Staff Report Report from the Commercial Specific Plan CommitteeCouncil Agenda
Date: 6/18/90
Item:
TOWN OF LOS GATOS
Council Agenda Report
DATE: June 13, 1990
TO: MAYOR AND TOWN COUNCIL
FROM: ROBERT F. BEYER, INTERIM TOWN MANAGER
SUBJECT: A. REPORT FROM THE COMMERCIAL SPECIFIC PLAN COMMITTEE.
B. RECOMMENDATION TO INTRODUCE AND ADOPT AN URGENCY INTERIM
ZONING ORDINANCE PROHIBITING NEW OFFICE ACTIVITIES ON THE GROUND
FLOOR IN THE DOWNTOWN.
C. RECOMMENDATION TO ADOPT A RESOLUTION CONCERNING THE PROPERTY
SOUTH OF SARATOGA AVENUE AND EAST OF HIGHWAY 17.
RECOMMENDATION:
That the Council take the following actions:
1. Amendments to the sign ordinance:
a. Direct the Planning Department to schedule a public meeting with the auto dealers;
b. Refer this matter to the Planning Commission to develop specific amendments regarding
'space for lease" signs and signs at auto dealers.
2. Procedures relating to projects that create traffic Impacts:
a. Adopt the proposed revisions to the Traffic Policy as recommended by the Planning
Commission with an amendment to encourage high tax revenue generating businesses at
the edge of Town.
b. Direct the Planning Department to develop a definition of high tax revenue and develop
procedures that would streamline the review process for these projects.
3. Downtown Parking:
a. Direct the Town Engineer to prepare a resolution amending the two hour parking limit for
on street parking in the Downtown to one hour and institute a permit parking program.
4. Development of property south of Saratoga Avenue and east of Highway 17:
a. Adopt the draft resolution attached as Exhibit 1.
(Continued on Page 2)
PREPARED BY: LEE E. BOWMAN I�
Planning Director/Deputy Town Manager
LEB:RR:Ikj
"1G!\ost 11yn \L- 16113
Reviewed by: Attomey
TOWN COUNCIL ACTION DIRECTED TO:
ACTION OF COUNCIL
APPENDIX A
PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: REPORT FROM THE COMMERCIAL SPECIFIC PLAN COMMITTEE
DATE: JUNE 18, 1990
5. Off -site auto storage:
a. Refer to the Planning Commission an amendment to the Zoning Ordinance to allow off -
site auto storage in all zones subject to specific standards with a Conditional Use Permit.
6. Urgency Ordinance prohibiting new office uses on the ground floor in the Downtown:
a. Make the finding that the Urgency Interim Zoning Ordinance is necessary to protect the
public health, safety and welfare as set forth in Section I of the Draft Ordinance (Exhibit 2);
b. Waive the reading;
c. Introduce Urgency Interim Zoning Ordinance;
d. Adopt Urgency Interim Zoning Ordinance;
e. Instruct the Town Clerk to schedule a public hearing for July 2, 1990, to extend the
ordinance for 10 months and 15 days.
NOTE: A four -fifths vote of the Council is required to adopt an Urgency Interim Zoning Ordinance.
BACKGROUND:
On April 17, 1989, the Council approved the formation of a Committee to create a Commercial Specific Plan.
The Committee has been meeting on a regular basis since January, 1990 and divided the Town's commercial
areas into 12 subareas. These commercial subareas were studied individually during a series of public
workshops. The Committee solicited input from all businesses and property owners in each area. During
the last two meetings, the Committee reviewed the issues and comments from the merchants and property
owners and developed specific recommendations to address those issues and comments that require
immediate action. The Committee intends to continue meeting to discuss the more complex issues and to
develop a draft Commercial Specific Plan.
DISCUSSION:
On May 31, 1990, the Commercial Specific Plan Committee recommended that the Council set, as the
highest priority, staff time to prepare a Commercial Specific Plan. In addition, the Committee recommended
that Council provide funds to hire consultants for the preparation of various special studies including a
market study to determine the commercial/business needs of the community and a report identifying the
types of businesses which would provide the greatest source of revenue for the Town.
The following is a summary of the Committee's other recommendations regarding the items that should
be addressed immediately.
Sign Ordinance:
1. Hold a meeting to solicit input regarding special event signs, lease signs, and the duration of
temporary signs. The Committee is concemed with the size, number, orientation and duration of
temporary signs. The Committee recommends that for lease` signs be allowed to be double-
faced so they may be placed perpendicular to streets to provide greater exposure. The Zoning
Ordinance currently requires that these signs be single -faced.
2. Develop a handout regarding the sign ordinance to be distributed to local businesses. It appears
that some local businesses do not clearly understand the sign ordinance and have interpreted it to
be more restrictive than it actually Is. The Planning Department was working with the Chamber of
Commerce prior to the earthquake to develop a handout but since that time no progress has been
made in completing the handout.
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PAGE 3
MAYOR AND TOWN COUNCIL
SUBJECT: REPORT FROM THE COMMERCIAL SPECIFIC PLAN COMMITTEE
DATE: JUNE 18, 1990
Traffic Policy:
3. Amend the traffic policy to:
a. Relax regulations for high revenue generating projects which are not peak hour intensive;
b. Explore the possibility of streamlining the review process for high revenue generating
projects.
c. Relax regulations in the commercial areas on the edge of Town in order to encourage high
revenue generating businesses.
The Committee recognizes the fiscal constraints that the Town is experiencing and is cognizant of
the fact that revenue from businesses is essential if the Town is going to continue providing the
same high level of service that residents have experienced in the past. Consequently, the
Committee determined that it is essential that the Council adopt the proposed revisions to the Traffic
Policy which would allow the Planning Commission/Council the flexibility to approve projects that
would provide revenue to the Town. In addition, the Committee recommended that the Council
explore the possibility of streamlining the review process for high revenue generating projects and
to adopt policy that encourages high revenue generators on the edge of Town which would
minimize the traffic impact from these businesses on the Downtown.
Downtown Parking
4. Address the employee parking problem:
a. Reduce the two-hour time limit for on -street parking to one hour in the Downtown and
provide parking permits to business owners;
b. Business owners may issue dated permits to customers who will be parked longer than one
hour. The permit will be valid all day.
c. "Valued Los Gatos Customer" should be printed on each permit;
d. Consider using an adhesive backing on the permits so that customers can post them on
their driver's side window in an easily visible location.
The Downtown business owners are concerned that employees are parking in prime on -street
spaces, and that customers are discouraged from shopping in Los Gatos due to the lack of parking
and the parking time limits. Reducing time limits for on -street parking will discourage employees
from parking on Downtown streets, while the parking permits will give downtown business owners
a certain level of control over on -street parking and would minimize the number of tickets given to
valued customers. The parking permits should indicate that the Town appreciates the customers
patronage.
Property south of Saratoga Avenue and east of Highway 17
5. Adopt a policy statement regarding the property located south of Saratoga Avenue and east of
Highway 17. The policy would indicate the Council's support for future development on the property
of a hotel consisting of the following:
a. Up to 300 rooms.
b. A conference facility containing approximately 10,000 square feet.
c. The hotel could be up to three stories tall.
d. Underground parking is encouraged.
The owners of the Los Gatos Lodge property have Indicated that such a policy statement would
encourage the sale and development of the property. A shuttle bus could take visitors to the
Downtown area. The Committee indicated that a hotel of this size is needed In the community and
would provide an important source of revenue to the Town.
PAGE 4
MAYOR AND TOWN COUNCIL
SUBJECT: REPORT FROM THE COMMERCIAL SPECIFIC PLAN COMMITTEE
DATE: JUNE 18, 1990
Auto Storage
6. Amend the Zoning Ordinance to allow off -site auto storage in all zones subject to specific standards
with a Conditional Use Permit. Auto dealers have indicated that they are having difficulty finding
adequate auto storage space. The Committee determined that an amendment to the Zoning
Ordinance as described above may lead to an increase in auto storage and would assist the auto
dealers. The requirement for a Conditional Use Permit assures that auto storage Tots would be
reviewed on a case -by -case basis to assure that the storage lot would not impact surrounding
properties.
Earthquake Reconstruction
7. Adopt an Urgency Ordinance prohibiting new offices on the ground floor in the downtown
commercial area.
Due to the October 17th earthquake, many buildings in the Central Business District which were
previously occupied by retail businesses are now vacant. The Committee determined that it would
be beneficial to existing downtown retail businesses to reserve ground floor spaces for retail activity.
Retail activity on the ground floor is essential for a successful downtown and creates an interesting
atmosphere which attracts pedestrians. Encouraging new retail businesses also contributes to the
success of existing retail businesses by attracting customers interested in fulfilling a variety of
shopping needs.
Auto Dealerships:
8. Encourage the Chamber of Commerce to work with the auto dealers to form an association to
promote Los Gatos dealerships.
The Committee determined that the auto dealerships could benefit by taking an approach to
promotion similar to that pursued by auto malls. The auto dealerships should work together to
promote Los Gatos Boulevard as an auto row.
EXHIBITS:
1. Draft Resolution concerning property south of Saratoga Avenue and east of Highway 17.
2. Draft Urgency Interim Zoning Ordinance prohibiting new office uses on the ground floor in the
Central Business District and Downtown C-1 Zone.
RESOLUTION
A RESOLUTION OF THE TOWN OF LOS GATOS
CONCERNING PROPERTY SOUTH OF SARATOGA AVENUE
AND EAST OF HIGHWAY 17
WHEREAS, the Town Council determines that it is necessary to establish certain
development guidelines for future development of the property south of Saratoga Avenue
and east of Highway 17.
WHEREAS, it is necessary to provide specific guidance to future developers of this
property.
WHEREAS, it is necessary to encourage development of the property as a hotel
which would provide an important source of revenue to the Town.
RESOLVED: the Town Council hereby establishes the following guidelines for the
property located south of Saratoga Avenue and east of Highway 17 which should be
developed as a hotel consisting of the following:
a. Up to 300 rooms;
b. A conference facility containing approximately 10,000 square feet;
c. Up to three stories tall; and
d. An underground parking facility.
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PASSED AND ADOPTED at a meeting of the Town Council of the
Town of Los Gatos, the day of , 1990, by the following vote:
COUNCIL MEMBERS:
AYES:
NAYS:
ABSENT:
ABSTAIN:
SIGNED:
ATTEST:
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
CLERK OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
Ikj02\cnctrpts\hwy17 2
ORDINANCE
URGENCY INTERIM ZONING ORDINANCE AMENDING
THE ZONING ORDINANCE CONCERNING OFFICE DEVELOPMENT
IN THE CENTRAL BUSINESS DISTRICT AND DOWNTOWN
NEIGHBORHOOD COMMERCIAL ZONE
The Town of Los Gatos hereby ordains:
SECTION I
FINDINGS
Pursuant to Government Code Section 65858, the Los Gatos Town Council hereby
finds that there is a current and immediate threat to the public health, safety and welfare
in that the Zoning Ordinance permits ground floor office activities in the Central Business
District and the Neighborhood Commercial Zone. Due to the October 17 Earthquake,
many commercial buildings in the Downtown which were previously occupied by retail
businesses are now vacant. The retail atmosphere in the Downtown may be significantly
impacted as retail and office activities compete for the newly renovated commercial space.
The potential for office uses occupying a majority of the ground floor renovated ground
floor commercial space creates a threat to the public health, safety and welfare as follows:
a. Ground floor retail uses create a lively atmosphere which attracts pedestrians
to the Central Business District and contributes to the vitality of the Central
Business District as a retail center.
b. Encouraging retail activity contributes to the success of existing retail
businesses by attracting customers interested in fulfilling a variety of shopping
needs. The potential for ground floor office development in previously
occupied retail spaces threatens the ability of the Central Business District to
recover from the October 17th earthquake.
ordres\ords\urgency.2
EXILE 2
SECTION II
AMENDMENTS TO ZONING ORDINANCE SECTION 4.54.020
Zoning Ordinance Section 4.54.020 is hereby amended as follows:
SEC. 4.54.020-, PERMITTED USES
Activities allowed in the C-1 zone are those which do not unreasonably
interfere with nearby residential uses and which are in the following categories:
(1) Retailing.
(2) Personal service businesses and service businesses necessary for the
conduct of households.
(3) Office activities, provided they we not located on the ground floor along
the street Existing office activities shall be considered conforming and
shall be allowed to continue in perpetuity.
(4) Limited manufacturing activities when a majority of sales are made,
on site, to the ultimate consumer.
Examples of proper C-2 activities are grocery stores, launderettes or dry-
cleaning agencies, drug stores, barber shops, appliance repair shops and offices.
Examples of activities which are not proper in the C-1 zone are vehicle service and
sales, palmists and soothsayers, manufacturing, wholesaling, or laundry or dry-
cleaning plants.
ordres\ords\urgency.2 2
SECTION III
AMENDMENTS TO ZONING
ORDINANCE SECTION 4,56.020
Zoning Ordinance Section 4.56.020 is hereby amended as follows:
SEC. 4.56,020: PERMITTED USES
Activities involving the conduct of commerce and general business and for the sale
of commodities necessary for the needs of residents and visitors of the Town, such as:
(1) Retailing.
(2) Personal service businesses.
(3) Service businesses necessary for the conduct of households or
businesses.
(4) Office activities, provided they are not located on the ground floor along
the street. Existing office activities shall be considered conforming and
shall be allowed to continue in perpetuity.
(5) limited manufacturing activities when a majority of sales are made,
on site, to the ultimate consumer.
(6) Wholesaling without warehousing on the premises.
(7) Single-family and two-family uses, in conjunction with the other uses
permitted in this Section. (Added by Ord. 1546, 8-16-82).
Example of proper C-2 activities are apparel stores, launderette or dry-
cleaning agencies, travel agencies, antique stores, telephone answering services, artist
studios, sales offices for merchandise stored elsewhere, craft studios, auto parts sales
and paint shops. Examples of activities which are not proper in the C-2 zone are
vehicle sales or service, manufacturing, warehousing, laundry or dry-cleaning plants.
ordres\ords\urgency.2
3
SECTION IV
EFFECTIVE DATE
This Ordinance shall take effect immediately and shall be of no further force and
effect after July 2, 1990.
Within 15 days after this Ordinance is adopted, the Town Clerk shall cause it to be
published once in a newspaper of general circulation published and circulated in the Town.
ordres\ords\urgency.2 4
This Ordinance was introduced and adopted by the following vote as an urgency
interim zoning ordinance of the Town of Los Gatos at a regular meeting of the Town
Council on June 18, 1990.
COUNCIL MEMBERS:
AYES:
NAYS:
ABSENT:
ABSTAIN:
SIGNED:
MAYOR OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
ATTEST:
CLERK OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA
ordres\ords\urgency.2 5
MEMORANDUM
DATE: July 6, 1990
TO: COMMERCIAL SP CIIFIC PLAN COMMITTEE
FROM: LEE E. BOWMA , PLANNING DIRECTOR\DEPUTY TOWN MANAGER
SUBJECT: TOWN COUNCIL ACTION REGARDING RECOMMENDATIONS OF THE COMMERCIAL
SPECIFIC PLAN COMMITTEE
On June 18, 1990, the Town Council reviewed the recommendations of the Commercial Specific Plan
Committee. Attached is a copy of the Council Agenda Report regarding the Committee's recommendations.
Each recommendation is listed below, followed by Council action.
The Council also voted to set aside $30,000 for the funding of specific studies to be presented to the Council
for final approval.
RECOMMENDATION:
1. Amendments to the sign ordinance:
a. Direct the Planning Department to schedule a public meeting with the auto dealers;
b. Refer this matter to the Planning Commission to develop specific amendments regarding
"space for lease" signs and signs at auto dealers.
Action: On a 4 to 0 vote, the Council took action as set forth above.
RECOMMENDATION:
2. Procedures relating to projects that create traffic impacts:
a. Adopt the proposed revisions to the Traffic Policy as recommended by the Planning
Commission with an amendment to encourage high tax revenue generating businesses at
the edge of Town.
b. Direct the Planning Department to develop a definition of high tax revenue and develop
procedures that would streamline the review process for these projects.
Action: On a 3 to 1 vote, the Council approved a modification of the above request, stating that if
the General Plan Committee wishes to revise the General Plan to identify suitable locations
and types of high revenue generating businesses based on the data coming from the
Commercial Specific Plan Study, such locations and types may be incorporated under the
new traffic policy and would be reason to find that they are a benefit to the Town. (Mr.
Ferrito voted no stating his concerns in prioritizing revenue generating businesses.
RECOMMENDATION:
3. Downtown Parking:
a. Direct the Town Engineer to prepare a resolution amending the two hour parking limit for
on -street parking in the Downtown to one hour and institute a permit parking program.
Action: This item was referred to the Parking Commission.
APPENDIX B
Memo to the Commercial Specific Plan
Page 2 of 3
July 6, 1990
RECOMMENDATION:
4. Development of property south of Saratoga Avenue and east of Highway 17:
a. Adopt the Draft 1990-135 Resolution expressing a policy statement indicating the Council's
support for future development on the property of a hotel consisting of the following:
1) Up to 300 rooms;
2) A conference facility containing approximately 10,000 sq. ft.;
3) The hotel could be up to three stories tall;
4) Underground parking is encouraged.
Action: On a 3 to 1 vote, the Council adopted Resolution 1990-135 with two changes. The third
paragraph was modified to read "... it is necessary to retain the use of property as a hotel
which would provide an important source of revenue to the Town . . .". The fourth
paragraph was modified to read "... The Town Council hereby establishes the following
guidelines, (which do not guarantee approval of a project) for the property located south
of Saratoga Avenue ...". (Mr. Ferrito voted no, not agreeing with the amount of detail (in
regards to size) delineated in the resolution.)
RECOMMENDATION:
5. Off -site auto storage:
a. Refer to the Planning Commission an amendment to the Zoning Ordinance to allow off -
site auto storage in all zones subject to specific standards with a Conditional Use Permit.
Action: On a 4 to 0 vote, the Council took action to refer to the Planning Commission investigation
of an amendment to the Zoning Ordinance as set forth above to permit off -site auto storage
on a case by case basis.
RECOMMENDATION:
6. Prohibit new ground floor office activities in the Central Business District:
Adopt an Urgency Ordinance prohibiting new office uses on the ground floor in the Central
Business District
Action: On a 4 to 0 vote, the Council adopted the Urgency Ordinance. The Council limited the
prohibition on new office activities to the Central Business District.
DISCUSSION:
The Commercial Specific Plan Committee needs to clarify the types of special studies that needs to be
prepared in order for Committee to prepare the Commercial Specific Plan. Staff conveyed the Committee's
recommendation for funding as follows:
That the Council provide funds to hire consultants for the preparation of various studies including
a market study to determine the commercial/business needs of the community and a report
Memo to the Commercial Specific Plan
Page 3 of 3
July 6, 1990
identifying the types of businesses which would provide the greatest source of revenue for the Town.
The Committee should discuss this matter and develop a recommendation that identifies the specific
type of study or studies that should be prepared.
Another issue the Committee needs to discuss is whether the Town should prohibit new ground floor
office activities in both the C-1 and C-2 zones. The Urgency Ordinance was originally adopted to
include only the C-2 zone. However, on July 16th, the Council will discuss whether to include the
C-1 zone in the Downtown Area. The Draft Council Report regarding this matter is attached. The
Committee should discuss this matter and make a recommendation to the Council.
Attachment
CHER2\MEMOS\CSPACT
Los Angeles
San Francisco
San Dieao
Chicago
Boston
Washington. D.C.
Fort Lauderdale
Economics Research Associates
Executive Summary
Market Study and
Business Development Strategy
for Three Los Gatos
Business Districts
Prepared for
Town of Los Gatos
March 1991
ERA Project No. 10046
APPENDIX C
1160 Battery Street. Suite 350. San Francisco, California 94111
(415) 956-8152 Telex: 340890 (ERA SFO) Fax (415) 956-5274
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INTRODUCTION
The Town of Los Gatos engaged Economics Research Associates (ERA) to prepare
this market study and business development strategy for three Los Gatos business districts.
The districts discussed in this report include Downtown Los Gatos, Los Gatos Boulevard,
and a 41-acre parcel located at what will be the southeast comer of the interchange at
Highways 17 and 85. The land uses discussed for these districts include various types of
retail development, hotels, and offices. The Commercial Specific Plan Committee's goals
were to discover what types of business development would be supportable in the market
and, furthermore, which of these types would be the most beneficial to the Town in terms
of maximizing net tax revenues and minimizing public services costs.
Following this introduction, Section II summarizes the market research and fiscal
analysis and presents development strategy recommendations. Section III describes in
detail the market demand for various types of retail uses. Sections IV and V, respectively,
discuss the hotel and office markets. Section VI briefly outlines the fiscal implications of
various land uses.
William W. Lee, ERA Senior Vice President, served as project manager for this
study, led the progress meetings, and supervised the preparation of this final report and all
interim reports. Andrea Morgan, Senior Associate, was the assistant project manager,
primary researcher and report author. Donna Lee, Senior Associate, researched and
analyzed the hotel and office markets. Steven R. Spillette, Research Associate, assisted
in data collection.
ERA wishes to acknowledge the contributions of many others over the course of
this study. Land use and fiscal data were provided by Lee Bowman, Bud Lortz, and Tami
Borton of the Town of Los Gatos Planning Department; and by Michele Braucht and
Dianne Rovero of the Town of Los Gatos Finance Department. The Los Gatos
Commercial Specific Plan Committee (CSPC) and many Los Gatos citizens and business
owners provided important insights and information during the data collection phases of
1
this project, and the CSPC made valuable suggestions on working papers and drafts
incorporated into this document. The members of the CSPC are:
Michael Abkin
Steve Blanton*
Eric Carlson
Rod Johnson
Pat O'Laughlin
Linda Lubeck
Terry McElroy
Rick Miller
Cliff Peterson
Stephen Rice
Ted Simonson
Brent Ventura
The final interpretation and analysis represented herein is, however, the responsibility
of Economics Research Associates.
*Mr. Blanton served on the CSCP until his election to the City Council made him
ineligible.
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SUMMARY: MARKET CONCLUSIONS AND
STRATEGY RECOMMENDATIONS
The goals of this study were to identify commercial uses that would have market
support in three Los Gatos business districts and then to determine which of these uses
would be the most fiscally beneficial to the Town, in terms of maximizing net tax
revenues and minimizing additional public services costs. This section of the report
synthesizes ERA's market conclusions with the fiscal implications of land use decisions
in order to present development strategy recommendations. We also discuss factors that
make land development difficult and we suggest ways to overcome these obstacles. In this
section we present the, recommendations for each of the three business districts studied and
then make some additional recommendations that relate to the entire town.
DOWNTOWN LOS GATOS
Over the long term, we think that the downtown will continue to specialize in
restaurants and everting entertainment (live theater, film, comedy and music clubs) and in
selling specialty retail goods and antiques. These types of uses will continue to be
supplemented by some local -serving convenience retail stores. Pedestrian activity is high
and will continue to be so, given design of the downtown district (and the difficulty of
parking); a good deal of the charm of downtown Los Gatos is due to the lively atmosphere
created by pedestrians and retail storefronts.
Long -Term Market Opportunities
The retail trade area analysis (Section III) suggests market support for about 1 10,0(141
square feet of additional retail space in the downtown over the next 15 years. We think
that Los Gatos can best tap this potential in three ways:
• Restaurant and Evening Entertainment - The downtown could support
additional 40,000 to 50,000 square feet of restaurants, or about six to ten new
full -service and other restaurants. These would complement and strengthen the
current draw of the existing restaurants by giving residents and visitors broader
3
selection, all within walking distance of each other. In addition, the restaurants
would complement and support patronage at the movie theater on Santa Cruz
Avenue, if it were renovated, and the theater at Old Town.
• Convenience Retail - Local demand exists for an additional 20,000 to 30,000
square feet of convenience retail, which could be represented as one small
grocery store, a drug store, and a wine or liquor store. The existing stores of
these types in the downtown currently average well over $200 per square foot
in taxable retail sales, so additional stores would be expected to contribute
higher than average tax revenues to the Town.
• Specialty Retail - Specialty retail stores are well -represented in the downtown
and the existing stores have been averaging more than $200 per square foot
in taxable sales. We find market support for an additional 45,000 to 55,000
square feet of these stores, which may sell cameras, jewelry, sporting goods,
records, flowers, stationery, books, and other goods.
Obstacles to Development
• Insufficient parking is the critical constraint downtown. Shoppers do not mind
walking a few blocks to their cars, but they become annoyed at being forced
to circle the block repeatedly to look for a parking space.
• Downtown Los Gatos also has a shortage of suitable commercial building sites.
The downtown is densely developed and has few vacant or under-utilized
parcels that could accommodate new commercial development. The best
potential appears to exist in empty buildings that have been rebuilt recently.
or in buildings awaiting earthquake repairs.
• The inflexibility of the current parking assessment system hampers new
business development. New businesses cannot locate in town unless they ui
meet their parking requirements, generally on -site. Very few of the existing
lots have the area to stripe new parking spaces, and the current system of
public parking lots has no spaces available for "sale" to new business owners
to meet their requirements. In addition, there is no mechanism for transferring
the excess parking entitlement of one business owner to another.
4
• The combination of building safety codes, planning restrictions, parking
requirements and building conditions together make earthquake repairs
fmancially difficult or impossible for some property owners. For example, one
property owner found that in order to repair his building and meet earthquake
safety standards, he needed to expand the floor area of the upper story of his
building in order to support an upper -story exterior wall with a load -bearing
wall on the ground level. Because of the increase in floor area, the owner was
required to provide or purchase from the Town additional parking spaces.
However, there was no room on the lot to provide the spaces, and the Town
had none to sell. The building has not yet been repaired. In other cases,
property owners with recent mortgages cannot afford to pay for both the
mortgage and the earthquake repairs and still keep commercial rents at market
levels.
• The traffic impact fee works against restaurant development in particular by
requiring payment of a fee twice what is required of a similarly -sized office
development. Unlike offices, however, restaurants do not generally contribute
to peak -hour traffic congestion.
Strategy Recommendations and Implementation Measures
• The Town should proceed as quickly as possible to create a redevelopment
district in the downtown. Redevelopment is primarily a financing tool that
would allow the Town to use revenue bonds to fund capital improvements
(such as parking, streetscape improvements, sidewalk repairs, and others) in the
redevelopment area. In a redevelopment area, the Town would be entitled to
a greater proportion of property taxes than usual, receiving 56 to 70 percent
of the future increase in value (above the current property value), versus the
current 12 percent. The revenue bonds would be paid back with these
"property tax increments". (This issue is discussed more fully in John B.
Dykstra & Associates' report.) In the downtown, redevelopment funds could
be used, for example, to assist property owners in post -earthquake restoration
of historic buildings; since the historic buildings are a public benefit, their
restoration serves a public purpose and could legitimately be subsidized. In
5
addition, redevelopment funds could be used to build additional parking
facilities.
• The Town should take immediate steps to increase the parking supply and
reduce parking demand. To immediately and inexpensively increase supply,
the Town could re -stripe existing lots and on -street spaces to create small
spaces for compact cars. In the longer term, the Town should focus on
decking existing lots in high -priority areas with a combination of assessments,
meter revenues, in -lieu fees, and tax increment funds. The high -priority areas
should be determined by analyzing existing information regarding parking
demand by days of the week and by time of day.
• Parking demand could be reduced by creating incentives for employees to use
non -central parking lots; e.g., provide a van shuttle to free parking lots on the
periphery of the business district, suggest that business owners give bonuses
to employees who walk or bicycle to work or in other ways refrain from
parking downtown, and use flyers and posters to educate the downtown work
force about parking altematives.
• Installation of parking meters on downtown streets and lots would help to
discourage employee parking and would remind shoppers to take care to avoid
parking tickets. The meters should allow two to four hours of parking to give
people time to dine and shop and still discourage employee parking. Each
meter could also generate some revenue for additional parking development.
We do not think that the presence of meters will discourage shoppers
accustomed to free mall parking; we think that the minimal cost will make no
difference to people who come to downtown Los Gatos for an ambience and
a shopping experience quite different from that available at a shopping mall.
• The Town should encourage restaurant development by lowering parking
standards for restaurants in the downtown, but could discourage stand-alone
bars by keeping those standards high. The current restaurant standard works
out to 7.5 to 10 spaces per 1,000 square feet of space; this ratio should he
lowered to about 6 per 1,000 square feet.
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• The Town could encourage new restaurant and retail development by improving
the flexibility for meeting the parking requirements in future parking structures.
This could be done by allowing in -lieu fees paid to the Town and by allowing
the transfer of excess parking entitlements among business owners and property
owners. (These changes cannot be made, by law, to the structures paid for
with the current assessment district.)
• The Town should revise its traffic impact fee schedule to place more of the
burden on uses that generate peak -hour trips. The current fee schedule would
require $40,000 to $50,000 in impact fees for a medium-sized full -service
restaurant, despite the fact that such a use would have very little impact on
traffic congestion at peak hours.
• The Town should also encourage new business development in the future by
continuing to subsidize the in -lieu parking fee to keep the cost at $7,000 to
$10,000 per space for parking spaces under development; redevelopment tax
increment revenues could fund the difference.
• To encourage additional shopping in off-peak times, the Town and business
associations should work together to encourage shop owners to stay open late
(until 9:00 or 10:00 p.m.) one night a week. The restaurant operators should
be consulted in choosing which mid -week night is the busiest and therefore
most likely to bring new customers. Friday is probably the busiest, but if
shopkeepers resist staying open late on Friday, then Wednesday or Thursday
would probably be the second-best choice.
• The Town should work with the Old Town developer to allow that center some
way to redesign its space, increase its square footage, and improve its linkage
to the downtown. The developer should be allowed the option of satisfying
some portion of the center's parking requirements off -site.
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LOS GATOS BOULEVARD
The commercial areas along Los Gatos Boulevard are appropriate for providing the
bulk of the Town's local -serving convenience goods, and for that they require much more
parking than the downtown. In addition, Los Gatos Boulevard has the regional -serving
auto dealerships, which are also land -intensive uses.
Long -Term Market Opportunities
ERA's market conclusions indicate support for additional convenience goods and
auto dealerships.
Auto Dealerships - There is market support for one to three dealerships along
Los Gatos Boulevard, if there are suitable sites. Potential sites identified by
ERA include the vacant Nissan/Volvo site and a vacant building on a County
parcel on the southern end of the auto strip. There are enough dealerships to
maintain the critical mass making Los Gatos Boulevard a viable location for
new dealerships, but competition for dealers from Santa Clara and San Jose
auto strips is tough; if Los Gatos is to get new dealerships, it will need to act
decisively. Current dealerships are nearly all domestic, for whom sales have
suffered the most in recent years; on the other hand, the import market has
been doing better nationwide and may create a better balance for the district
as a whole.
• Convenience - One new neighborhood commercial center with about 60,000
square feet of space would be supportable over the next 15 years. This center
would probably contain a grocery store, a drug store, and a few apparel and
specialty stores, as well as some small restaurants. Drug stores and apparel
stores currently on Los Gatos Boulevard are generating above -average taxable
sales.
• Comparison Goods - If the 40-acre parcel near the freeway proves too small
to support all 300,000 square feet of demand for comparison goods (see section
below), then one or two large retail users may be convinced to locate a stand-
alone building on an adjacent site. The Good Guys, Big 5 Sporting Goods,
and Home Depot have all been known to locate near an existing retail center.
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Obstacles to Development
• There is some uncertainty among the business community regarding Town
policy on types of development allowed; this uncertainty has hampered
development interest to some extent. The lack of policy direction from the
Town results partly from the political desire to have new auto dealerships
replace the old ones while landowners see no new dealerships looking for space
in Los Gatos. The Town has not been particularly receptive to proposals for
altemative uses on sites formerly occupied by auto dealers.
• The high cost of land relative to auto dealerships' ability to pay is another
obstacle. One site is on the market at about $38 per square foot, when dealers
can support land costs of about $6 to $10 per square foot.
Strategy Recommendations and Implementation Measures
• The Town should re-examine the suitability of the Nissan site for auto sales
and decide whether to keep it for auto sales or allow some other type of
development. If auto sales are the preferred use, restrictive zoning and/or
public subsidy (from redevelopment funds, perhaps) may be required to get the
land price lowered to the point where a dealership is feasible. In addition, the
Town may need to encourage realignment of the driveway to improve access
to the site and to provide the site direct access to the existing intersection and
traffic light.
• Town staff should target additional sites for dealerships. Restrictive zoning
and/or land write -downs may be required to make current land prices affordable
for new dealerships.
• The Town and business associations should support auto dealers in their new
joint effort to market the auto strip as a whole.
• Town policy should control use permits for restaurants to channel that activity
into the downtown, where it will stimulate foot traffic for retail uses; this
policy will not work unless parking constraints are eased in the downtown.
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Additional regulatory policies could revise parking standards for restaurants so
that more spaces are required for restaurants outside the downtown than inside.
40-ACRE PARCEL AT HIGHWAYS 85 AND 17
This parcel represents a tremendous opportunity for the Town: it is the one
significant large parcel remaining that could draw a regional clientele. The parcel should
be comprehensively planned to both serve the community's needs and become a major
revenue generator for the Town. Comprehensive planning is critical so that the parcel is
not chopped into pieces that do not work well together.
Long -Term Market Opportunities
ERA believes that the location, access, and visibility of this site give it excellent
potential for retail, hotel, and perhaps office uses.
• Power Center' - There is substantial potential for additional retail development
in the area, but the presence of strong regional malls nearby (particularly
Valley Fair) probably precludes a true regional mall strategy. However, power
centers have been built increasingly in the Bay Area in recent years and are
usually quite successful, generating a high volume of sales by competing on
price. The site could support a power center of 250,000 to 300,000 square
feet, depending on the amount of land allocated to other uses; the market area
could certainly support that level of activity. Taxable sales in a power center
would average about $250 per square foot, a figure somewhat higher than the
average for all retail stores. The types of stores in the power center would
probably focus on apparel; general merchandise, such as a department store like
Target or Wal-Mart; specialty stores such as sporting goods, records, etc.;
'/A power center typically has three to five fairly powerful anchors (not full -line
department stores) and only a few small shops, as opposed to a regional mall with three or
four department store anchors and numerous smaller stores. The anchors are powerful because
they are usually value -oriented, which generates high -volume sales and draws from a large
trade area. Retail chains such as Home Club, Circuit City, The Good Guys, Toys R Us, Such
a Business, Nordstrom Rack, Loehmann's, Marshall's, Burlington Coat Factory, New York
Fabric, Drug Barn, and Target are typical Bay Area power center anchors.
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appliances such as The Good Guys; and building and hardware, such as Home
Club. Typically, the power center would have two large anchors with 100,000
(or more) square feet of space, two mid -size anchors with about 60,000 square
feet each, seven to ten stores around 10,000 or 20,000 square feet, and some
smaller tenants.
• Hotel - The market area could support an additional 300 to 330 rooms over
the next 15 years, and this site is an excellent one, given its freeway location.
A business -class hotel (like a Marriott) would provide the most net revenue per
acre to the Town of all the land uses studied; the hotel becomes even more
attractive financially if it is included in a redevelopment district.
• Office - Although the market area shows support for about 500,000 square feet
of office space over the next 15 years, the costs associated with offices could
outweigh the benefits unless the offices were built in a redevelopment district.
A new office building is more fiscally attractive inside, rather than outside, a
redevelopment district because a greater proportion of its property taxes would
flow to Los Gatos (56 to 70 percent, versus the current 12 percent; refer to
Section VI). The main revenue from an office building comes from property
taxes, as opposed to hotels, which also generate transient occupancy taxes,
and retail centers, which also provide sales taxes.
Obstacles to Development
• Landowner cooperation with planning efforts is essential. The combination of
land uses that generate the highest value for the owner are different from the
uses that generate the best revenue/cost balance for the Town. A landowner's
preferences would probably be, in order, office, multi -family residential, retail,
hotel, and auto dealers. Some negotiation will be necessary.
Strategy Recommendations and Implementation Measures
• The Town should create a specific plan for this area that incorporates the
development recommendations discussed above.
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• The Town should work with the landowners to solicit power center and hotel
developers and begin the development process so that at least the power center
will be open when the new highway opens.
• The Town should create a redevelopment district in this area to facilitate
assembly of a few outlying parcels and create a cohesive, well -planned
development.
TOWN -WIDE ISSUES
Obstacles to Development
• There is a perception among landowners that the Town is "anti -business". This
perception arises out of Los Gatos history; some years back, there was a
movement to stop commercial encroachment into residential districts. In
addition, the Town had little problem attracting all the business it needed, and
there was no desire to exacerbate the traffic and parking problems that were
becoming apparent. However, the recent loss of auto dealerships has hurt the
Town's fiscal position; it is a scenario familiar to almost all cities and counties
in Califomia. In the wake of the loss of auto dealers and the 1989 earthquake,
the Town has had difficulty in issuing clear policy directions regarding business
development because prior to this and other studies, there was no consensus
about what sorts of businesses would survive and therefore should be
encouraged.
Strategy Recommendations and Implementation Measures
• The Town should issue clear policies regarding allowable uses in business
districts; one way to start would be the completion, publication, and distribution
of this study and CSPC/Planning Commission decisions regarding other
commercial areas.
• In particular, the Town must decide whether it will aggressively pursue auto
dealerships or whether it will allow other uses to replace former dealerships
on Los Gatos Boulevard.
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• Town staff should give prompt attention to development proposals and use
permit applications.
• The Town should consider hiring an economic development staff person. This
could be a contract position to run for two years, then reevaluated in
consideration of the staff person's performance and the level of new business
activity. The staff person should have an economic development and marketing
background to assist him or her in acting as liaison between the business
community and the Town administration. She or he should work closely with
realtors to find tenants and with the landowner to solicit developers (resources
like The Book on Value Retailing and mailing list agencies could help with
these efforts).
• The Town, perhaps in concert with the Chamber and other business
associations, should develop a Town marketing brochure to assist realtors,
landowners, and business associations in recruiting new business owners; the
new economic development staff member could have large responsibility for
this effort.
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