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2011080105 - Addendum to Staff Report - Albright Way (proposed Netflix campus)MEETING DATE: 08/1/11 ITEM NO: ADDENDUM COUNCIL AGENDA REPORT DA1'E: July 29, 2011 TO: MAYOR AND TOWN COUNCIL FROM: GREG LARSON, TOWN MANAGER'W SUBJECT: PLANNED DEVELOPMENT PD-10-005' AND MITIGATED NEGATIVE DECLARATION ND-11-004. PROJECT LOCATION: 90-160 ALBRIGHT WAY AND 14600 WINCHESTER BOULEVARD. PROPERTY OWNER: LG BUSINESS PARK, LLC. APPLICANT: JOHN R. SHENK. A. CONSIDER A REQUEST FOR APPROVAL TO MODIFY THE EXISTING PLANNED DEVELOPMENT TO ALLOW THE POTENTIAL FOR A MIX OF LAND USES. THE PROJECT MAY CONSIST OF OFFICE ALONE OR A MIX OF OFFICE AND MULTI -FAMILY AND/OR SENIOR RESIDENTIAL USES, SUBJECT TO DEFINED TRIGGERS. THE PROJECT COULD INCLUDE UP TO A MAXIMUM OF 550,000 SQUARE FEET OF OFFICE SPACE OR A COMBINATION OF LESS OFFICE SPACE WITH RESIDENTIAL USES. RESIDENTIAL USES COULD INCLUDE MULTI -FAMILY AND/OR SENIOR UNITS UP TO A MAXIMUM OF 168 UNITS ON PROPERTY ZONED CM:PD. APNS 424- 31-053, 054, 063, 424-32-038, 045, 049, 054, 059, 060, AND 063. B. CONSIDER A REQUEST FOR APPROVAL OF A DEVELOPMENT AGREEMENT. C. CONSIDER ADOPTION OF THE RESOLUTION CERTIFYING THE ENVIRONMENTAL DOCUMENT AND MITIGATION MONITORING AND REPORTING PROGRAM. STAFF REMARKS: Attachment 35 contains additional communications from the public that were received after the staff report on this matter was finalized. Additionally, staff has prepared a fiscal analysis (Attachment 36) and provided information regarding traffic demand management strategies (Attachment 37). Lastly, the applicant has submitted a letter addressing the Development Agreement (Attachment 38). PREPARED BY: Wendie R. Rooney, Director of Community Development Reviewed by: (\Assistant Town Manager Town Attorney Clerk Administrator Finance mmunity Development N:\DEV\TC REPORTS \ 20111Albright8-1 ADD.doc Reformatted: 5/30/02 PAGE 2 MAYOR AND TOWN COUNCIL/PD-10-005/ND-11-004 SUBJECT: 90-160 Albright Way and 14600 Winchester Boulevard July 29, 2011 A. Comparative Fiscal Analysis Attached is a local community fiscal analysis of the proposed Albright development compared to the current Netflix site and the existing Albright development (Attachment 36). The analysis considers the tax revenue impacts to not only the Town, but also to local K — 12 public schools and the local fire department. Although the proposed Albright development will only increase ongoing Town property tax revenues by approximately $200,000 per year, Los Gatos schools will see increased property tax revenues of more than $1 million per year upon project build out as proposed. In addition, the fiscal analysis highlights the anticipated decline in Netflix related sales tax revenues due to their recent membership rate restructuring and the relocation of the DVD division by the end of the calendar year. The fiscal analysis does not consider or estimate the spin off multiplier effect on tax revenues typically resulting from a headquarters operation and/or significant increase in employees. While the fiscal impacts are not a factor in land use decisions, this information is supplied in response to questions from the media, community, and Council members. B. Traffic Demand Management Attached is a summary of current Netflix traffic demand management efforts including shuttles, bicycle facilities, on -site services and carpooling (Attachment 37). C. Staff Report Correction Page 7, item 5, of the staff report should read as follows: 5. Current building size versus the same building area in three-story buildings: Larry Cannon agrees with the project architect that the four- and five -story building solution is a better one since the heavy tree screening will mitigate the height substantially, and the resulting large open space should be a benefit. Larry Cannon suggested that as planning continues, it might make some sense to see if the end user might be amenable to developing some public space in the landscaping where there might be periodic "Concerts on the Grass" or other ways of inviting the public in to enjoy the benefits of the generous and heavily landscape open space. This might serve as a good public benefit, and there would be lots of parking to accommodate that type of use. In the review of the most recent architectural plans, the Town Architect noted that: "The site plan is predicated in a mix of four- and five -story buildings. While this is larger than the norm for Los Gatos, I believe that the nature of this site, and the presence of the very large and mature landscaping that screens much of the site from view make it an acceptable mix so long as there is agreement concerning the overall maximum development to be accommodated on the site." PAGE 3 MAYOR AND TOWN COUNCIL/PD-10-005/ND-11-004 SUBJECT: 90-160 Albright Way and 14600 Winchester Boulevard July 29, 2011 D. Development Agreement The applicant has submitted a letter offering to modify the terms of the length of the Development Agreement (Attachment 38). The applicant proposes to change the term from 15 years with a 5 year extension to 10 years with a 10 year extension. E. Traffic Improvements The following are staffs response to items raised by individual Council members subsequent to the preparation of the report on this matter: • Are there any examples within Los Gatos or nearby communities of close signalized intersections such as being proposed? The Roberts Road, Shannon Road, Nino Way corridor on Los Gatos Boulevard, and the Oka Road, Hwy 17 on and off ramps, Los Gatos Boulevard corridor on Lark Avenue are two examples of locations with high traffic volumes with closely spaced signals that are coordinated. Signal coordination is common in busy areas such as on Santa Clara Street in San Jose and Campbell Avenue in Campbell. • Why are there two left turn lanes exiting the property? The two left turn lanes are needed to accommodate vehicles wanting to travel south towards Hwy 17 and southbound Hwy 85. Two left lanes leaving the site are proposed to limit the time north- and south -bound Winchester Boulevard traffic is stopped. This movement is controlled by the new traffic signal to be constructed at the main project entrance. • Does new intersection across from Courtside need to be done at time of Phase 1? If yes, how would it be handled with the existing buildings to remain? The specific Phase 1 improvements have not yet been identified. This will be addressed as part of the Phase 1 Architecture and Site approval when the applicant submits the A&S package for review and approval. PAGE 4 MAYOR AND TOWN COUNCIL/PD-10-005/ND-11-004 SUBJECT: 90-160 Albright Way and 14600 Winchester Boulevard July 29, 2011 ATTACHMENTS: 1-34. Received Under Separate Cover 35. Additional communications from the public (4 pages) 36. Community Fiscal Analysis (1 page) 37. Traffic Demand Management (1 page) 38. Letter from the applicant (1 page) cc: John Shenk, 700 Emerson Street, Palo Alto, CA 94301 David A. Kingery, Principal, The Carlyle Group, 4 Orinda Way, Ste.170D, Orinda, CA 94563 WR:JP: N:\DEV\TC REPORTS\ 2011\Albright8-I ADD.doc From: q.ames(alcomcast.net [ci.ames@comcast.net] Sent: Thursday, July 28, 2011 2:20 PM To: Joe Pirzynski; Steve Rice; smcnutt©losgatosca.00v; BSpector; Steve Leonard's Subject: Proposed Class A Business Park 108 Brocastle Way Los Gatos, CA 95032-1760 July 27, 2011 Los Gatos Town Council Los Gatos Town Council Chambers E.. Main St. Los Gatos, CA re: Proposed Class A office space Dear Council Members, This is my second letter regarding this matter and I would like to emphasize some points, but first I would like to assert my general agreement with the letter by Jeff Whalen which appeared in the "Letters" column of the July 26, 2011, issue of the Los Gatos Weekly Times. 1. I am NOT in favor of the 15-20 year open-ended development plan. 2. I am NOT in favor of 5-story buildings. 3. I am NOT in favor of multi -family dwellings. I am in favor of: 1. A class A business park for Los Gatos. 2. I am neutral on the issue of senior housing for the site. I remain concerned about all the construction noise, dust, and debris, since I live above Winchester, near the town's open lot which becomes a dumping site for all manner of building materials, huge vehicle storage, etc. If 5 stories are required, I believe there is a business park sunk down below highway 9 across from Los Gatos Lodge which might be a good place for that as only a couple of stories would be sticking up to be seen by anyone driving/living nearby. I also don't think (although I am not positive) that five -stories there would adversely impact a residential area or a view of the mountains. But I cannot fathom 5 story buildings looming over the two-story Charter Oaks townhouses, Winchester Blvd. and the Los Gatos Creek Trail, pyramid -style or no pyramid -style. Maybe I need to be given the "Cook's Tour" that Joe Pirzyinski and Diane McNutt were given. They certainly seem to be completely "snowed" by it. Maybe I need to see and hear what they saw and heard. But I have walked the Los Gatos Creek Trail, Attachment 35 Winchester Blvd., and throughout the existing business complex. I have stared up at the existing Netflix building, the Penthouse Apartments, and the Toll House Hotel and tried to imagine the additional stories. These proposed buildings (for, as I understand it, there are to be more than one with five stories) will even tower above the giant "Tinker Toys" substation constructed by PG&E a few years ago near the corner of Lark and Winchester. YIPES! I also feel the constant comparisons during the last Town Council meeting between Los Gatos and Cupertino were ridiculous. We're nothing like Cupertino. Cupertino is a suburban bedroom community with large, commercial areas along multi -lane busy streets lined with strip malls of all sizes. It is not a village with a charming downtown of small shops and restaurants. I simply do not see how the two are comparable. I do NOT live in a Cupertino. I don't WANT to live in a Cupertino. How absurd! If Netflix, never mind its current problems and dubious future, wants a Cupertino kind of business environment, let it go to Cupertino. Or, better yet, downtown San Jose where they can have 20 stories if they want:_ Lord.knows, downtown Sanose could use.the :, influx; it needs all the help it can get. Beseechingly, Judith E. Marlin q.ames(cr�comcast.net 409-395-7639 From: eladrellim(acomcast.net [eladrellim(ahcomcast.net] Sent: Friday, July 08, 2011 3:14 PM To: Joe Pirzynski; Steve Rice; Steve Leonardis; Diane McNutt; BSpector Cc: eladrellim@comcast.net; bridgetm19(acomcast.net Subject: Albright Way Project - Support Planning Commission Recommendations Dear Town Council Members, I would like to voice my support for the Albright Way project as outlined by the Planning Commission Recommendation: Commercial only zoning for up to 550,000 Sq Ft max of class A commercial buildings, with one building up to 250,000 Sq Ft no higher than the current Netflix building, with Netflix identified as the possible tenant for the 250,000 Sq Ft building. I believe this an excellent compromise that addresses all the issues raised at the various neighborhood meetings, planning meetings and Council Meeting by the local neighbors, developers, real estate people while meeting the intent of the planning commission goals to keep the small town flavor of Los Gatos, while allowing for reasonable growth of both businesses and residential developments in harmony with the overall Town Plan. I do not want the commercial zoning changed at all for this site. No high density residential and no Sr. housing should be allowed at this site. I don't believe a 5 story building (as the developer keeps emphasizing) fits into the LG small town feel nor do I believe that Netflix needs a 5 story building for "collaboration" reasons. A 4 story or 3 story building with the latest electronic communications of instant messaging, video chat, email, remote access tools, along with combinations of those existing tools negate this "5 story building collaboration" argument to the hubris bin. I also believe that we need to look at this site from the long term LG perspective, assuming that Netflix may or may not continue as a major tenant due to technology shifts, company takeovers, business changes or many other factors outside of any business's control. Look how many years it took Sobrato to lease the multistory building in downtown San Jose where Price Waterhouse Coopers finally leased this year. I believe this site should stay generic enough to meet any future Class A commercial space needs that LG requires and not make it so specific to one tenant that it can not be released/reused easily for future tenants. Many staff people, council members, and general public speakers at the council meeting kept saying how important Class A Commercial space is to the future of LG. I agree that we need to work to accommodate larger tenants such as Netflix, but not cater to their "demands" that fall outside of the overall good for LG now and in the future. Please consider this my "vote" to support the Albright Way project as outlined by the Planning Commission Recommendation From: Janice Fok [jgdfok@gmail.com] Sent: Thursday, July 28, 2011 5:13 PM To: Steve Rice Cc: BSpector; Steve Leonard's Subject: follow-up to phone conversations Hello Vice Mayor Rice, Thanks for speaking with me regarding the Albright Way parcel, and the development now being considered by the Town Council. There was one point that I failed to mention - the policy on story poles. The Swanson Ford project was allowed to pass without a complete representation of the height and mass being constructed. A friend told me the poles had gone up, I didn't believe her because I didn't see them at all. You see, we approach that intersection from different directions. Coming down Los Gatos Blvd, she could see the feeble attempt with some wood and netting. Coming down Blossom Hill from Winchester toward the Blvd, they were completely out of view. Any and all projects should be required to construct complete story poles, on time, and leave them up for the required period. This process is important, letting the community know what is being considered, and allows for public comment at the appropriate meeting. The public deserves to know what height building is being considered for Albright Way, and story poles, or some equivalent representation of building height and size, must be in place before a final decision is reached. I know I had to do them on my dinky little master bedroom project, and the consequences of that are zero to the town and it's future. Thank you again for your time and consideration, Janice Fok Hancock Court July 26, 2011 The Honorable Joe Pirzynski, Los Gatos Town Council Members Town of Los Gatos, 110 East Main Street Los Gatos, CA 95030 RE: Support for Albright Way Rezoning Dear Mayor Pirzynski and Members of the Town Council: I am writing to express my support for the Albright Way Rezoning. I support a mix of office and senior housing on the site. The Albright Way rezoning is consistent with the Town's goals for economic development and senior housing Approving this zoning with the requested five -story height will retain Netflix as a major employer in Los Gatos. The opportunity before you provides our Town with high quality, Class A office space. The benefits to our community are significant. Our schools will greatly benefit for the substantial increase in property tax revenue that will be generated from the redevelopment of the Albright Way property. Allowing senior housing, as part of the zoning, provides the Town future options to meet its own housing goals, and provide a type of housing that is in short supply. I encourage the Council to vote to approve the rezoning with office, senior residential anththe . requested height. Sincerely, Jeff Black 362 Bachman Ave From: Phil Fok [pefflyer@gmail.com] Sent: Thursday, July 28, 2011 8:39 AM To: Joe Pirzynski; Steve Rice; Diane McNutt; BSpector; Steve Leonardis Subject: Albright Way Proposal Dear Members of the Town Council, There have been a lot of emotions and noise around the Albright Way project. It would be fair to say that most of the residents want to keep Netflix local, although the issue has generated a notable amount of public controversy. However, keep in mind that the "controversy" is not about Netflix - the real issue is the developer's request to change the parcel zoning and mitigate his own risk. The plan to redevelop the Albright Way business park to Class A office space is consistent with existing zoning use regulations. There is nothing to prevent Netflix or any other business from having office facilities on Albright Way. The exact configuration of the buildings is an architectural design issue for the building permit process and must be treated separately from the rezoning request. The true core issue is the developer's desire to include the option for housing as part of this project. Housing, of any type, is not consistent with the permitted zoning use for the parcel. Part of the reason for not allowing housing is that the infrastructure of the area (traffic flow, school capacities, etc.) is not designed to support additional residential population. The developer's proposal for a one-time, upfront "pre -payment" as a resolution for these issues simply takes all of the ACTUAL risks of development and puts it on the citizens of the town as an unlimited liability. Many people have debated over how much of an impact would result from new housing. Residents, school officials, real estate agents, town officials, and an array of consultants have all offered their own scenarios of how traffic will flow and how many students will be added. The fact is that no one, no matter what their professional qualifications or expertise is, can guarantee the future. Which one is right is not important- what is important is who is accountable for the actual results. The developer's proposal to freeze all fees and requirements for the next 20 years is an attempt to shift responsibility for future development impacts from the developer to the town. If residential housing is part of the new plan, then it would only by appropriate to hold the developer responsible for resolving the actual impact. If traffic becomes an issue, then the ACTUAL cost of mitigation must be shared by the developer. If the number of new students causes overcrowding at schools, then the developer must bear some responsibility for the ACTUAL cost of additional capacity. There is no point in debating what the level of impacts might be, and it is unfair for the developer to have the freedom to act as they wish without accountability for the results. Furthermore, if the developer truly has confidence in their forecasts of the future impacts from this project, then they have no reason to object to the concept of accountability for the actual results, since it should be consistent with his own predictions. If he does object, then that is reason to question his predictions. You, as elected officials, have a fiduciary duty to represent the citizens of the town. Approval of this request as written would be a failure of that fiduciary duty by placing an uncapped burden on the future of the town to deal with the results of this development over the next 20 years. There is an existing and appropriate process to follow for this property development which is structured to insure fair treatment for all parties. Do not allow this developer to circumvent the process and the well-being of the citizens of Los Gatos. And none of this is a knock against Netflix - we welcome Netflix, or any other business, to build commercial office space in this commercial office park. To summarize: 1) Nothing is preventing redevelopment of the office space at Albright Way -. commercial office space IS the current zoning use classification for the parcel. There is no reason to appose redeveloping the office park as an office park. 2) Housing of any type is not compatible with the current zoning or with the infrastructure of the area. The addition of housing will have significant impacts which are difficult to forecast, and therefore the actual costs are difficult to predict. These impacts are very different from office use. 2) The developer, on behalf of the property owner Peter Pau, is seeking to reduce his risk in this venture by prepaying the impact fees for the next 20 years based on a set of predictions. That transfers all of the risk to the town and fails to hold the developer accountable for the actual results of his actions. 3) The actual impact of the proposal cannot be guaranteed by any consultant or forecast. The developer stands to make significant gains with this investment - he should also bear the responsibility for the impacts of his actions. If he has confidence in his forecasts, then there is no reason to object to actual_ accountability. Regards, Phil Fok COMPARATIVE FINANCIAL ANALYSIS FOR THE PROPOSED ALBRIGHT DEVELOPMENT LL c O H N 00 rl m m U1 10 00 m 0 0 ei 0 0 0 0 0 0 10 N a m 000 m CO 'd N m N 0 0 N m LL H O 0 0 0 a 10 O 00 1n H 4a 0J 0. 0 00 d 0 el 0 0 N 0 0 0 0 N N O 0 a N 00 W 10 O m 01 m N a a m G 0 O 10 1n 0 0 0 0 0 0 0 0 N 01 0 0 0 N 01 0 0 0 0 0 0 0 0 Notes and Assum C a) E i m e m o a Y C O 0. 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C O c 0 4-, _ 0 U a) 0 0 do t 3 m C i-+ a, 0) ra E O 0) 01 X 0) Z 0) E O a) a a) E 0) X 01 0) O CO 0 F 4 0 0 0) L 40 0) ro Y `o X >- 0) al 0 0 O. al s 4- 0 0 0 0 O_ in 0 L tC m 0) 0) 0 CO L VI N 0 0 0 L u 0 CO -J a) L Y _0 a) 0 0- At tachment 36 THIS PAGE INTENTIONALLY LEFT BLANK TRAFFIC DEMAND MANAGEMENT STRATEGIES AND EFFORTS Listed below are the current traffic demand strategies and efforts used by Netflix at their current campus to both reduce localized traffic impacts and to increase employee convenience and efficiency. Netflix has indicated they will retain and expand upon these practices at the new site, if approved. Note that these types of strategies and efforts are frequently used throughout Silicon Valley, typically by single large campus tenants. • Daily transportation shuttles o 2 serving San Francisco o 1 serving Mountain View CalTrain station o ljust started serving Dublin/Pleasanton/Milpitas o Other shuttles and stops will be added as the work force continues to grow and as employee interest and demand warrants • Carpool organizing, ride sharing and other commute support through corporate intranet • Secure bicycle racks, lockers and showers for bicycle commuters • Flexible work scheduling so employees may manage their own commute impacts • Meal and snack service provided on site to minimize mid -day traffic demands • Bicycles and electric vehicles provided for access between buildings • Electric vehicle charging stations for employees with electric vehicles Netflix has also requested improved pedestrian access over Highway 85 on the east side of Winchester Boulevard to minimize vehicular traffic between current and proposed buildings as well as a better connection to the future Vasona light rail station. Attachment 37 THIS PAGE INTENTIONALLY LEFT BLANK John R. Shenk 700 Emerson Street Palo Alto, California 94301 July 29, 2011 The Honorable Joe Pirzynski Mayor Los Gatos Town Council Members Town of Los Gatos, 110 East Main Street Los Gatos, CA 95030 Re: PD-10-005 for 90, 100, 101, 120, 121, 131, 141, 151 and 160 Albright Way and 14600 Winchester Boulevard, Los Gatos Honorable Mayor Pirzynski and Town Council Members: On behalf of the property owner, LG Business Park, LLC, I want to convey some news regarding the term of the Development Agreement We have heard concern that the initial term of the Development Agreement feels too long. As you know, your professional staff and we worked hard to develop an Agreement that used industry standard terms as its base. The initial 15 year term and 5 year extension term are standard. Nevertheless, we have worked hard to confirm that we can offer to modify the terms to address the issues we heard. While a total of 20 years of potential term is critical to the leasing and financing of such a project, the initial term can be reduced to 10 years and the extension term can be extended to 10 years. In order to stay in alignment with the Town and its General Plan, we can agree that in addition to being required to be in compliance with the terms of the Development Agreement we would also agree to be required to have built at least 250,000 sf of new office space on the Property during the initial 10 year term in order to benefit from the second 10 years of term. Again, I respectfully request the Town Council's approval of the PD Overlay Zoning and the Development Agreement on Monday night. We look forward to working with the Town to ensure that the PD Overlay Zoning is the best land use decision for the Towri s residents, employers, and employees. If you have any questions or would like additional information, please contact me directly at (408) 242-9052 or by email at jshenk@me.com. Respectfully, John R. Shenk Development Manager Owner's Representative & Applicant Attachment 38 THIS PAGE INTENTIONALLY LEFT BLANK