Staff Report
PREPARED BY: MONICA RENN
Economic Vitality Manager
Reviewed by: Town Manager, Assistant Town Manager, Finance Director, Community Development
Director, and Town Attorney
110 E. Main Street Los Gatos, CA 95030 ● 408-354-6832
www.losgatosca.gov
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
MEETING DATE: 03/05/2019
ITEM NO: 7
DATE: FEBRUARY 28, 2019
TO: TOWN COUNCIL
FROM: LAUREL PREVETTI, TOWN MANAGER
SUBJECT: ADOPT TWO RESOLUTIONS RELATED TO BUSINESS STREAMLINING
OPPORTUNITIES THAT REDUCE THE TIMELINE AND COST OF SPECIFIC
TOWN PROCESSES:
A. A RESOLUTION SUSPENDING ORDINANCE 2021 AND MODIFYING THE
ASSIGNMENT OF DUTIES FOR NEW CONDITIONAL USE PERMITS FOR
RESTAURANTS TO THE DEVELOPMENT REVIEW COMMITTEE UNTIL
DECEMBER 31, 2019; AND
B. ADOPT A RESOLUTION MODIFYING THE ASSIGNMENT OF DUTIES FOR
MINOR EXTERIOR ALTERATIONS ON COMMERCIAL BUILDINGS TO BE
PROCESSED WITH A BUILDING PERMIT UNTIL DECEMBER 31, 2019.
RECOMMENDATION:
Adopt two resolutions related to business streamlining opportun ities that reduce the timeline
and cost of specific Town processes:
A. A resolution suspending Ordinance 2021 and modifying the assignment of duties for
new conditional use permits for restaurants to the Development Review Committee
until December 31, 2019; and
B. Adopt a resolution modifying the assignment of duties for minor exterior alterations on
commercial buildings to be processed with a building permit until December 31, 2019.
BACKGROUND:
Since 2015, the Town Council, Planning Commission, and Policy Committee have been working
to streamline many provisions that govern businesses in Los Gatos. From providing
PAGE 2 OF 5
SUBJECT: ADOPT TWO RESOLUTIONS RELATED TO BUSINESS STREAMLINING
OPPORTUNITIES THAT REDUCE THE TIMELINE AND COST OF SPECIFIC TOWN
PROCESSES
DATE: FEBRUARY 28, 2019
S:\COUNCIL REPORTS\2019\03-05-19\Downtown Restaurants Streamlining\Staff Report.docx 2/28/2019 3:10 PM SLL
BACKGROUND (continued):
more flexibility with business models to reducing cost and timelines for permit processing, the
Town has made strides in creating opportunities for business success in Los Gatos. Attachment
1 provides a chronology of streamlined provisions adopted from 2015 to date.
Most recently, in the spring of 2018 the Town Council adopted two resolut ions: one
suspending the need for a formula retail business in downtown to obtain a Conditional Use
Permit (CUP) and another modifying the deciding body for restaurants to modify their CUP to
the Development Review Committee (DRC) in an effort to reduce the time and cost associated
with a CUP modification. Both have provided opportunities for business and property owners
to modernize business use models for their spaces and create opportunities for further
business growth.
Since their adoption, these resolutions have both been utilized by our business community to
allow for growth and business development. The Town has two new formula retailers in
downtown and have had five existing restaurants modify their CUP, with a sixth currently in
process. These changes have provided benefit to businesses and customers and have
contributed to reducing commercial vacancies. As a whole, these changes have caused no
notable negative impacts to the surrounding businesses, residential neighborhoods, or
commercial zones.
DISCUSSION:
On January 22, 2019, the Town Council discussed and adopted strategic priorities for 2019 –
2021 in which “Streamline Policies: Land Use/Economic Vitality Measures” remained as a
priority. Additionally, the Council has an adopted Strategic Priority that encourages an
improved quality of life through “Community Vitality.” Staff understands this to mean that
there is a desire among the Council to create vibrancy in Town through programming
opportunities such as music, entertainment, outdoor dining, events, and other placemaking and
community engagement. Many of these amenities could be provided by programming within
the businesses themselves, if the tools and processes were available to them and attainable in
terms of time and cost. By continuing to evaluate the Town’s processes and provide additional
streamlining, the Town may be able to retain and attract vibrant businesses.
It is important to note that aside from Town provisions, businesses are faced with additional
challenges. In recent months, a series of other factors have presented themselves in Los Gatos
and in the greater Bay Area that create a challenging business environment. Most notably,
several businesses have recently closed locally for a variety of reasons, ranging from parent
company strategic decisions to privately driven decisions such as retirements and lease
PAGE 3 OF 5
SUBJECT: ADOPT TWO RESOLUTIONS RELATED TO BUSINESS STREAMLINING
OPPORTUNITIES THAT REDUCE THE TIMELINE AND COST OF SPECIFIC TOWN
PROCESSES
DATE: FEBRUARY 28, 2019
S:\COUNCIL REPORTS\2019\03-05-19\Downtown Restaurants Streamlining\Staff Report.docx 2/28/2019 3:10 PM SLL
DISCUSSION (continued):
negotiations. More regionally, the cost of compensating employees has risen. The minimum
wage in California has increased to $11 for companies with twenty-five or fewer employees and
$12 for companies with twenty-six or more employees. Complicating this increase further for
small businesses is the fact that many local cities have adopted their own minimum
requirements that are much higher than the current state minimum. Cities such as San Jose,
Mountain View, Palo Alto, and Sunnyvale raised their rates to $15 per hour in January of 2019,
and several others adopted a minimum of $13.50, which has a ripple effect to neighboring
jurisdictions such as Los Gatos who must compete with such compensation rates to retain
employees.
Given that there are multiple pieces of the puzzle that contribute to a business’ success, and
that the business mix in any community directly attributes to the overall vibrancy and appeal of
the location, it is important for the Town to continue to consider options that may reduce the
time and expense of opening or expanding a business in Town, so that Los Gatos may remain
competitive with neighboring communities as a destination to gather, shop, and dine.
As the Town Council further considers the current business environment, it may wish to expand
on the streamlined processes and provisions to provide an even more favorable business
environment in Los Gatos. This report identifies two potential considerations. First, one of the
largest barriers of entry to downtown Los Gatos is obtaining a CUP. For this reason, the Council
may wish to consider a pilot program to modify the assignment of duties in Town Code Sec.
29.20.750, and 29.20.755 to allow the Development Review Committee (DRC) to consider and
approve new restaurant CUPs through December 31, 2019 (see Attachment 2). This pilot would
also require the temporary suspension of Ordinance 2021 (Attachment 3), which strongly
discourages the conversion of uses from retail to restaurant, creating a process that is
significantly quicker and less expensive than our current process. This approach is s imilar to the
resolution adopted by Town Council on June 19, 2018 which allows for CUP modification with
DRC approval.
Currently, restaurants are approved at either Planning Commission or Town Council depending
on how the Town Code defines the restaurant, costing the applicant $7,124.67 and $12,062.79
respectively, and typically taking anywhere from three to seven months for approval. In
contrast, the DRC process takes about six to eight weeks and costs the applicant $4,335.68 to
apply. This process still incorporates public noticing, input, and a full public hearing.
In making this recommendation, staff considered neighboring and comparable jurisdictions’
provisions for new restaurants to determine what would make a prospective restaurant choose
PAGE 4 OF 5
SUBJECT: ADOPT TWO RESOLUTIONS RELATED TO BUSINESS STREAMLINING
OPPORTUNITIES THAT REDUCE THE TIMELINE AND COST OF SPECIFIC TOWN
PROCESSES
DATE: FEBRUARY 28, 2019
S:\COUNCIL REPORTS\2019\03-05-19\Downtown Restaurants Streamlining\Staff Report.docx 2/28/2019 3:10 PM SLL
DISCUSSION (continued):
Los Gatos over another location. Often, the investment of time and money are major deciding
factors for new businesses, thus providing this streamlined process may attract new
businesses. Attachment 4 provides benchmarking information from other cities. Staff found
that Los Gatos was the only jurisdiction requiring any approval at the Town Council or Planning
Commission level for a restaurant.
Given the number of vacancies in Los Gatos at this time, allowing this flexibility could provide a
catalyst for businesses currently deciding between Los Gatos and another jurisdiction to choose
Los Gatos as their business’ new home. To provide a level of comfort and control, the Council
may wish to freeze the resolution after a certain number of new restaurants are approved , to
review the progress, and confirm its continuance or modify the resolution. Again, this is a
similar approach to the action taken regarding the formula retail resolution in June 2018
requiring staff to return to the Council should five new formula retail businesses locate in
Downtown.
Attachment 5 provides a second streamlining opportunity that could both assist existing
businesses and provide a draw for new businesses considering Los Gatos. This resolution would
reassign the duties for minor exterior alterations on a commercial building from the DRC to the
staff level with a building permit. Staff would use the provisions in the Town Code and
Commercial Design Guidelines to determine if the alteration is appropriate, and to ensure the
compatibility of the exterior modification.
Such modifications could include changes to windows, awnings, or doors on an existing store
front, and would require that they meet the same provisions currently outlined in the
Commercial Design Guidelines. If the building is deemed historic, consideration by the Historic
Preservation Committee would still be required; however, after this consideration the applicant
could go straight to building permits. Removing the need for DRC approval reduces the process
by six to eight weeks and $2,515.50.
CONCLUSION:
Staff is recommending that the Town Council consider expanding on their efforts to streamline
business processes by adopting two resolutions:
1. A resolution suspending Ordinance 2021 and modifying the assignment of duties for
new conditional use permits for restaurants to the development review committee
until December 31, 2019; and
PAGE 5 OF 5
SUBJECT: ADOPT TWO RESOLUTIONS RELATED TO BUSINESS STREAMLINING
OPPORTUNITIES THAT REDUCE THE TIMELINE AND COST OF SPECIFIC TOWN
PROCESSES
DATE: FEBRUARY 28, 2019
S:\COUNCIL REPORTS\2019\03-05-19\Downtown Restaurants Streamlining\Staff Report.docx 2/28/2019 3:10 PM SLL
CONCLUSION (continued):
2. Adopt a resolution modifying the assignment of duties for minor exterior alterations
on commercial buildings to be processed with a building permit until December 31,
2019.
COORDINATION:
This report was prepared with coordination between the Town Manager’s Office, Town
Attorney’s Office, and Community Development Department.
Attachments:
1. Economic Vitality and Land Use Streamlining
2. Draft Resolution suspending Ord 2021 and modifying new CUPs for restaurants
3. Ordinance 2021
4. Benchmarking data
5. Draft Resolution for minor exterior modifications on commercial buildings
This Page
Intentionally
Left Blank