11 Staff Report - Automobile Dealership Websitesn
DATE:
TO:
FROM:
SUBJECT:
COUNCIL AGENDA REPORT
March 2, 2006
MAYOR AND TOWN COUNCIL
DEBRA J. FIGONE, TOWN MANAG
MEETING DATE: 3/6/06
OTHER BUSINESS
) 1
CONSIDERATION OF A RESOLUTION ENCOURAGING THE
RETENTION OF AUTOMOBILE DEALERSHIPS AND ESTABLISHING
REQUIREMENTS TO CHANGE THE USE OF EXISTING AUTOMOBILE
DEALERSHIP SITES
RECOMMENDATION:
A. Discuss the need to set forth expectations and requirements to change the use of automobile
dealership sites.
B. If Council determines that it is desirable to adopt a document establishing the process to change
the use of an automobile dealership site, it should adopt the Draft Resolution (Attachment 1).
If amendments are needed to the Draft Resolution, staff will return to Council with a revised
resolution reflecting the changes requested by Council.
BACKGROUND:
As the Council is aware, three Los Gatos automobile dealerships will be closing. The Los Gatos
Auto Mall has closed and Swanson Ford will close in March. Los Gatos Hummer will be relocating
to Milpitas and it is unclear at this time if there will be a replacement dealership on this site, although
the current owner will attempt to secure a replacement. Developers have preliminarily met with staff
to discuss redevelopment of two dealership sites with other uses and have sought input on how the
Town Council and staff will view the changes in land use.
Redevelopment of the automobile dealership properties raises several substantive land use and
economic issues:
(Continued to Page 2)
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PREPARED BY: BUD N. LOR
DIRECTOR 0 COMMUNITY DEVELOPMENT
Reviewed by: Q S) Assistant Town Manager Attorney Clerk Finance
Community Development Revised: 3/2/06 2:55 pm
Reformatted: 5/30/02
n
PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: RESOLUTION ON AUTO DEALERSHIPS
March 2, 2006
1. Current Town Policies:
The Town has a number of policy documents that cite the importance of automobile dealerships
to the Town and contain language specifically addressing this land use. The Los Gatos General
Plan encourages a full range of commercial uses to support economic vitality and provide
citizens with a variety of commercial uses to support residents, minimize sales tax "leakage,"
and maintain an "economically stable community within environmental goals." The General
Plan also contains policies addressing dealerships in which the Town will "retain and enhance
auto dealerships" and "auto related uses currently existing shall be allowed to remain
indefinitely."
The Town's Economic Vitality Program also discusses the importance of automobile dealerships
to the Town to provide resident -serving retail opportunities, jobs, and sales tax. The Program
further states that the Town will assist dealerships to make improvements to their facilities while
maintaining sensitivity toward adjoining neighborhoods.
Last year, the Council adopted two policy documents applicable to automobile dealerships.
First, the Commercial Design Guidelines (CDG) contains a section that specifically creates
design guidelines for dealerships. In addition, Council adopted the Policy on Minor Alterations
to Commercial Buildings which allows for architectural enhancements and minor additions to
existing commercial buildings (including dealerships) to be approved through a public review
process by the Development Review Committee provided the design changes are consistent with
Town policies, including the CDG.
2. Impacts to Town's Economic Base:
The Town's automobile dealerships comprise a significant portion of the Town's economic base.
The Town derives 23% of its sales tax revenues from dealerships totaling approximately 6% of
the Town General Fund operating revenues which are used to provide core municipal services
to the community. If the number of dealerships declines, staff and some of the remaining dealers
are also concerned with the long-term viability of the Town as a location for automobile
dealerships due to the reduction in the critical mass of dealerships.
Staff is in the process of conducting outreach meetings with each dealership in Town. The
purposes of the meetings are as follows:
Obtain information on the status of each dealership.
• Obtain input on the state of the overall automobile retailing industry.
• Discuss the ongoing viability of Los Gatos in the regional automobile retailing
marketplace.
PAGE 3
MAYOR AND TOWN COUNCIL
SUBJECT: RESOLUTION ON AUTO DEALERSHIPS
March 2, 2006
DISCUSSION:
Staff believes it is important to provide potential developers with guidance on the Town's viewpoint
on the current automobile dealership uses before the Town receives any formal development
applications. Furthermore, staff would like to provide information to developers on specific
requirements that will need to be addressed in reviewing land use changes to dealership sites.
Staff has developed the attached Draft Resolution (Attachment 1) that, should Council adopt it, will
express and document the Council's concerns and expectations. Specifically, the Draft Resolution
contains the following:
• Recaps the Town's policies regarding automobile dealerships.
• States that Council strongly prefers to retain the existing automobile dealership uses.
• States it is preferred that a conversion of a dealership site be processed through a Planned
Development application.
• Establishes that the Town will initiate a rezoning of automobile dealership sites should a
conversion be proposed though a process other than a Planned Development (see Alternatives
section below for discussion on rezonings).
• Requires that an applicant submit a fiscal impact analysis which may be peer reviewed.
• Requires an applicant to propose mitigation measures to offset Town service impacts.
• Requires a demonstration that an automobile dealership is no longer a feasible use on the site.
• States that the applicant must demonstrate why the change of use is necessary, unavoidable, and
consistent with the General Plan.
• Encourages the automobile dealerships to update their existing facilities.
Like the Town's Alcohol Policy, this Draft Resolution would not become part of the Town Code,
but will express the Council's expectations regarding applications to change the land use of an
automobile dealership site.
ALTERNATIVES:
The Draft Resolution does not preclude the Council from taking additional actions to further protect
automobile dealership uses. As an alternative or in addition to the resolution, Council could consider
the following alternative approaches:
PAGE 4
MAYOR AND TOWN COUNCIL
SUBJECT: RESOLUTION ON AUTO DEALERSHIPS
March 2, 2006
1. Auto Dealership Zoning District:
Staff could develop a new zoning district specifically for auto dealership sites and the sites could
be rezoned from CH (Restricted Highway Commercial) to the new district. The new code would
greatly reduce the range of allowed uses and would require a rezoning to change the use of an
automobile dealership site.
2. Auto Dealership Overlay Zone:
Staff could develop a new overlay zone for automobile dealership sites. This approach would
retain the existing CH zone and apply an overlying zoning code that contains specific
requirements and standards for dealership sites. The Town currently uses overlay zones for
Planned Developments (PD) as well as Landmark and Historic Preservation (LHP) sites.
Either alternative will require that staff develop new zoning code language containing requirements
and standards for automobile dealership uses. The rezoning/overlay zone process will require
several public hearings and may trigger California Environmental Quality Act review. Staff
estimates either alternative will take nine to twelve months to implement and would require changes
to the Community Development Department work program. It may be necessary to adopt a
moratorium on dealership conversions until such time as the rezonings have been adopted.
CONCLUSION:
The Los Gatos automobile dealership uses are a significant component of the Town's resident
serving businesses and the Town's economic base. Several developers have met with staff to discuss
potential redevelopment of dealership sites. Staff recommends that Council adopt the Draft
Resolution to provide guidance to staff, Planning Commission, developers, and local dealers on the
importance of the Town's automobile dealership uses and to provide a policy statement on the
Council's expectations should the Town receive applications to change the use of a dealership site.
ENVIRONMENTAL ASSESSMENT:
It has been determined that this item is not a project as defined under CEQA and no further action
is required.
FISCAL IMPACT: None.
Attachments:
1. Draft Resolution.
PAGE 5
MAYOR AND TOWN COUNCIL
SUBJECT: RESOLUTION ON AUTO DEALERSHIPS
March 2, 2006
Distribution:
John Moore, Moore GMC Truck, Pontiac, Buick, 15500 Los Gatos Blvd, Los Gatos, CA 95032
Ron Battistella, Los Gatos Auto Mall, 620 Blossom Hill Rd, Los Gatos, CA 95032
Marc Chase, Bentley of Silicon Valley, 66 E. Main St, Los Gatos, CA 95032
Bruce Swanson, Swanson Ford, 16005 Los Gatos Blvd, Los Gatos, CA 95032
Mark Maxwell, Los Gatos Acura, 16151 Los Gatos Blvd, Los Gatos, CA 95032
David Spencer, Los Gatos Chevrolet, 15600 Los Gatos Blvd, Los Gatos, CA 95032
David Moeller, South Bay Honda, 16213 Los Gatos Blvd, Los Gatos, CA 95032
Russ Hill, United Auto Group, Inc., 16151 Los Gatos Blvd, Los Gatos, CA 95032
Gayle C. Jones, Trustee, 2272 Channel Rd, Newport Beach, CA 92661
Thomas Moore, PO Box 223179, Carmel, CA 93922
James S. & Paula K. McHugh, Trustee, 16150 Kennedy Rd, Los Gatos, CA 95032
Elizabeth K. Dodson, 15585 Los Gatos Blvd, Los Gatos, CA 95032
Robert Swanson Family Partnership LP, 16005 Los Gatos Blvd, Los Gatos, CA 95032
Nancy J. Bowen, Russel V. Roessler, Trustee, 111 W. St John St, #1040, San Jose, CA 95113
Grant R. Bishop, Trustee, PO Box 125, Los Gatos, CA 95031
BNL:RT:mdc
N:1DEVIRANDY\Town Council\AUTO DEALERSHIPSILGAUTODLR RPT 030606.wpd
(-\
RESOLUTION NO.
RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS
ENCOURAGING THE RETENTION OF AUTOMOBILE DEALERSHIPS WITHIN
TOWN AND ESTABLISHING REQUIREMENTS TO CHANGE THE USE OF
EXISTING AUTOMOBILE DEALERSHIP SITES
WHEREAS, the Town of Los Gatos contains a number of automobile dealerships
which are important businesses to the Town and its residents and provide significant revenues to
the Town through sales taxes; and
WHEREAS, the Town of Los Gatos General Plan contains Goals and Policies
encouraging a full range of commercial uses that preserve the Town's economic vitality while
maintaining the unique character of Los Gatos. For example, Goal L.G.5.2 is to maintain an
"economically stable community within environmental goals"; and
WHEREAS, the General Plan contains specific policies addressing automobile
dealerships in which the Town will "retain and enhance auto dealerships" and "auto related uses
currently existing shall be allowed to remain indefinitely"; and
WHEREAS, the Town's Economic Vitality Program addresses the importance of
automobile dealerships to the Town in terms of retail opportunities for residents, jobs, and sales
tax. The Program states that the Town will assist dealerships to make improvements to their
facilities while remaining sensitive to surrounding neighborhoods; and
WHEREAS, automobile dealerships represent roughly 23% of the Town's sales tax
revenues which comprises approximately 6% of the Town's General Fund operating revenues;
and
WHEREAS, a decline in revenue can potentially impact the Town's ability to
provide municipal services to its citizens; and
ATTACHMENT 1
WHEREAS, one Los Gatos auto dealer has closed and two other dealers have
informed the Town that they will close their Los Gatos dealerships in the near future; and
WHEREAS, the Town Council is very concerned with the health of the Town's auto
dealers and seeks to protect the long-term viability of the Town as a desirable location for auto
dealerships; and
WHEREAS, in the absence of more detailed analysis under the California
Environmental Quality Act, the redevelopment of one or more automobile dealership sites can
cause significant long term physical changes to the appearance and function of Los Gatos
Boulevard resulting from the construction of large structures, increased vehicle traffic, noise,
light and other physical impacts.
THEREFORE, BE IT RESOLVED: The Town Council expresses its strong
preference that the existing automobile dealer uses be retained on their current sites.
FURTHER RESOLVED: The Town Council establishes the following policies in
reviewing applications to convert automobile dealership sites to another use:
A. It is preferred that any proposed change in the use of an automobile dealership
be processed as a Planned Development application. If a conversion of an
automobile dealer site is proposed through an application other than a Planned
Development, the Town will initiate a rezoning of all dealership sites and may
adopt a moratorium on such conversions until such time as the rezonings have
been adopted.
B. The applicant is required to submit a fiscal impact analysis to assist the Town in
assessing the fiscal impact of the proposal. The analysis shall evaluate the
impacts to both Town revenues and expenses potentially incurred due to Town
service demands. The Town may require that the applicant's fiscal impact
analysis to be peer reviewed at the applicant's expense.
C. Based upon the fiscal impact analysis, the applicant shall propose mitigation
measures to offset Town service impacts associated with the project.
D. The applicant must demonstrate that an automobile dealership use is no longer a
feasible use on the site.
E. The burden of proof rests with the applicant to demonstrate why the change of
use is necessary, unavoidable and consistent with the Town General Plan.
FURTHER RESOLVED: The Town Council has streamlined the process to allow
automobile dealerships to upgrade the architecture of their existing facilities through adoption of
the Policy on Minor Alternations to Commercial Buildings and adoption of the Commercial
Design Guidelines. The Council encourages the dealerships to update their facilities consistent
with the Policy and Guidelines.
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of
Los Gatos, California, held on the day of 2006 by the following vote:
COUNCIL MEMBERS:
AYES:
NAYS:
ABSENT:
ABSTAIN:
SIGNED:
ATTEST:
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
CLERK ADMINISTRATOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
N:\DEW2ANDY\Town Council\AUTO DEALERSHIPS\LGAUTODLR RESO 030606.wpd
Town Council Minutes
Redevelopment Agency
March 6, 2006
Los Gatos, California
7:47 PM
OTHER BUSINESS
ITEM #10
Continued
2005/06 MID -YEAR
BUDGET
PERFORMANCE AND
STATUS REPORT
CLOSED PUBLIC
COMMENT
7:47 PM
COUNCIL DISCUSSION
Motion by Mr. Pirzynski to:
• Accept the 2005/06 Mid -Year Budget
Performance and Status Report, including
FY 2006-11 Five Year Financial
Projections.
• Authorize budget adjustments as
recommended in the attached second
quarter budget performance report.
Seconded by Mrs. Spector.
7:50 PM
MAYOR CALLED THE
QUESTION
Carried unanimously.
7:51 PM
OTHER BUSINESS
Continued
ITEM #11
CONSIDERATION OF
RESOLUTION
ENCOURAGING
AUTOMOBILE
DEALERSHIPS AND
CHANGE USE OF
EXISTING
DEALERSHIPS
ITEM #11
Consideration of a resolution encouraging the
retention of automobile dealerships and
establishing requirements to change the use of
existing automobile dealership sites.
Staff report made by Bud Lortz.
7:57 PM
COUNCIL COMMENT
None.
7:57 PM
OPEN PUBLIC
COMMENT
Mr. Hirschman
• Asked Council to hold off on adopting
any resolution until further discussion
takes place.
• Commented that he felt a lack of public
notice for the agendized item.
N:1COU NCI L\MI NUTES120061M20060306.doc
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Town Council Minutes
March 6, 2006
Redevelopment Agency Los Gatos, California
'OTHER BUSINESS
Continued
ITEM #11
CONSIDERATION OF
RESOLUTION
ENCOURAGING
AUTOMOBILE
DEALERSHIPS AND
CHANGE USE OF
EXISTING
DEALERSHIPS
PUBLIC COMMENT
Mr. Bruce Swanson
• Suggested that retail could help replace
the Town's sales tax revenue at the
location.
• Commented that manufactures are
making the profits in the automobile
industry today.
• Commented on the high cost of living as
a contribution to a loss in revenue for
Swanson Ford.
• Commented that the resolution is
discouraging.
• Commented that he felt that the auto
dealerships will continue to have hard
times in Town.
• Commented that displays are a huge
part of auto sales.
Council Comment
• Clarification on the speaker's opinion
regarding sales tax replacement at that
location.
• Asked Mr. Swanson for his opinion on
the future of automobile dealerships in
Los Gatos.
Mr. Davis
• Commented that the resolution lacked
balance relating to neighborhoods which
surround the automobile dealerships.
• Commented on the expiration of the
Land Use Permit for the Auto Mall.
Mr. Robert Swanson
• Commented on the changes in the
automobile dealership business.
• Commented on the new "hot spots" for
automobile dealerships.
• Suggest looking into retail for the future
on Los Gatos Boulevard.
• Commented on the 10-mile rule relating
to automobile dealerships.
• Commented that the resolution is
discouraging, and would like continued
dialogue with the Town.
• Asked for clarification regarding a peer
review process.
Council Comment
• Asked for comments relating to the
resolution and the future of the
automobile dealerships in Town.
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Town Council Minutes
Redevelopment Agency
March 6, 2006
Los Gatos, California
ITEM #11
Continued
CONSIDERATION OF
RESOLUTION
ENCOURAGING
AUTOMOBILE
DEALERSHIPS AND
CHANGE USE OF
EXISTING
DEALERSHIPS
PUBLIC COMMENT
Mr. Stansberry
• Commented on evolving the retail
business on Los Gatos Boulevard.
• Commented on looking at the General
Plan for guidance regarding
revitalization of Los Gatos Boulevard.
Mr. Scott
• Does not support the resolution.
• Commented on the decline in sales tax
and suggested the Town could find
ways to redevelop Los Gatos Boulevard.
8:36 PM
CLOSED PUBLIC
COMMENT
8:36 PM
COUNCIL DISCUSSION
• Questioned the revenue differences
between sales tax from automobile
dealerships and sales tax from retail for
the location.
• Questioned if studies have been
conducted on retail establishments along
Los Gatos Boulevard.
• Commented on developing a policy or
guidelines to give direction relating to
business establishments along Los Gatos
Boulevard.
• Commented on reviewing issues raised by
the speakers at tonight's meeting.
• Commented on continuing to showcase
Los Gatos as a "full service" community.
• Questioned the content of the resolution,
and requested further discussion and
information before making a decision.
Motion by Mr. Wasserman to table resolution,
and requested staff to bring back more
information at a study session on March 20, 2006
or April 3, 2006.
9:04 PM
MAYOR CALLED THE
QUESTION
Carried unanimously.
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