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09 Attachment 6 - January 8, 2020 Planning Commission Verbatim MinutesLOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A P P E A R A N C E S: Los Gatos Planning Commissioners: Matthew Hudes, Chair Melanie Hanssen, Vice Chair Mary Badame Jeffrey Barnett Kendra Burch Kathryn Janoff Reza Tavana Town Manager: Laurel Prevetti Community Development Director: Joel Paulson Town Attorney: Robert Schultz Transcribed by: Vicki L. Blandin (619) 541-3405 ATTACHMENT 6 LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 P R O C E E D I N G S: CHAIR HUDES: The next item is actually a number of changes to Town Code Amendments, Application A-19-010. Of course this is Town Wide and the Applicant is the Town of Los Gatos. This is to consider amendments to Chapter 29, Zoning Regulations of the Town Code regarding land use and economic vitality streamlining. I was going to suggest a process for this, that we take the Staff Report from Mr. Mullin and we take any comments from the public, but then as we consider this there seem to be possibly four distinct items, and so I'm going to go through them in sequence and get a vote on each of those as we go through. I think it will be clearer that way rather than mixing things up. We'll do the whole thing and the Staff Report and then the public comments. So, Mr. Mullin. SEAN MULLIN: Thank you. The Town Council has an adopted strategic priority that promotes community vitality and encourages land use streamlining efforts. Staff has been working with the Council and Council Policy Committee to identify and streamline many of the business-related processes to reduce the associated time and costs. Five LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 temporary resolutions were adopted by the Council and were set to sunset in December of 2019. On October 1st the Council voted to memorialize the streamlining efforts and adopted a resolution on November 5th extending the temporary streamlining efforts until such time that the Town Code amendments may be adopted. Before you tonight is consideration of the Town Code Amendments necessary to memorialize these streamlining efforts. The code amendments are related to allowing new formula retail businesses in the downtown C-2 zone without approval of the CUP, Conditional Use Permit; allowing the DRC to approve certain CUP modifications for existing restaurants in the downtown C-2 zone; to approve CUPs for new restaurants town wide; approving minor exterior modifications to commercial buildings at the Building Permit level; and allowing the DRC to approve CUPs for new group classes in the downtown C-2 zone. A thorough discussion of each topic is included in your Staff Report. In conclusion, the Staff recommends that Planning Commission review the proposed amendments and forward a recommendation to the Town Council by taking the actions outlined on pages 7 and 8 of the Staff Report. I'd like to note that Monica Renn, the Town's Economic Vitality Manager who ushered the temporary streamlining efforts through the LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 process, is here tonight and is available to answer any questions. This concludes Staff's presentation and we are available to answer any questions. CHAIR HUDES: Okay. Questions? I had one kind of big question and that is that actually I was a little baffled at the original paragraph that explains what's going on here. So, to be clear, memorializing these streamlining efforts means making them permanent, is that correct? SEAN MULLIN: That's correct. Permanent by changing the Town Code. CHAIR HUDES: And so why is there also the language that says, "Until such time that Town Code Amendments may be adopted."? SEAN MULLIN: There were two separate actions by the Council. Because these resolutions were sunsetting, or expiring, in December of 2019 the first action was to vote to see if they wanted to memorialize these, how they wanted to act on each of these. They voted to memorialize them. The second component on November 5th was to come back with a resolution which hadn't been prepared for the first meeting, and that resolution then extended those LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 temporary resolutions until such time that the Town Code could be updated. CHAIR HUDES: Okay, thank you. I'm going to move to public input at this point and then we'll come back for more Staff questions, then we'll go kind of one-by-one. So, I don't have any cards. Oh, I do. Bob Caya, McCarthy Ranch. BOB CAYA: Good evening, my name is Bob Caya and I represent McCarthy Ranch. As most know, we have a vested interest in Los Gatos from a personal, business, and property perspective. By way of the Planning Commission, Town Council, and Staff's leadership we have seen noticeable progress toward the revitalization of downtown Los Gatos and are here tonight to full-heartedly encourage the Planning Commission to recommend to Council that the Town permanently adopt all of the currently temporary resolutions before you this evening. To boot, I'd like to provide three specific personal examples of these resolutions working toward the Town's strategic initiative of being open for business. One, the minor exterior modifications to commercial buildings resolution allowed us to renovate our existing Highway 9 properties, and upon completion of construction we will be able to re-tenant them with first class tenants who will collectively add to the strong LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 fabric that is our community as well as provide a warm and welcome entrance to the downtown. This was something that was proving to be economically non-feasible prior to the passage of this temporary resolution. Two, the new restaurant CUPs to be heard at the DRC resolution has directly benefited one of our perspective tenants at that same property, a first-rate Bay Area local business who has wanted to come to Los Gatos for some time but been gun shy given what they perceived as overly restrictive regulations. Based on this and other resolutions we were able to convince them that Los Gatos is heading in a positive policy direction and they should make the move. They obliged and pending all necessary approvals will be calling Los Gatos home soon. Three, the restaurant CUP modifications at the DRC resolution allowed Rootstock to modify its existing CUP so we may offer live music twice weekly, which has been widely well received. We would not have been able to do that economically as it would have otherwise cost us about $15,000. As we feel these examples show, these resolutions are bringing real results and will continue to encourage positive developments for the betterment of our town should they be permanently enacted. LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 We appreciate the Planning Commission's consideration of this item and encourage a resounding yes recommendation to the Town Council. Thank you for your time. CHAIR HUDES: Thank you. Any questions? I had one. You were referring to exterior modifications of commercial business on Highway 9. Which ones were those? BOB CAYA: We own the corner old Postal Mate, the old liquor store there, the large office building, and then the old insurance building there, which are now under construction. CHAIR HUDES: Okay, so they are now under construction but they haven't been completed yet? BOB CAYA: Yes. CHAIR HUDES: Thank you. Would anyone else like to comment on this? Okay, so I'll now close the public portion of the public hearing and we'll consider each of the four individually. Let's first talk about formula retail business in the downtown C-2 zone. This is specifically talking about formula retail in downtown C-2. Are there questions of Staff or comments on this? Vice Chair Hanssen. VICE CHAIR HANSSEN: I just want to make sure I understand it. The temporary measure passed by Council was LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to allow over an 18-month period up to five formula retail, but what we're being asked to consider now is to allow unlimited formula retail as long as it's not greater than 6,000 square feet, is that correct? SEAN MULLIN: The first part of your question was that Council was allowing up to five to come in before Staff had to bring the item back for review with the Council, not necessarily stop the resolution but give them an opportunity to review the impact. The second part of your question is the code change that's before you tonight would make that permanent. There would not be a cap on the number of formula retail in downtown under 6,000 square feet. VICE CHAIR HANSSEN: Right, so not that it would happen, but if 20 formula retailers wanted to come into the C-2 zone and they were under 6,000 square feet, no one would be looking at it? SEAN MULLIN: In theory, yes, that is possible. VICE CHAIR HANSSEN: Okay. CHAIR HUDES: As a follow up to that, I am having a little hard time with the term memorializing because what was approved was five in 18 months, so we're not memorializing five every 18 months, correct? What we're LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 making permanent is unlimited number every month in perpetuity, is that right? SEAN MULLIN: Correct, until… If there becomes a concern Council could direct Staff to look into a future code change, but yes, the answer to your question is yes. CHAIR HUDES: But that's what the law would be is that we could take any number of them? ROBERT SCHULTZ: That is correct, and if at any time Council felt that there would too many they could always put a moratorium on them and make changes to it, but this change would not have any cap or any review of formula retail. CHAIR HUDES: If I could maybe just follow up to that since it seems to be a pretty dramatic change, what has been the outreach, what's been the reaction? We heard from someone who's a developer. Probably there are landlords that have opinions but there are also key independent retailers in this town, some of whom have been here a very long time and are struggling. What's been the outreach and what's been the reaction from them? SEAN MULLIN: With this portion, and I'm going to defer to Monica in one moment, with this portion the application where planning has taken the lead the outreach has been through social media blasts and posting our normal LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 methods. Monica has done additional outreach that I'd like to let her summarize. CHAIR HUDES: Okay, thank you. MONICA RENN: Monica Renn, Economic Vitality Manager. Really at a high level what we've seen is a big change in how people shop. We've seen a big change in how tenants will tenant a space: the size, the merchandise, the location. We did extensive work with the brokerage community, with the property owners, with the businesses themselves, and all of them are actually very much in favor of this. What we see now is something like 12 vacancies on North Santa Cruz, so if there were really a line of formula retailers that were looking to infiltrate or to take over downtown, I don't think we would see that vacancy. There is a formula to almost every formula retail, for lack of a better word, as to where they want to locate, so just dropping into a center of a main street doesn't necessarily fit almost ever. We're seeing Williams- Sonoma close, we all know that. We have potentially one to two, maybe three, of our formula retailers that we have now that will be closing in the next four months. Those have not been made public but we do know that. We know that based on market trends, we know that based on our information coming forward. LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 So, having all that information and working with the Council and working with all the stakeholders what we've found is hey, let's be a little more dynamic, let's try to open up the ability to see what can happen. We do know Sephora is coming in, that's a new formula retail in a new location, and we know that's going to bring a lot of action, that's going to bring a lot of people who are… We call it retail synergy, so a lot of other people who want to be located around that are now going to look to Old Town. So, I would say the outreach has been extensive and the support of it has also been very favorable. CHAIR HUDES: Could you maybe comment on the… I know the developers and the landlords, yes, but we do have some independent retailers that have been here a long time that are struggling. Have they participated? Have you heard from them that they're in support of formula retail coming into the downtown? MONICA RENN: In conjunction with the Chamber I've sent emails out, probably three to four emails, regarding every single one of these issues before the Staff Report is written to go to Council to invite them to the Council meeting and to follow up with what the action was, LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 understanding that independent business owners are very busy and they don't necessarily have the time. The ones who have come to our meetings at the Chamber have all been in support of this. Independent retailers know that their business alone does not bring the masses, so they can appreciate that when there is a draw, be it a formula retail, be it a restaurant, be it some sort of service business, when there is a draw they are going to do better, so all of those that I have talked to, they have all been in support of this. CHAIR HUDES: Okay, thank you. Other questions? Yes, Commissioner Badame. COMMISSIONER BADAME: I don't have a question but just a couple of comments. In regard to, for example, Sephora coming into the Old Town, I have to wonder about the impact that it's going to have on a similar existing business that's been there for at least five years, and that would be Bluemercury, so I'm kind of worried about some of these formula stores. In fact, to me the CUP process allows community participation as to the needs and types of businesses that would shape and serve the Town and I kind of worry about a saturation of formula businesses in that it would take away from the uniqueness of our town, and to LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that respect, even though some of this is to streamline costs and time, typically formula can absorb the cost of the CUP, so those are some comments I have in regard to formula. CHAIR HUDES: Thank you. Commissioner Tavana. COMMISSIONER TAVANA: I was going to echo some of those opinions as well but I guess I would say over an 18- month period only three new formula retailers have taken action so far. Can you comment on who those three are? MONICA RENN: Correct. Actually, what we saw was an interesting dynamic of where kind of formula replaced where formula was because there is a place that they want to be. Really the new one is Sephora, and then the other one would be AT&T, because at one point the Walking Company was considered one of our new ones, but then they moved into where the Gymboree left and closed, so in turn they replaced like for like, and I would just say a couple of things. One is both businesses that were mentioned by the commissioner are both formula retail. There's another makeup store two doors down from the other. Oftentimes you will find that they purposely cluster together because something you can't get at one you get at the other. It's no shock that Athleta joined our community shortly after LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 lululemon did; in another community they actually share a common wall because they know that the market is the same, and so a lot of times that competition is healthy and it actually creates a stronger shopping base for all of the stores involved. Maybe that's not the case all the time of course. If there's a business model that's not strong and a stronger competitor comes in we can see that one closes, but if it is a formula they have that kind of greater role above them making those decisions and making the choices based on their market area and based on their shopping area. CHAIR HUDES: Okay. Yes, Commissioner Tavana. COMMISSIONER TAVANA: I guess as a follow up, is there a procedure in place to determine what formula retailers are acceptable or not acceptable, or who's allowed in and who's not allowed in? What does that process look like? MONICA RENN: Sure. There is not something in place for that and the CUP process that's in place for formula retail is actually not there for us to choose or to allow a specific business, it's really about the use. So, the discussion is is this allowed, is this use appropriate? It's not about a specific company, and so we can't make LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 those decisions based on the company, and that's why we find when we create the CUPs they have to be broad enough that another company can replace them because they do run with the land. CHAIR HUDES: Thank you. Commissioner Janoff. COMMISSIONER JANOFF: Are we in discussion? CHAIR HUDES: Yeah. COMMISSIONER JANOFF: Okay. It strikes me that vacancy is worse for the Town than bringing in a retail that may be a large formula retail. I'm excited about Sephora coming in, but it seems to be that it's an experiment worth trying because the Town is going to benefit from a more active and vibrant shopping experience. I think one of the terms used in the report had to do with restaurants are limited in some ways because if you're a town of only restaurants you'd have a busy town at lunch and dinner and then the rest of the time it's sort of quiet possibly, so you need to have that balance and purpose for people to be in town longer. I think the dwell time or the amount of time people are staying and shopping and enjoying and taking advantage of what the Town provides is important and I would support this change for that reason. I think an occupied town is a healthier town and some of those big draw companies are really going to help. LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CHAIR HUDES: Vice Chair Hanssen. VICE CHAIR HANSSEN: I was going to say I really appreciated Ms. Renn's comments; it gave me a lot of confidence. We had previously a couple of years ago been asked to view a presentation on the future of retail and it was really dark and dismal in terms of what's going to happen, and for many, many, many years we've had our businesses complaining about how hard it is to change their business or do things in town, so that being the case I think there is one thing that is sort of a checkpoint and it's this 6,000 square feet thing, so for that reason you're not going to see Walmart wanting to be in town, or if they do there's going to be a checkpoint to evaluate it. Under 6,000 square feet, I think that's going to help. I'm kind of asking Ms. Renn, I think the kinds of retail, the size thing, will be a good indicator? MONICA RENN: You're correct, and there was kind of a caveat in that original resolution that you of course could recommend to the Council that continued and that was that if a company came in and asked to join several spaces that it would need a Conditional Use Permit and it would need review, so for example like you're saying, if a large company came in a said hey, we want to take over this entire building and make all of these suites a Walmart or LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 whatever it is, they're probably going to hit above that 6,000 square foot, but there are some things if you're feeling some discomfort there that you could certainly bring to the Council's attention. VICE CHAIR HANSSEN: I don't know if it's fair to say that that's the collective will of the Town to not have Walmart here, but it is a whole different kind of place than a lot of the places we've had in Los Gatos, so I am comfortable with the 6,000 square feet and what I heard you say is we could add in if some really very large retailer was trying to come into town without having any review of it, that we could ask to put in if they tried to put multiple spaces together, is that right? MONICA RENN: That's correct, and I think it's important to note that we often do that internally. If there is something that we really feel like this is out of the norm, we have a company asking to all of a sudden take over an entire block, Staff would not be comfortable approving that; I think that is something we would definitely bring to the bodies. VICE CHAIR HANSSEN: Okay, thank you. CHAIR HUDES: Maybe I had one comment. I don't know very much about retail; I'm not even a very good shopper, but I have been around the town a while and I do LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 remember there was a lot of controversy about this subject when the CUP for formula retail was enacted and so I'm kind of shocked that we haven't had any reaction here to it, that we haven't even had a single item. I also am thinking that, myself, I didn't really even understand the language very well in what went out, so the memorializing, what does that mean? The fact that we're talking about not memorializing the five every 18 months but we're memorializing something different or we're enacting something different I felt was a little bit unclear, so I actually think that my opinion is it would be hasty to pass this on at this point without making sure that people have had the opportunity to weigh in on this as it was such a hot topic a while ago. So, my feeling is that I'd like to leave this one open on a continuance with maybe better wording of what we're doing in the outreach and make sure that we have the opportunity to hear from people on this one. That's just my opinion on this. I think anything to do with the business and the vitality of the downtown is something that I'm very passionate about, but I also am kind of very surprised that we haven't had that reaction and I wonder if it may have had something to do with the language and the clarity of what we're doing to do. LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Commissioner Burch. COMMISSIONER BURCH: I in the last year, based on some job type related issues, have done a lot of work researching retail and where retail is going, how other jurisdictions are now adapting to that, and I'm probably going to be the first one to tell you here I am enthusiastically behind what we're doing. Retail is changing drastically. It's no longer necessarily completely about going into a store even to buy. Oftentimes if you go, you look, you like it, you may go somewhere else and then buy that item online. So, what's happening is as we all know our land prices are not going down. Smaller companies are having a very hard time meeting lease costs or other such issues, and I realize that financially that's not our purview to worry about, but what it does lead to is you see vacancies, and the more vacancies you have the less people come into town and it becomes a cycle that is actually building on itself. By lessening this restriction—and just so everyone knows, Los Gatos is known for being notoriously difficult for retail—so by backing off a bit on this… And 6,000 square feet is not very big, so we're not inviting in a West Elm or a Home Depot. These are smaller businesses anyway, but they're businesses that have the financial LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 backing to be able to be slow for the first few months that they're here, but their names are recognizable enough that when people come to go shop at that place they will then continue walking. They'll see something else, a store that they've never heard of down the street, and again that becomes a cycle, that builds on itself. If this was just open-ended and anybody could come in at any size I would not be for this, but when you really look at what it takes to build a store and just basic code requirements, what has to be in that store to support it, we are not talking about large stores, but what we are talking about is not going up and down Santa Cruz and having 12 vacancies. That's terrible. So, I think that this is well overdue. I think that other developers are going to start seeing this and begin speaking to their clients who are looking in our neighboring jurisdictions, which we're seeing very alive and vibrant—like you said, not just at dinner or lunch but are vibrant—and they're going to start suggesting to their clients, you know what? Los Gatos has got some programs going. You should come talk to them, see what you think, and I think we're going to see a vast difference in this town. LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I understand what you're saying about some of the wording, but I don't know that that… I feel like we could hammer that out right here and still send that on with confidence. CHAIR HUDES: I don't have the expertise to really know, but I do know that we have some folks who have been very loyal to the downtown and have operated businesses for 20 years and I would hate to see this go in and them be surprised by this, because these are some of the same people who were opposed to the formula retail coming in previously and maybe they're enlightened now and maybe they're going to perfectly fine with all of that, but I feel like we owe something to them in terms of communication, and I'm not saying for months, I'm talking about to do a clear description of what we're proposing here, because I think the language has been confusing so I don't think we have anyone here who understood it and I am suggesting that we reword and we elicit whatever comments that we can get from some of our folks who we know have devoted their lives to operating retail businesses downtown. COMMISSIONER BURCH: In this dialogue do you guys mind if I just ask one quick question of Ms. Renn? Did you meet with Catherine at the Chamber? I know that she has a LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 couple people who work for her that oftentimes when things are in front of us that deal with the downtown they go door-to-door and talk to people. Are you aware if this took place for this issue? MONICA RENN: I have gone door-to-door and talked about all of these issues. I have gone to Chamber meetings. I have summarized this in very short bullet points, knowing that independent businesses don't have a ton of time to read these Staff Reports, so it hasn't just been hey, check out this attachment and let me know what you think, it's been tonight is this, this is what it means for us. I think this is why the Council did the 18-months or five, because if there was that reluctance we have gone almost two years and have not seen that flood, and that was really what the conversation was at the Council is that was the test period, that was the period, you know, do the neighbors know, do they not know? During that time I have been in various arenas sharing this information and have tailored that language to match my audience, so it hasn't just been passing out resolutions, because I do understand that those can be difficult and they don't make sense when you're trying to do 18 things at once; I've tried to really be tailoring that information. COMMISSIONER BURCH: Thank you. LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CHAIR HUDES: Thanks. Yes, Commissioner Janoff. COMMISSIONER JANOFF: I think both points are really important, but I wonder whether we can accomplish the same objective of making the language that goes to the community from these bodies clearer by recommending that that happen when this goes to the Town Council, so before it's agendized on the next Town Council meeting recommend that there be communication from these bodies that is adopting the clear language as is suggested. I wouldn't like to see it held up but I would like to see as many persons who are interested in participating in the public process, we don't have many tonight, and if it is that important to the residents of the Town then give them the opportunity, and they have that opportunity before the Town Council. I believe it accomplishes the same objective without holding things up. CHAIR HUDES: Okay, thank you. Yes, Vice Chair Hanssen. VICE CHAIR HANSSEN: I was going to say I'm very much with Commissioner Burch on this and I don't think we should hold this up, especially since we had the 18-month trial period, but I also agree with Commissioner Janoff. I think just like we're doing with the General Plan Advisory Committee, we're looking at the possibility of growing LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 2,000 units and they're putting communications out there saying come and voice you opinions on how we do this. I think as long as there's some communication that goes out, because I think it got a little bit lost with the up to five and all this stuff, just be clear in the communications—and I'm not saying hold it up—that we are proposing to allow any formula retailer up to 6,000 square feet to operate in our town if they have the will, then I think it's fine. But I also feel like Ms. Renn has done a fabulous job of reaching out to everyone as well so that the only thing it would just need is a little clarity of language. CHAIR HUDES: Okay. Other comments? COMMISSIONER BARNETT: I'll just briefly chime in, if I may. I've been in Los Gatos since 1974 and it was a charming village with uniqueness at that time, but I think given the economic pressure now with land values that it's difficult to fight the market and in some form or fashion that we're going to have to accept more formula retail in the Town. CHAIR HUDES: Okay. It's suggested that we take each of these and do a vote on them and then we can bundle that into a final recommendation, is that okay? LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 So, on this item we would need a motion. Yes, Commissioner Burch. COMMISSIONER BURCH: Are we just going to make a motion to adopt the revision to the formula retail businesses in downtown C-2 zone? ROBERT SCHULTZ: It's a recommendation to (inaudible). COMMISSIONER BURCH: Recommendation, I'm sorry. A recommendation of approval to Council to adopt the formula retail business in the downtown C-2 zone changes. Do I need to add any more to that? Okay. CHAIR HUDES: Okay. Do we have a second? Yes, Commissioner Janoff. COMMISSIONER JANOFF: Second. CHAIR HUDES: Okay, thank you. Any comments before we vote? I unfortunately will not be able to support the motion because I have to kind of vote on what's before me, and what's before me is something that I don't think informed the public enough about the issue for what I'm dealing with right now. I do support the idea of getting more input. I am not opposed to formula retail in the downtown even as it's been proposed, I just feel like what's before me hasn't had enough clear notice for people LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 who I believe reacted in a different way in a different time, so for that reason I won't be supporting the motion. Anyone else want to make comments? Okay, I'll call the question. All in favor? Okay. Opposed. So, it passes 5-2 and I think you've got the commissioners voting, so thank you. Yes, Commissioner Burch. COMMISSIONER BURCH: Can we take like a five- minute break? CHAIR HUDES: Yes, we may. Thank you. (INTERMISSION) CHAIR HUDES: Let's get started again. The next item in the Town wide code amendment application is restaurants and CUP modifications at the DRC level, which was a temporary 18-month resolution to allow current restaurants to modify their CUP at the DRC. Many of them chose to modify their use permit to allow them to participate in the pilot parklet program and now new CUPs to be heard at the DRC and suspension of Ordinance 2021, so this would I guess suspend or eliminate 2021, is that correct? SEAN MULLIN: This change would eliminate 2021. LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CHAIR HUDES: Right, okay. Any comments or observations about how that's worked for restaurants? Commissioner Badame. COMMISSIONER BADAME: Well, I work downtown and I can definitely say that the outdoor dining has been a big plus. Live music has also enhanced the ambiance, so I think the CUP modification at a DRC level for existing restaurants has been phenomenal, so I'm a big supporter of that. CHAIR HUDES: Great, other comments? VICE CHAIR HANSSEN: I had a question. CHAIR HUDES: Yeah. VICE CHAIR HANSSEN: I just want to make sure I know what we would be recommending. Basically what we're saying is that there is no need for any more 18-month period, that basically all new restaurant CUPs as well as modifications to existing CUPs could go through the DRC? SEAN MULLIN: Correct, they are eligible to go through the DRC. VICE CHAIR HANSSEN: Okay. CHAIR HUDES: Commissioner Burch. COMMISSIONER BURCH: Is there anything that would make them need to come to the Planning Commission, LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 something that you feel that DRC would not cover in this scope? JOEL PAULSON: Joel Paulson, Community Development Director. Under the current regulations there is nothing that comes to mind, however, with any application we always have the ability to forward that to the Planning Commission should there be an issue or concern. As Ms. Renn mentioned before, if someone came in and wanted to merge a block of suites and turn it into a big disco/nightclub/restaurant, that's probably going to be problematic, so we would look at those things on a case-by- case basis, but there are no specific restrictions in the ordinance. COMMISSIONER BURCH: Okay, thank you. CHAIR HUDES: Okay, other questions on restaurants? I would add my comment that it seems as though we've stimulated some innovation in the restaurants so there's a wider variety I would say, and not just of cuisines but also of styles of dining, and saved some locations that looked like they had been struggling for some time and now they seem to be pretty vibrant and I think we even have some ones that are sought out over a pretty wide regional basis, so I think that things seem to LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 be working pretty well there and I think we're getting the kind of vibrancy and vitality that we need to have. There will always be a question of do you go too far with restaurants, and that's probably the bigger concern, so if there were a situation where we are becoming a Saratoga, which is only restaurants, what would the mechanism be for moving that back and dealing with that situation? SEAN MULLIN: As previously discussed with the formula retail, the Council could put a moratorium on it, they could pass a resolution to change the process temporarily so that it could be studied, so if there was a concern coming up the Council could address it. CHAIR HUDES: Great. Vice Chair Hanssen. VICE CHAIR HANSSEN: I think you already asked the question but so a business wants to come in and change the retail to restaurant, they don't have to get a CUP for that or they can do it through the DRC, because it's a change from one kind of CUP to another, so it could be done at the DRC? SEAN MULLIN: It would still require a CUP but instead of the hearing body typically being the Planning Commission and Council it could go to the DRC. The scenario you're discussing, a concern was raised with that in LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Resolution 2021, which all this gets alleviated by making these changes. VICE CHAIR HANSSEN: Okay, that's fine, and as long as I'm speaking I wanted to say I generally don't see a problem with this at all. I mean, the only concern possibly would be the one where we end up having more restaurants than retail, but it seems like that can be checked by the DRC. SEAN MULLIN: Ultimately that would be Council if there was an issue. At the Staff level and the DRC level CUPs would continue to be processed and if they met the requirements they would be moved forward. If the Council noted a concern of an oversaturation of that particular use, they could put a moratorium in and then study what changes are necessary. VICE CHAIR HANSSEN: Good. Thank you. JOEL PAULSON: I would just add for the Planning Commission that the Staff will continue to maintain a list of these various changes and the number of businesses that come in under the new provisions and should they start spiking we would take that question back to Council even if they had not called that out before. There is no hard and fast number but that's something that Staff would have to look at and will continue to monitor. LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CHAIR HUDES: Okay. Other comments on this? Since I'm not carrying my weight here on motions I'll move to recommend to the Council the we memorialize the item on restaurants. Commissioner Badame. COMMISSIONER BADAME: Second. CHAIR HUDES: Discussion? Okay, I'll call the question. All in favor? It passes unanimously. So, let's move on to exterior modifications, and these are minor exterior modifications to commercial buildings, to allow this to be processed as building permits rather than Architecture and Site applications at the DRC. Any questions of Staff on this? Yes, Commissioner Janoff. COMMISSIONER JANOFF: The question that comes to mind is, this is broadly commercial but how are historic commercial buildings handled with these proposed modifications? SEAN MULLIN: Any exterior change to a historic commercial building would continue to require the Historic Preservation Committee's review. It could be done at the building permit level or preliminarily prior to the building permit submittal. COMMISSIONER JANOFF: But there's sort of a full stop, check with the… LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 32 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 SEAN MULLIN: That's correct. COMMISSIONER JANOFF: Great, thank you. CHAIR HUDES: Question for Staff. Has there been anything close on this where you were thinking maybe we should take this to Planning Commission, or did these go through pretty much as you expected? JOEL PAULSON: We haven't had any that have risen to that level yet. Not to say that that won't happen because everyone always likes to push the envelope, but the current ones that we have, they meet the requirements. It's façade changes, material changes, window and door changes, things like that, so some of them will have different architectural look and feel but it has not risen to a level where we thought Planning Commission needed to weigh in on it. CHAIR HUDES: So, it sounds like the most extensive one of those might have been McCarthy Ranch on the corner of North Santa Cruz in the testimony that we had. JOEL PAULSON: That's probably the one that has the most changes because it's also multiple buildings. CHAIR HUDES: Right, okay. Any further discussion on this one? Okay, a motion on this? Commissioner Badame. LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 33 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER BADAME: I move to forward recommendation on minor exterior modifications to commercial building to Town Council. CHAIR HUDES: Okay. Commissioner Burch. COMMISSIONER BURCH: I'll second that. CHAIR HUDES: Further discussion? Okay, all in favor? Opposed? Passes unanimously. Then finally group classes. This is a resolution allowing a CUP for group classes within the downtown C-2 zone to be heard by DRC and those in other commercial zones to be allowed by right with a certificate of use and occupancy in business license. So, this is a CUP at the DRC level in downtown and it's by right elsewhere, is that correct? SEAN MULLIN: That's correct. CHAIR HUDES: On this one I had a question and that is in the Staff Report it says that the term group classes is not defined in the Town Code, and so my question is do we need to tighten that up? The term group class is defined really only as "not one-on-one" instruction, and so something like a music school, a religious school, a riding academy, a tutoring business, that's doing it on a group basis, those would all be considered group classes, is that correct, or do some of those fall outside of group class? LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 34 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 SEAN MULLIN: All those examples are already considered group classes. What Staff recognized here with this change of introducing a group, the term group classes, is that it was absent from our code and we were using over time the art, craft, music, and dancing school which fits the model of single instructor with a group class, so adding group classes, which is the term that we use most often, will just clarify it. But your examples are already considered group classes. CHAIR HUDES: Okay, well, my comment on that would be that where I've seen some downtowns decaying, where the vibrancy and value had degraded, are some downtowns that have become more and more occupied by not the cycle type of group class but things like tutoring or religious schools or things like that, and that tends to go hand-in-hand with sort of the degradation of downtowns, and so I was wondering if things like an actual school should be differentiated from some of the group classes, the fitness and things, that were envisioned in this. I don't know if other people have thoughts about that or whether we need a better definition of group class or that we feel like things will work themselves out, I don't know. Yes, Commissioner Badame. LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 35 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMMISSIONER BADAME: Well, I have some concerns with that. I equate group classes in the downtown to dead weight not really adding to the vitality of the downtown, and what little group classes I've seen I don't see them patronizing the businesses. They go to their class and then they leave, so it seems to me that something like that needs more scrutiny or a better definition because I would also be concerned about the degradation of downtown. CHAIR HUDES: Vice Chair Hanssen. VICE CHAIR HANSSEN: I wanted to ask a question. I was thinking of the example of SoulCycle. It was my recollection that there was a whole bunch of juice bars and places that kind of crept up. The synergy thing that you were talking about, is that correct? MONICA RENN: That's correct, and actually lululemon, we were trying to get them to come here for several years after their pop-up store and they hemmed and hawed, and then once SoulCycle opened they jumped on the next opportunity to come, so that's an example. I can say as a customer of that same workout studio, there are examples where an instructor will actually announce in class, "Let's go X place for coffee together after," and there will be a core group of people who will leave and go somewhere together, so I think it just depends on the type. LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I think another thing to note is that this too has been available for several months now and so it's less about us looking at the crystal ball. I think it's more about us kind of seeing what has happened and then understanding that we can do a moratorium of do some sort of stop if there becomes a level that's discomfort. The group classes that we've seen that have been coming forward to us are really ones that are experiential, and in fact we were asked to do a presentation. I was asked to represent Los Gatos and do a presentation recently at an economic development summit that was about our downtown and it was about how we create experience, because with our one-way pilot we actually got a lot of people looking at us, and the entire conference was actually on experience, how to create experience, how do you get somebody to your location, because then they will shop and they will stay, and it's by providing things that can't be done online like the classes, the socialization, exercise, those type of things. VICE CHAIR HANSSEN: So, relative to Chair Hudes' thoughts, SoulCycle makes perfect sense to me. Orangetheory Fitness, another one. I mean, they have it in downtown Oakland and I'm sure it's helped the other businesses there, but if you think about like a Chinese school or LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 37 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 something that's only catering to a very small percent of the population, doesn't really have synergies with anything else, where do you draw the line on that? I mean, I guess it gets approved at the DRC level so you would presumably talk about those issues from downtown anyway. MONICA RENN: I have two thoughts on that versus of course it's the use, it a use of group classes, but for me people equals synergy, so if people are coming regardless, especially if they're dropping their kids off and they have an hour to kill or two hours or kill, or maybe they're dropping off a spouse or going to dinner, maybe it is a language class and then they're waiting somewhere they're going to meet the person after. I just think anything you can do to get people here, to get people understanding that this is a town that offers something for everybody the more successful we'll be across the globe. I mean, every store downtown is not for every person and we know that and I think that's why it is important to encourage a mix, but that happens naturally and so for me I think heck, if we can get people down here somebody is going to buy something else or discover something else or stay a little longer, so for me it's people equals synergy. VICE CHAIR HANSSEN: Okay, thank you. LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 38 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CHAIR HUDES: Commissioner Burch. COMMISSIONER BURCH: I completely agree with you on that. I'm just curious, in your expertise are you completely comfortable with us not having a definition of group classes? If we all stop thinking about what the market needs right now—we all know right now it's yoga, Pilates, or cycling or something—and we go 15 years down the road when trends have turned another way, are we comfortable not having at least any parameters? And I am going to defer to your expertise; you've talked to other jurisdictions. MONICA RENN: You know, I think if we wanted to craft a definition of group classes it could be helpful. It's interesting because a lot of times when people do come to tenant a property they will look at our code, they will search out group classes, and we know internally that we use that school definition but it's not something that somebody can search from our Town Code, so I think if we were open to create a definition and it was a definition that was anything beyond kind of that one-to-one, and that's what we tell folks. When they come and they say oh no, I'm not having group classes, I'm just going to work with three people at once, we say it is our practice that one-on-one is personal service and once you go beyond that LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 39 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 it's group class, so we do have kind of an unwritten definition and I think putting that down—kind of for lack of a better word, my apologies—memorializing that definition, putting it somewhere could provide us with the ability to serve more clearly. COMMISSIONER BURCH: Yeah, I would think so too. Without slowing down process I just would recommend that we do something just knowing we don't know where the service or class market is going to go in 15 years and this gives us some kind of parameter to fall back on. CHAIR HUDES: Vice Chair Hanssen. VICE CHAIR HANSSEN: I was under the understanding that we also have a process for schools, and so I wondered if it would be clearer if we just said… Because there is actually a definition proposed in the ordinance for group classes being not one-on-one instruction, but you could also say it's not a school as defined in our code because we have a specific definition of what a school is, you know, like a public school. SEAN MULLIN: To address that question, there already is for traditional schools, the term I'll use, so public school, high school, private school, those kinds of things, that's a separate use from group classes and is administered differently. The group class is how we've used LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 40 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that term internally but applied it to the art, craft, music, dancing schools, really looking at these specialty type classes, so dancing, music, or in this case the exercise. VICE CHAIR HANSSEN: Not a broad based, multi- disciplinary education? SEAN MULLIN: Correct. VICE CHAIR HANSSEN: Okay. JOEL PAULSON: And I would just offer that if the Commission thinks that's clearer, then language to the effect of, "and does not include schools as defined in the Town Code," which Vice Chair Hanssen mentioned, that could be part of the recommendation to the Council. CHAIR HUDES: Okay. Comments about that? I agree, I think that would be helpful. I absolutely appreciate the dynamics that are coming with businesses like SoulCycle and the other fitness related ones, however, I also am very aware of some downtowns that have become homes to tutoring classes and karate studios and other things where the value of the downtown has significantly degraded for the very reason that Commissioner Badame pointed out in that those people are there for a very specific purpose and they're not availing themselves, and those are often associated with decreasing rents and a decline of a downtown. LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 41 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 When you go into a downtown and you see one that's been in decline you see some personal service businesses and you see those kinds of things and that's about it, and so I would be supportive of this with the addition of saying not a school, but I also would suggest that we monitor this one really closely and if we are starting to see some degradation, we start to see too many uses that are really not synergistic and not additive that we then come back on this one and watch this one closely, because it is associated with declining downtowns, it can be, so maybe we will need a different definition at that point, so I would be supportive of this language as it is with that addition. Yes, Commissioner Burch. COMMISSIONER BURCH: Do you want me to… CHAIR HUDES: Sure. COMMISSIONER BURCH: Okay. I'm going to venture a motion that we recommend approval of the modification for I guess the addition of group classes as written, but we would like to see a definition of group classes as discussed in this meeting added to that wording. CHAIR HUDES: And I wonder if the maker of the motion would be open to including the term "not a school," because school is covered elsewhere? COMMISSIONER BURCH: Yes, absolutely. LOS GATOS PLANNING COMMISSION 1/8/2020 Item #3, Town Code Amendment Application A-19-010 42 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CHAIR HUDES: I would second that motion then. COMMISSIONER BURCH: Thank you. CHAIR HUDES: Further discussion? Okay, all in favor? Okay, opposed? Passes unanimously, and this is a recommendation so I assume there's not appeal rights on this, is that correct? SALLY ZARNOWITZ: That is correct. CHAIR HUDES: Okay, very good. We got through it. Thank you for indulging in the step-by-step approach here, but I think we were dealing with kind of a basket of things that had some differences.