys at Law SAN JOSE OFFI . Telephone: 408.287.9501 Facsimile: 408.287,2583 TRI-VALLEY Telephone: 925.224.7780 Facsimile 925.224.7782 Fax Cover Sheet 60 South Market Street, Suite 1400 San Jose, CA 95113-2396 OFFICE 6155 Stoneridge Drive, Suite 200 Pleasanton, CA 94588 TO: Mayor and Town Council FAX NO: 408.399.5786 and 408.354.8431 COMPANY: Town of Los Gatos PHONE NO: 408.354.6832 or 408.354.6834 FROM: John A. Hickey 408.947.2414 DATE: April 17, 2006 NO. PAGES: 5 MESSAGE: Re: 4/17/06 Council Agenda - Item 16 (Resolution re Auto Dealerships) Please distribute the attached letter to the Mayor and the Town Council in advance of this evening's Town. Council meeting. Thank you. P APR 1 7 2006 TOWN OF LOS GATOS CLERK DEPARTMENT CONFIDENTIALITY NOTICE The documents accompanying this telecopy transmission contain confidential information belonging to the sender which is legally privileged. The information is intended only for the use of the individual or entity named above. If you are not the intended recipient, you are hereby notified that any disclosure, copying, distribution or the taking of any action in reliance on the contents of tbis telecopied information is strictly prohibited. If you have received this telecopy in error, please immediately notify us by telephone to arrange for the return of the original documents to us. If this fax is incomplete or difficult to read, please call (408) 287-9501, x 1485 ❑Original will follow by mail 0 Original will no ATTACHMENT if Reply to: ■ an Jame 60 South Market Street Suite 1400 San Jose, California 95113-2396 Telephone: 408.287.9501 Facsimile: 408.287, 2583 John A Hickey 408,947.2414 jahehogefenton.com VIA FACSIMILE AND MAIL Mayor and Town Council Town of Los Gatos 110 E. Main St. Los Gatos, CA 95031 El I nA Hoge Fenton Jones & Appel Inc. Attorneys at Law San Jose ■ Pleasanton April 17, 2006 a PMYaaanlan 6155 stoneridge Drive. Suite 200 Pleasanton, California 94588-3283 Telephone: 925, 224.7780 Facsimile: 925. 224.7782 Re: 4/17/06 Council Agenda, Item 16: Resolution Regarding Auto Dealership Sites Dear Mayor and Town Council: On behalf of James and Paula McHugh,, we submit the following comments regarding the proposed resolution regarding auto dealership sites in Los Gatos. While the McHughs appreciate the Council's desire to keep auto dealerships in Los Gatos, the McHughs are dismayed to see that the resolution and action items proposed by Town staff would have the unintended effect of discouraging auto dealerships in town. The McHughs urge the Council to reject the proposed resolution and instead direct Town staff to work in close cooperation with auto dealerships, owners of auto dealership sites, and owners of potential auto dealership sites to develop an attractive incentive package to encourage auto dealerships in Los Gatos. 15400 Los Gatos Boulevard The McHughs own the property at 15400 Los Gatos Boulevard, located at the corner of Los Gatos Boulevard and Gateway Drive, through a living trust. As noted in the materials prepared by Town staff for the Council's March 20 study session, the property is not an automobile dealership site, because the Swanson. Ford dealership previously located at the site has been forced to close. Nonetheless, the McHughs are deeply concerned about the adverse impact that the resolution and the staff recommendations would have on the continued viability of auto dealerships in Los Gatos. Expression of Support Is an Empty Gesture While the McHughs appreciate the Council's desire to support auto dealerships in town, the mere expression of support in the draft resolutions is hollow, because is does not provide any Town of Los Gatos April 17, 2006 Page 2 practical incentive or support. Rather than adopt an empty resolution that fails to provide real assistance, the Council should acknowledge that certain sites in Los Gatos are no longer viable locations for auto dealerships and that the Town's policies have hurt, rather than helped, many of the auto dealerships. Working from that premise, the Council should direct Town staff to work in close cooperation with auto dealerships, owners of auto dealership sites, and owners of potential auto dealership sites to develop an attractive incentive package to help auto dealerships in Los Gatos. Fiscal Analysis Requirement Discourages Auto Dealerships Buried in item 3 of the staff report is a recommendation that the Council amend the proposed resolution to require that any application to change the land use of an auto dealership site include a revenue impact analysis or a fiscal impact analysis, and that the Town consider fiscal impacts when reviewing such an application. Unfortunately, the proposed requirements would discourage landowners in Los Gatos from leasing to auto dealerships, because the requirements would increase the cost of shifting from an auto dealership use to another use after an auto dealership departs. While the Town may be tempted to impose additional procedural costs or substantive restrictions that would make it more difficult for auto dealership sites to shift to another use, the practical effect would be that landowners would refuse to Iease to auto dealerships, and auto dealerships would refuse to purchase property in Los Gatos, thereby undermining the Town's objective. Prudent business strategy requires that a landowner maintain as many options as possible. If the Town imposes requirements that make it harder for a Landowner to shift from an auto dealership use to another use, the Town effectively limits the value of the site by limiting the landowner's options. Faced with a choice between leasing land to an auto dealership, and thus being required to pay more and overcome additional obstacles in the event that the auto dealership fails, versus leasing land to another commercial use without such restrictions, a prudent landowner would choose to avoid the auto dealership. The same consideration is true of any other procedural or substantive obstacle the Town might impose to discourage changes of use at auto dealership sites. By imposing new obstacles, delays, and de facto moratoriums, the Town punishes the auto dealerships that have provided so much of the Town's revenue over the years. Agenda Item Failed to Provide Adequate Public Notice The McHughs also object to the fact that the agenda issued by the Council for the April 17 meeting fails to describe adequately the action proposed by Town staff The agenda describes the proposed action benignly as "Consideration of a resolution expressing support for automobile dealerships and review of action items from the automobile dealerships study session." However, buried in item 3 of the staff report is a recommendation that the Council include in the proposed resolution an amendment to the Town's application procedure that would require a fiscal analysis for site development permits involving auto dealership sites. The requirement of a fiscal analysis is neither an expression of support for auto dealerships nor an action item from the automobile dealership study session, as evidenced by the minutes of the March 20 Council meeting. 192019 Town of Los Gatos April 17, 2006 Page 3 Good governance and the Brown Act require that the agenda include a reference to the proposed requirement of a fiscal analysis. The agenda item as posted fails to provide adequate notice, and the Council, even if it adopts the proposed resolution, must not include the provision regarding a fiscal analysis. Seek Input from Auto Dealers Before Develonine an Incentive Plan. Not After Town staffrecommends that the Town develop a proposed incentive plan to encourage auto dealerships to come to and remain in Los Gatos. If the Town wants to encourage auto dealerships to remain in Los Gatos, the Town must offer an attractive incentive plan; moreover, that incentive plan must reflect the knowledge and needs of the auto dealerships, not just Town staff. Unfortunately, Town staff recommends that the Council direct staff to convene a formal meeting with the auto dealers after Town staff prepares the Town Code amendments and the draft incentive package. With all due respect, this puts the cart before the horse and marginalizes the people and businesses that are in the best position to design the incentive plan. While Town staff may understand the planning objectives of the Town, Town stair does not understand the constraints and landscape of the, auto dealership market as well as the auto dealerships themselves. Rather than treat the auto dealerships as a token afterthought, the Council should require Town staff to develop an incentive plan only in close cooperation with the auto dealerships, and should direct the Town staff not to bring the incentive plan to the Council for consideration unless it has the support of the auto dealerships in Los Gatos. Commitment to Los Gatos The McHughs have Lived and worked in Los Gatos for almost 40 years and remain committed to the Town's economic health and community spirit. The McHugh property at 15400 Los Gatos Boulevard was a longtime auto dealership site and a source of much revenue for the Town. Now, despite the McHughs' best efforts, the site is no longer a viable location for an auto dealership. The Council must acknowledge that if the Town wants to encourage the survival of the remaining auto dealerships, it must revise its policies to provide real incentives and support. The McHughs therefore encourage the Council to reject the proposed resolution and instead direct Town staff to Work in close cooperation with auto dealerships, owners of auto dealership sites, and owners of potential auto dealership sites to develop an attractive incentive package to help auto dealership in Los Gatos. 192019 • Town of Los Gatos April 17, 2006 Page 4 cc: Jim and Paula McHugh Bob Krandel Norm Matteoni 192019 Sincerely, HOGE, FE 1 ON, JONES & APPEL, INC, hn A. Hicke • NAI BT Commercial Commercial Real Estate Services, Worldwide. April 17, 2006 The Mayor and Town Council Members Town of Los Gatos 110 E. Main Street Los Gatos, CA 95030 1650 Technology Drive Suite 600 San Jose CA 95110 tel 408 436 8000 fax 408 436 3699 www.naibtcommercial.com a2� APR 1 7?006 TCVti N C':L.CL—IATOS CLERK DEPARTMENT MENT Re: Incentives and Policy Suggestions that Assist Automobile Dealerships Achieve Economic Viability Dear Madame Mayor: As you are aware, my associate, Jon Stansbury and I, are the real estate sales representatives for Swanson Ford in the disposition of their inactive land site located at 16005 Los Gatos Boulevard in the Highway Commercial Zoning District. The attached, bound informal study is provided to you to illustrate some facts about: • The incentives the town has in place to support auto dealerships and/or landowners leasing to dealers. • Those incentives that the dealers themselves have suggested. • Those incentives offered in competing locations where the auto mall model, operating with proven incentives, is a thriving economic environment. These incentives are illustrated by a photographic tour of the auto dealerships in Los Gatos as compared to a similar pictorial tour of the Capital Expressway Auto Mall. Clearly, there are exceptional differences in the two operating models. We hope that this bound study will provide you with a direct illustration showing that the types of incentives asked for by your own dealership operators are found in this example of a successful "dealership" row. Please bring this bound study with you to the meeting tonight as you may want to use it as a ready reference. Please contact us if we can answer any questions. Sincerely, NAI BT COMMERCIAL/TERRACOMMERCIAL /' CL 1Cth Caxton Vice President Jon Stansbury i Vice President ./ cc: Los Gatos Town Manager, Community Development Director Los Gatos Daily News, San Jose Mercury News ATTACHMENT/S Build on the power of our network. TM'Over 300 offices worldwide. THE TOWN OF LOS GATOS NEEDS TO LOOK AT FACTS Qo a) 0 (n '> cn c a) c .o _ c- c (a o 0 0 , as -0 (La (n 0 m (a Ec 0 - _ 0a) <o D •L .,.., Z L �� 75 0 0 C.)0 ac) U) 0 -0 .0 c 0 0 E a) (a m i d c o 0 w ca c73 U a) c 2 0)o_-)>I—U) _ t c - o 0 D��= o CO 0 (0 c -0 > (9 —CZ c CO(no- � (ca _o_ To O 0)o c 0 70 0 o ;.p- c c o 0 o0 or 0 3 Keith Claxton o O L m 0 C 0) (a -0 a) Q Q) •c O a) N -0 (a 0 cn ci3C +� N cn o 4 �— Vice President NAI BT Commercial San Jose, California April 12, 2006 TABLE OF CONTENTS Facts Regarding the Automobile Industry, Dealerships and the Policies That Serve Dealership Operations Well An Informative Photographic Tour of Auto Row in Los Gatos What are the Incentives Offered by Competing Cities; a Photographic Tour of Capital Expressway Auto Mall Redevelopment is Proposed and is Being Delayed Section IV. 0 ct cu 00 ct v O 0 czt U 0 •�' N N 0 E 0 Ct Ct 0 • 0 0 .•--1 ICU 171.1( 44) b.A CAS bA CIJ 1.0 0 0 rzzs ct ct 0 a) O cizi. 0 N N bA E O cd •E o cip c/) ; � O I v W W site' A7,1 ct (34 taxes as has been 5 04 (14 0.4 E E 00 O ctzi O c cu bUA • ct •U O a) czt N o rzi ct 7)4 AUTOMOBILE INDUSTRY ECONOMIC REALITY • mature industries have reduced profit margins More competition means margins decline • Automobile Manufacturers are under pressure. • Automobile Manufacturers pass this pressure to their distributors. • As the profit per auto sold is squeezed, dealer profitability/viability erodes. z a 0 x 0 h 0 5 w 104.1.1", • .411 -• diam11.,11 ,11.11,1.1.1.1r,1111,11, 1.. :11...1... 114,11:1001,911.12 1:sx.....91.1701.•• • 11:11t ••,u Mug. WARM," 1 won eV4 • AZCA -------. • • • • . • • • • ra .a:,::,.• • ••I • • • ; 4•1/i -•;••;;=-=-7•••= • ••••,••••••-_ • • ". r A.:sq.:op m.....•asarlr TPA 11 /1 •%:1.471., •g, • :no ••• ••••• 1•111•7:,.;,. ••••:. • .- .... - :.,••••• , • 7'7 .4•41. 411 b. vri.v, wog •r rot 4 ..ad VS .1...W...1 9 •11:;111 . tC.Th7r• 1.;In.1. 0“=.....7. • ieam5:9/11.: Pee.F1 4.,VN r.. • • . tr.•.17:11/11,1:•••111,1 • .,11.1 I 1.• • •.• 1.1.1 S.? .11.1, • 1 1,...,4,1 1./ef• 24 WV. .1-tetiro rj,••••••••••••• 4,1. 1,4 ••• 1,4,4040 .1.41 .1.0.4119.1111.11 ^noon ••••••,it o• _•, ITN: lag 2.1 • I 41, 4•111 CU: , • X11.11•1111.: rl I • yr • • 4:11.c1:4%.,•;: hx.174 •;;;,Tarc.,r ;.4r) . ..411,1 • %INV) 111.7 nod,. uad JueSaus ry•vla 2;r:rt ..."remot .0.n. /4. 44 KI14,1.T.0 1I,11.1.4,,z w.to awe:7 Lif I .taiA Y I Vt.,: 'BIT! I OAVRTI-1 Si‘:)1.0 fAT s.] What do the auto dealerships in Los Gatos have as benefits? n rscA W • c.l •u •o ?� •ate Clp N 0 $-, Z '-' Ct O 0 • U . aJ 0 0, bo -4-) 0 cu ,.z:(, E :me, O © cA c�__, v; 4 • U O rO'-4-cA •- '� a 00 bb y. oh . - FC) gyp,., c,,5 -1::; ' ti„- 0 c, (...)5,) : ,„ — ,..., .5 8 N •N :-. z to to ct O an• .o .� O O QE '' O• gn cd E O N 'r' cd � by N ell `O • '-' �' p ct 0 W E c� .,, O O The Staff Report dated April 7, 2006 recites these same benefits ..nothing new. 0 rA CI a 0 0 • c; N cCi g(i) CZ! g cC3 N '7:3 ct U .r, CU cip • 0 0 cip cip o • a) d--) o ct J -5 E 0 tiZ-4' a) a) 7i 1 0 cA ct a) bi) . Ct '4g Ct 13 to ct tyJy�� 0 5 V ct 0 v:E ,,-5_,) a, au 0 cd 0 C%1 a) C/) - . Q) 0 73 . ,__, in b.A Ct 0 up c't CD 4.% (A ---I 0 bi • N ^' U O a' Ct ct CA cA CD a.) c� � a) Lu • . • . None of these suggestions have been embraced to date. 0 0 H a) 17E P4 o o C7t L" 0 0 0 f Ct CD Ct CA a, I -'ll i •n IMIin S reet i IIent1e of Los ato Los Gatos Acura /". CD • C/ 0 • lot •'; IIMMINII I os Gatos C -vro e a r4S1i1SIiu% iitaiPDiit:' ►)U cu au 0 0 ,-.0 ti Restrictive or Tedious CUP Review or Potential Restrictions on Use I ast Property in t e Town Stu o y of Dealershi I eA a) - CI) 6 Q COttn vi czt ° , Z o 7,d ,..c o to (1) mtz 77: 7i c+- -15) © -+C-4t E • ,--1 , to E .. (ii None of these suggestions have been embraced to date. - CV i•, • CUP • � O CV CJ CIJ CCU • O .14 •O •O CA NU •�" y Pmt CA ta) o cu o O � O CV Well, the other cities offer incentives: CEi N O CICS 4-4 • • c�3 Ct a) ct CC$ cr) O •r+ cn a H •o Dealers do not have to deal with street landscaping. Dealers have more signage • Dealers build larger buildings on their sites (higher FAR (floor area ratios)) E 0 cn 0 (1) cz1Cz$ a) U N •1 O a) • a' Ct •� a) . 411 N•'i' -CU CI) Q �-' cA o o'5 ct 7154 7454 h Z tk • imi •,mj -+) 4� — O 0 a� 5cu U lit E • , W cip O G CD CI o Ct CA cumo sales area Example: Pylons mark start of Capital Expressway Auto mall n .-454 .-454 CCU 14 et ;) tit p4 E F2 :4 C CZ: Capital Expressway ril 1-7450 cit pm: • Poi • CA +14 o � * z •- a -45 o c Pit +.4 01) 0 E 44 7454 Ct •- CI 0 C A This other city offers incentives: Example: New Lexus Bldg O _g Ct W 14 A4 r7 cA ~ c' ''8 ci4 pz o -4-4 *-4--z w) = et © WA O O Fmt .. — tk •IE g 8 M E© (4 •E cu ci) 2 cA ;* ct � o O .v PM Ct (L) cA O 71 i• LA A H • Stevens Creek Buick, GMC Example: Allison B Stevens Creek GMC has three floor parking structure Allison is building 4 stories with parking on roof (5th Floor) 0 ct cu a) 4 o 0 a) -4--acA 4a) • r--)ci) a) 5 a, o a) . . a) T=1-, 0 a) a) 0 a) . CD 0 (I) a, m4:1 ctt a) w5 : 1-4.4 E c a) cr) : c� Capital Expressway Auto Mall H a) 774 C) 7i Ct CZ! CA . 5 0 0 - U ct a) .'--' 2 O CA C vD c� 0 0 . a.) Q.) F1.• 3 0 CC3 Ct bi) 4-4 • (I) • r-4 1) 0 ct O CD 0 O (") (5 se o im- 0 • 7-4 a.) Balloons and Bunting b.Q CD a) co L.I. V a) 44 co O CD CO W oL ct c o CD (i) 0 Lincoln Mercury on Capitol as ital Expressway GMC Dea ershie n IC ob Lewis Suzuki & H ndai on Capito , it II FinitffRn a e ital Expressway For el • 5 N ct IFTZ tU 0 171. CA • Pi 4.4 sta Ct = la • /••• V) U EVALUATE WHAT YOU SEE The auto industry is changing! Why be in denial and hold to the past when you know: D 0 o -0 c -,� 0,a �, - 0 (a4- ` E o .� z° i"-0 C Q. u)o O 0E -0 co a C Z C a N O i > 0 co O� o),3 L ..E L .?. N N i ca 0 _ •.., u w� w— O L _ CO 9 �O'y-Q wt m r, z 13 Q. 00ca c co ca a) cn Q a s L c6 O el3 ca u) p s L a> 0 V a) ,,., N o O : CDa) L 'C (I)E 0 L.,`0 (3 a) Z 2.0 L _ L cn 73 � i ,G ,C Q. � i o Ri O 3 E ca O In aO Q Q *r 4.' .Q - CD L O o Z Q C ".' L N d V cat CB > D ca cca o E _C 0 may.. w'Q.. cn 3 3 oR o o .cn_c a)_ o00 �V,� Z con tn N I--.I--.I--I-- 49. 0) OF--OCZ i Los Gatos can only be a niche participant now...and that niche is going to dwindle LOOK AT YOUR REAL SITUATION • bIJ • ct CCU O N • Cl1 • 754 ct � � O ct C11 N O • (4 O Ct c 14 • 1.4 — O vp 0-4 CI)O REDEVELOPMENT 0 N bn ,S�-' (CI CI O O o ci) a.) •-• • F --I .44) 3 ,-.E 0 :_E -5, E , ,,, , ra, ci, +) E +2, an a.) '-' p a) O > tit00 a) rai U O N 0 Td 7-1 4D O O O vi O U G ct ct ¢, �+ p E,,, N +-' rn 3 `i' b,A 4 y 5 al cz1 p :-� 'V•> O p c� p O O = a4 c N : u Ov p • O -' pi.., cn , CDbi ct3 aA aIV ,..0 to 1, cti io H GA c// H • CD O • a) O O O 0 O U 0 a) Z U O o o °' �, W a)ct� W � � � U O U E '-- l' v-z: 0 (i) 0 c a 0 ,4 •o ct cE3 a.) _ U cc Let's look at some examples of possible development: ^a) rl 0 7't 4-1 a. 1 0 w • 4.4 E _o o REVIEW IN SUMMARY a,it '1-1 n cfs 4-1 y •ro ¢' E O C.4 "Z y CIJ v a ,- a •Ei O - 1 a� Cl eo o � � CJ "C mtZ cd oa,� to 0 czi aa4 • - .r cZa) CL O O 4-1 (14 0 ct cil v� a a, r� .� - ct b ra, .:� a,- "� �" I: IC O y4i 1:1 •� = ^a VS a it O 4> 4.) .-+g 4.rt—, ��0 6 act � yE a= ,� ,� 11 o •woo 0 a,F �� p bA a ✓� +� .a Ct O c4 'a Zvi = 6 4-4 0 �s ° .�c 'ccs �O O a� p cJ ell v ct a 6 01) o r0= oa vaW -8 'V CIO v� �'A � �y^d a ,��' OC v az c., a, > a O cd E-1 ct R. W - w o. i--i f. = • . . Let's do the honorable and appropriate thing here. Town Council Minutes Redevelopment Agency April 17, 2006 Los Gatos, California 7:47 PM 1 PUBLIC HEARINGS ITEM #15 Continued ZONE CODE AMENDMENTS A-06-01 THROUGH A-06-11 COUNCIL DISCUSSION Motion by Mr. Pirzynski to make the required finding that the proposed Town Code amendments are consistent with the General Plan and its elements. Seconded by Mr. Wasserman 7:47 PM MAYOR CALLED FOR THE QUESTION 3/2 Mr. Glickman and Mrs. Spector voting no. 7:48 PM • Questioned if proposed Town Code amendment A-06-09 sub -section C-1 could be removed from the amendment process. • Concerns regarding adding approval processes to the Planning Commission. Motion by Mr. Wasserman to introduce the ordinance to effectuate the Town Code amendments with • The exception to remove A-06-09 sub- section (C) which reads: 1. The proposed use will result in a significant loss of current or potential revenue to the Town. • And to renumber ordinance accordingly. Seconded by Mrs. Spector. 7:54 PM MAYOR CALLED THE QUESTION 4/1 Mr. Glickman voting no. 7:55 PM OTHER BUSINESS ITEM #16 CONSIDERATION OF RESOLUTION EXPRESSING SUPPORT FOR AUTO DEALERSHIPS ITEM #16 Auto Dealers (follow up to 3/20/06 Council Study Session) (16-36) Consideration of a resolution expressing support for automobile dealerships and review of action items from the automobile dealerships study session. Staff report made by Bud Lortz. 8:06 PM COUNCIL COMMENT • Questioned the noticing process relating to the 29 parcels on Los Gatos Boulevard which are over 40,000 square feet. • Clarification regarding the resolution applying to all such properties including the Swanson property. N:\CLKWACKIES MINUTES\Draft\MM04-17-06.doc 7 of 13 Town Council Minutes Redevelopment Agency April 17, 2006 Los Gatos, California OTHER BUSINESS Continued ITEM #16 CONSIDERATION OF RESOLUTION EXPRESSING SUPPORT FOR AUTO DEALERSHIPS COUNCIL COMMENT • Questioned if the proposed resolution would require a Planned Development application. • Commented on Council's decisions regarding land use issues relating to Los Gatos. • Clarification regarding the operational use of the words "review carefully" as stated in the proposed resolution. • Commented on a streamlined process for the Architecture and Site Application. • Commented that the proposed resolution is benign and, if passed, discussion could move forward regarding the nine action items contained in the staff report. 8:22 PM OPEN PUBLIC Mr. Moore COMMENT • Commented on traffic issues raised by staff, and the need for traffic to attract automobile sales. • Suggested retail options for Los Gatos Boulevard. • Commented against supporting the proposed resolution. Mr. Robert Swanson • Commented on the different automobile dealership franchises, and stated that they have no interest at this time in locating to Los Gatos. • Commented against supporting the proposed resolution. Council Comments • Questioned which of the three "resolves" was of concern to Mr. Swanson. • - Clarification regarding the importance of traffic flow and having dealerships in a close proximity. • Clarification relating to the 10-mile rule. Ms. Bowen • Commented against supporting the proposed resolution. • Stated that she feels that the resolution intervenes between property owners and tenants. Mrs. Swanson • Commented against supporting the proposed resolution. • Commented on the Swanson's property rights and the delays associated with the proposed resolution. N:\CLK\JACKIES MINUTES\Draft\MM04-17-06.doc 8 of 13 Town Council Minutes Redevelopment Agency April 17, 2006 Los Gatos, California OTHER BUSINESS Continued ITEM #16 CONSIDERATION OF RESOLUTION EXPRESSING SUPPORT FOR AUTO DEALERSHIPS PUBLIC COMMENT Mrs. Swanson Continued • Commented on the lack of interest from other auto dealerships relocating to Los Gatos Boulevard in the near future. • Commented the proposed resolution would force auto dealerships to prove their insolvency if they have to close their doors. • Asked for clarification regarding the nine action items identified in the staff report. Council Comments • Clarification from Mrs. Swanson regarding the three "resolves" in the proposed resolution. Mr. Hickey • Commented against supporting the proposed resolution. Mr. Lewis • Commented against supporting the proposed resolution. • Commented how the manufacturers control the dealerships and the locations for dealerships. • Commented on market surveys with the automobile dealership industry which are routinely done by the manufacturers. Mrs. McHugh • Commented against supporting the proposed resolution. • Suggested that the Town use incentive plans and work with the existing dealerships to keep them in Town. Council Comments • Asked Mrs. McHugh for ideas relating to incentive plans. • Asked for clarification regarding her ideas relating to the nine action items. • Commented that the action items should not take 4 to 6 months to accomplish. Mr. Skow • Commented against supporting the proposed resolution. • Commented against supporting the nine action items. • Commented against land use changes and Planned Development requirements relating to auto dealership properties. N:\CLK\JACKIES MINUTES\Draft\MM04-17-06.doc 9 of 13 Town Council Minutes Redevelopment Agency April 17, 2006 Los Gatos, California OTHER BUSINESS Continued ITEM #16 CONSIDERATION OF Mr. Skow Continued • Commented that the Town's review process is adequate, and asked why the Town would need the resolution. Council Comments RESOLUTION • Clarification on supporting Planned EXPRESSING Development requirements for all SUPPORT FOR properties that are currently dealerships. AUTO DEALERSHIPS Mr. Doyle PUBLIC COMMENT • Commented against supporting the proposed resolution. Ms. Fenton • Commented against supporting the proposed resolution. Ms. Jones • Commented against supporting the proposed resolution. • Commented on encouraging and supporting the dealerships that are currently in Los Gatos. • Commented that many dealerships rely on their used car sales, and suggested that dialogue with the dealerships and studies should be done before the Town would allow stand alone used car dealerships. Council Comments • Questioned if Ms. Jones would be willing to provide dealer input in an ongoing dialogue. • Clarification regarding her support relating to the nine action items listed in the staff report. • Questioned pursuing used car dealerships as stand alone dealerships. Mr. Pau • Commented against supporting the proposed resolution. Mr. Moulds • Commented against supporting the proposed resolution. Mr. Hirschmann • Commented against supporting the proposed resolution. • Questioned the intent of the proposed N:\CLKWACKIES MINUTES\Draft\MM04-17-06.doc 10 of 13 Town Council Minutes Redevelopment Agency April 17, 2006 Los Gatos, California OTHER BUSINESS Continued ITEM #16 CONSIDERATION OF RESOLUTION EXPRESSING SUPPORT FOR AUTO DEALERSHIPS PUBLIC COMMENT resolution. Council Comments • Questioned if Mr. Hirschmann had an opinion as far as requirements for Planned Development applications for the 29 parcels with 40,000 square feet or more. Mr. Wolf • Commented against supporting the proposed resolution. • Commented against any restrictions for property rights. Mr. Claxton • Commented against supporting the proposed resolution. Ms. Culker Smith • Clarification for incentives to only car dealerships. • Clarification why incentives are being talked about now. • Will the community have input on the incentives and design changes on Los Gatos Boulevard. Mr. Stansbury • Commented on looking to retail for Los Gatos Boulevard. • Commented against supporting the proposed resolution. Mr. Smith • Commented against supporting the proposed resolution. • Suggested a study group formed of businesses along Los Gatos Boulevard to gather input for redevelopment of the area. • Commented that the guidelines and ordinances are fine and do not need any resolution. Mr. Matteoni • Commented against supporting the proposed resolution. Mr. Davis • Supports the proposed resolution. 9:53 PM CLOSE PUBLIC COMMENT N:\CLK\JACKIES MINUTES\Draft\MM04-17-06.doc 11 of 13 Town Council Minutes April 17, 2006 Redevelopment Agency Los Gatos, California 9:53 PM OTHER BUSINESS Continued ITEM #16 CONSIDERATION OF RESOLUTION EXPRESSING SUPPORT FOR AUTO DEALERSHIPS COUNCIL DISCUSSION • Commented that staff could be directed to look into any of the nine action items listed in the staff report without having to adopt the resolution. • Commented against supporting the proposed resolution. • Clarification regarding a development agreement with Mr. Pau relating to the Swanson property. • Commented that property rights must be considered in the context of broader community needs. • Commented on community input relating to the Los Gatos Boulevard Community Design Plan. • Would like to give direction to the planning process. • Commented on the benefits of open communication with the auto dealerships. • Commented on the balance between the neighborhoods and the dealerships. • Commented on the benefits of using the Planned Development process. • Commented on the community's fear of property values going down if these changes were made. • Commented on the variation in facts and assumptions that market studies may generate. • Commented about concern with requiring fiscal impact information. • Commented on the need for more information on the development agreement process. • Requested information on the consequences and benefits of requiring Planned Development applications. Consensus to follow up with: • Staff review the nine action items for any follow-up N:1CLKIJACKIES MINUTES\Draft\MM04-17-06.doc 12 of 13