08 Economic and Comm Vitality Staff Report 1 19 21
PREPARED BY: Monica Renn
Economic Vitality Manager
Reviewed by: Town Manager, Assistant Town Manager, Town Attorney, Police Chief, Finance Director,
Community Development Director, and Parks and Public Works Director.
110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832
www.losgatosca.gov
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
MEETING DATE: 01/19/2021 ITEM NO: 8
DATE: January 12, 2021
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Discuss and Approve the Following Actions to Continue the Town’s Support of
Economic Recovery and Community Vitality in Response to the Ongoing
COVID-19 Pandemic, Including:
a. Approve Continued Rent Forgiveness for Town-Owned Properties;
b. Approve Business License Forgiveness for Specific Commercial Sectors
Unable to Operate Due to the Santa Clara County Public Health Order for
the First Quarter of 2021 and the Second Quarter if the Orders Continue
to Prohibit Those Sectors from Operating, and Suspend Late Fees on All
Business Licenses through 2021;
c. Approve a Parklet Incentive Program for Semi-Permanent Parklets,
Including:
1. Approve a Maximum Grant of $10,000 Per Business Who Would Like
to Build a Semi-Permanent Parklet,
2. Direct Staff to Work with Industry Professionals to Procure a Parklet
Design or Set of Design Guidelines,
3. Approve the Payment of the Town Pamphlet Application Fee from the
Town’s Economic Recovery Fund for Any Semi-Permanent Parklet
Application Received by June 30, 2021, with Construction Completed
by March 31, 2022,
4. Approve a Sunset Date of September 19, 2021 for the Temporary Krail
Parklets to Further Incentivize the Construction of Semi-Permanent
Parklets, and
5. Continue the Grey’s Lane Street Closure to Facilitate Placemaking and
the Installation of Semi-Permanent Parklets in This Area; and
d. Approve Additional Process Streamlining and Community Vitality
Opportunities, Including:
1. $2,500 for Public Health Order Signage from the Town’s Economic
Recovery Fund,
PAGE 2 OF 13 SUBJECT: Discuss and Approve Actions Related to the Continued Support of Economic Recovery and Community Vitality in Response to the Ongoing COVID-19 Pandemic DATE: January 12, 2021
2. $35,000 for Lighting Upgrades from the Town’s Economic Recovery
Fund,
3. Continuing the Council’s Previous Direction to Absorb 50% of
Conditional Use Permit Fees through December 31, 2021,
4. Providing New Direction that Removes the Limit of Ten Personal
Service Businesses that May Open in the C-2 Zone Without a
Conditional Use Permit Utilizing the Economic Recovery Agreement,
5. Adopting a Revised Economic Recovery Resolution to Allow up to Five
New Non-Restaurant Conditional Use Permits to be Approved at
Development Review Committee,
6. Convening a Joint Town Council/Planning Commission Study Session
to Discuss Retail Trends with Local Experts, and
7. Providing Direction on Other Ideas.
RECOMMENDATION:
Discuss and approve the following actions to continue the Town’s support of economic
recovery and community vitality in response to the ongoing COVID-19 pandemic, including:
a. Approve continued rent forgiveness for Town-owned properties;
b. Approve business license forgiveness for specific commercial sectors unable to operate due
to the Santa Clara County Public Health Order for the first quarter of 2021 and the second
quarter if the Orders continue to prohibit these sectors from operating, and suspend late
fees on all business licenses through 2021;
c. Approve a Parklet Incentive Program for semi-permanent parklets, including:
1. Approve a maximum grant of $10,000 per business who would like to build a semi-
permanent parklet,
2. Direct staff to work with industry professionals to procure a parklet design or set of
design guidelines,
3. Approve the payment of the Town Parklet Application fee from the Town’s Economic
Recovery Fund for any semi-permanent parklet application received by June 30, 2021,
with construction completed by March 31, 2022.
4. Approve a sunset date of September 19, 2021 for the temporary krail parklets to further
incentivize the construction of semi-permanent parklets, and
5. Continue the Grey’s Lane street closure to facilitate placemaking and the installation of
semi-permanent parklets in this area; and
PAGE 3 OF 13 SUBJECT: Discuss and Approve Actions Related to the Continued Support of Economic Recovery and Community Vitality in Response to the Ongoing COVID-19 Pandemic DATE: January 12, 2021
RECOMMENDATION (continued):
d. Approve additional process streamlining and Community Vitality opportunities, including:
1. $2,500 for Public Health Order signage from the Town’s Economic Recovery Fund,
2. $35,000 for lighting upgrades from the Town’s Economic Recovery Fund,
3. Continuing the Council’s previous direction to absorb 50% of Conditional Use Permit
fees through December 31, 2021,
4. Providing new direction that removes the limit of ten personal service businesses that
may open in the C-2 zone without a Conditional Use Permit utilizing the Economic
Recovery Agreement,
5. Adopting a revised Economic Recovery Resolution to allow up to five new non-
restaurant Conditional Use Permits to be approved at Development Review Committee,
6. Convening a joint Town Council/Planning Commission study session to discuss retail
trends with local experts, and
7. Providing direction on other ideas.
BACKGROUND:
The COVID-19 pandemic has created a truly unprecedented set of circumstances for the Los
Gatos community and beyond. Since March 2020, the Town Council has been working to
remain supportive and adaptive to the community’s stakeholders, delicately balancing
competing interests and continuing to consider how to provide available assistance. Without a
doubt, the health and safety of the community remain a top priority.
Some of the steps taken to support stakeholders include rent forgiveness for Town-owned
properties, expanded support through community grants, and community and economic vitality
support including:
• April 7, 2020 - Amended existing human services grant agreements with West Valley
Community Services, Counseling and Support Services for Youth, Next Door Solutions,
and Live Oak Senior Nutrition to donate an additional $10,000 to each organization, for
a total of $40,000, to assist Town residents with needed services due to COVID-19 and
related Public Health Orders.
• April 21, 2020 - Approved the waiver of rent and utilities for the Town of Los Gatos
lessees New Museum of Los Gatos (NUMU), Friends of the Library, Billy Jones Railroad,
Soccer and Little Leagues, and Los Gatos-Saratoga Community Education and Recreation
(LGS Rec) for the duration of the Santa Clara County shelter-in-place order due to
significant business disruption.
PAGE 4 OF 13 SUBJECT: Discuss and Approve Actions Related to the Continued Support of Economic Recovery and Community Vitality in Response to the Ongoing COVID-19 Pandemic DATE: January 12, 2021
BACKGROUND (continued):
• June 2020 – Funded $2,800 toward protein purchases for House of Hope food pantry.
• May – November -Funded $6,475 toward deep COVID cleaning for the LG Methodist
Church Shower Ministry to maintain weekly showers for the Homeless.
Specifically related to economic vitality, the Town has been working to streamline and update
business processes to provide modernized provisions with greater flexibility and opportunity for
businesses to locate and thrive in Los Gatos for several years. This has been an ongoing effort
with various streamlining and process modifications taking place pre-COVID. Attachment 1
provides an overview and timeline of these efforts from 2015 through 2019.
When the COVID-19 pandemic took effect in March of 2020 and the business community was
required to drastically modify or close their operations, economic vitality efforts remained
strong to support the Los Gatos businesses community including:
• June 2, 2020 - Adopted an Economic Recovery Resolution (Attachment 2) to create
further streamlining and flexibility for businesses to adapt to the dynamic economic
environment which included the implementation of parklets to accommodate outdoor
retail and dining, and curbside parking spaces for quick turn and pick up customer
parking. Since June, the Town has provided several krail installations and moves to
support the changing needs of the businesses. Additionally, businesses with private
outdoor property (e.g., parking lots) have been able to implement parklets and outdoor
service areas of their own.
• June 10, 2020 - Moved to a subsidy-based model for the Chamber of Commerce’s
contract for services related to the Visitor Information and Experience Los Gatos
services to allow for more support as their service model and deliverables adapted to
the pandemic.
• October 6, 2020 - Approved the continuation of the Economic Recovery parklet program
(temporary with krail) through March of 2021, adopted a grant match program for
businesses who make ADA accommodations to these temporary parklets, extended the
duration of the pilot parklet program (adopted in February of 2019) to a semi-
permanent timeframe with no set end date, and directed staff to return to Council in
January 2021 with a semi-permanent parklet incentive program.
PAGE 5 OF 13 SUBJECT: Discuss and Approve Actions Related to the Continued Support of Economic Recovery and Community Vitality in Response to the Ongoing COVID-19 Pandemic DATE: January 12, 2021
BACKGROUND (continued):
• September 15, 2020 - Granted the Chamber of Commerce up to $150,000 to partner on
a holiday lights campaign that installed light features throughout the Town.
Over the duration of the pandemic, the Town Council has authorized the use of the streetscape
funds previously allocated for a potential downtown project to fund the parklet krail rental,
installation, maintenance, and holiday light campaign. Approximately $1.5 million remains
available. For the Council’s reference, krail rental remains an ongoing cost at the rate of
$10,000 per month. If the Council so chooses, these funds could also be used to support the
initiatives outlined in this report or other recovery efforts.
DISCUSSION:
Continued Rent Forgiveness for Town-Owned Properties
Given the continued significant disruption to the business models of the Town’s lessees, staff
recommends the continuation of rent forgiveness for the entire fiscal year 2020/21. Tenants
understand that as updated guidelines make their businesses operable again rent will resume
on a prorated basis proportionate to building utilization and programming. Each quarter of rent
and utility forgiveness equates to an estimated donation of $85,000. If approved, the Mid-Year
Budget report will include a budget adjustment to backfill this revenue from the Economic
Recovery Project Fund. Total rent forgiveness since March 2019 shelter in place order until this
fiscal year end estimated to be approximately $433,000.
Options for Business License Forgiveness for Specific Commercial Sectors Unable to Operate
Due to the Santa Clara County Public Health Order, and the Suspension of Late Fees on All
Business Licenses through 2021.
The Town requires all businesses located within Los Gatos and/or those that operate within Los
Gatos to obtain a business license. The amount of business license tax paid by each business is
based on its business activity. Fees for activities such as wholesale sales and manufacturing are
charged on a sliding scale based on gross receipts, as is retail, with retail being capped at $975.
These gross receipt activities account for approximately 25% of annual business licenses, while
the remaining 75% are flat fee businesses. Annual renewal payments are due on January 2 of
each year. Payments for new flat-fee-based businesses are pro-rated by quarter.
PAGE 6 OF 13 SUBJECT: Discuss and Approve Actions Related to the Continued Support of Economic Recovery and Community Vitality in Response to the Ongoing COVID-19 Pandemic DATE: January 12, 2021
DISCUSSION (continued):
Many business sectors continue to thrive during the pandemic and collecting business license
fees remains appropriate, while others have been completely shut down by the provisions set
forth in the State and County Public Health Orders. In such cases, the businesses are technically
not operating. It is important to note that the business license taxes were approved by ballot
measure and most changes would likely need to be approved by a ballot measure, so the
options to modify what is paid are limited for Council action.
All of this considered, the Council may wish to offer business license forgiveness on a quarterly
basis for specific business sectors that are completely unable to operate during the current
shutdown. Staff is recommending that the Council consider a first quarter 2021 forgiveness of
business license fees for sectors required to be closed at this time, given that they are legally
unable to provide their services in their Los Gatos location. Such sectors include professional
business licenses for hair stylist, nail technicians, and other similar personal service industries.
Should the shutdown remain in effect through the second quarter of 2021, staff recommends
that the Council allow the forgiveness to continue for this quarter as well.
Business License taxes, budgeted to generate $1.2 million in FY 2020/21, is a general tax that
provides services an infrastructure Town-wide for businesses and residents. Staff estimates a
reduced revenue of $20,000 per quarter if personal service businesses unable to operate are
granted forgiveness.
In addition, staff is recommending that all late fees for business licenses be suspended for 2021.
The combined effect of decreased gross receipts, business closures, quarterly business license
exemption, and late fee suspension will be reflected in the amount of the business license tax
collected at the end of current fiscal year.
A Parklet Incentive Program for semi-permanent parklets
It has become apparent that outdoor dining and business services are going to be a crucial
component to economic recovery and business success for the foreseeable future. It also
seems that many customers will be more comfortable in an outdoor environment for some
time, even after the pandemic comes to an end. Thus, providing businesses with the ability to
utilize outdoor space is an opportunity for the Town to support the businesses further through
economic recovery and provide the community with comfortable options to patronize Los
Gatos businesses.
PAGE 7 OF 13 SUBJECT: Discuss and Approve Actions Related to the Continued Support of Economic Recovery and Community Vitality in Response to the Ongoing COVID-19 Pandemic DATE: January 12, 2021
DISCUSSION (continued):
On October 6, 2020, the Council received an update on the parklets in downtown. For this
conversation, there are two types of parklets: (1) krail parklets and (2) semi-permanent
parklets. The krail parklets are those implemented on a temporary basis as a part of the Town’s
Economic Recovery efforts from COVID-19 using krail, at no cost to the business. The semi-
permanent parklets are those that started as a part of the parklet pilot program, adopted in
February 2019 as a three-year pilot for downtown. At its October 6 meeting, the Council voted
to extend the timeline of the semi-permanent parklets to a date uncertain, stopping just short
of calling them permanent.
With each semi-permanent parklet, the Town and sponsoring business and/or property owner
enter into a private-public partnership agreement. The agreement allows the business to
construct the parklets at their expense, use the public land and parklet space for their private
business, maintain the space at all times, and have it available to the public during any hours
when the business is not open, while the Town provides its public property for the parklet at no
expense.
The Council also voted unanimously to extend the krail parklets until at least March of 2021 and
directed staff to return to the Council in January with a recommendation for a semi-permanent
parklet program.
The semi-permanent process requires the business to submit a parklet application (Attachment
3) and work with industry professionals to draw, engineer, and build the parklet after gaining
approval from the Town. Depending on scope and size, staff understands these parklets to cost
between $40,000 and $90,000. Approximately $10,000 - $15,000 of this cost goes toward
Town’s application fee and the cost to have the space designed.
Staff is recommending that the Town Council (1) approve an incentive program offering grants
to businesses who would like to build a semi-permanent parklet; (2) direct staff to work with
industry professionals to procure a design, or set of design guidelines that make it easier on
businesses to implement a parklet by reducing the design costs to each business/property
owner for each location; (3) Approve the payment of the Town Parklet Application fee for any
semi-permanent parklet applications received by June 30, 2021 from the Economic Recovery
Fund; (4) approve a sunset date for the temporary krail parklets to further incentivize the
construction of semi-permanent parklets; and (5) approve the continued closure of Grey’s Lane
to facilitate placemaking and the installation of semi-permanent parklets in this area.
PAGE 8 OF 13 SUBJECT: Discuss and Approve Actions Related to the Continued Support of Economic Recovery and Community Vitality in Response to the Ongoing COVID-19 Pandemic DATE: January 12, 2021
DISCUSSION (continued):
First, for the grant, staff is recommending an amount of $10,000 to each business who builds a
semi-permanent parklet to be issued following the approval of the parklet application. In the
case where two or more businesses are located in close proximity to one another and would
like to combine resources to build one larger parklet that is divided, staff would like to still
award each business the $10,000 to encourage the build-out of larger parklets that include
multi businesses rather than trying to squeeze in individual parklets or set up a scenario where
businesses are competing for spaces. In such a case, businesses would need to come together
to file one parklet application that provides space for each contributing business to operate.
Second, staff is recommending that the Council provide direction for them to explore the
option of buying a set of standards, guidelines, or plans from an architect or engineer that could
be provided to applicants at no charge. This would reduce the soft costs for each business, and
the investment made by the Town would be one that could benefit multiple businesses,
ultimately making the incentive program more valuable for businesses. Additionally, using such
a set of guidelines could reduce the amount of staff time and review necessary to approve the
parklets. The Town could potentially buy the rights to at least one design if continuity is
important, or multiple designs if the Council prefers to offer options to the businesses. If the
designs can be procured under the Manager’s authority of $50,000, then the Council would not
need to take subsequent action. Alternatively, the Council could direct that the design options
return to Council as well as the consideration of the contract with the vendor.
Third, to further incentivize semi-permanent parklets, staff recommends that the Town pay for
the Town Parklet Application fee for any semi-permanent parklet applications received and
approved by June 30, 2021. Funds to support this recommendation would come from the
Economic Recovery Fund.
Fourth, to make this incentive process most successful and allow for funds to be redirected
from the krail rental to the semi-permanent parklets, staff is recommending a sunset date for
the temporary krail parklets of Sunday, September 19, 2021. This would allow the temporary
parklets to remain in place through the summer to support recovery.
Finally, as the Council considers the semi-permanent parklet program as a whole, staff is
recommending that the temporary Grey’s Lane closure continue to facilitate placemaking and
encourage the adjacent businesses to install semi-permanent parklet(s). Any semi-permanent
parklets would reduce the public space area to, at a minimum, a walkway being preserved
through the center of the Lane as a pedestrian connection between the parking lots and N.
Santa Cruz Avenue.
PAGE 9 OF 13 SUBJECT: Discuss and Approve Actions Related to the Continued Support of Economic Recovery and Community Vitality in Response to the Ongoing COVID-19 Pandemic DATE: January 12, 2021
DISCUSSION (continued):
What would these actions mean for a long-term streetscape project in downtown?
As the Council considers a parklet incentive program and the addition of semi-permanent
parklets as a part of the current and immediate term downtown streetscape, it may wish to
think about a future, long-term streetscape upgrade project. While such a project would likely
be at least ten years out due to the need to accumulate approximately $10M to have the
resources for a comprehensive streetscape project, the Council may wish to identify a specific
amount to seed such an effort from the Economic Recovery project fund. As a reminder, in
2020, the Town Council repurposed the Downtown Streetscape Capital Project to fund COVID
Economic Recovery. Alternatively, the Council may wish to consider the identification of other
revenue sources in future budget cycles to save for a downtown streetscape redesign.
What about businesses with private property/parking lots, or those outside of downtown?
The Economic Recovery Resolution allows for outdoor business use of private parking lots. This
is especially useful for businesses outside of the downtown, including shopping centers. If
Council would like to provide additional opportunities, staff appreciates Council input and
direction on the following ideas:
• For businesses outside of downtown with available on-street parking, similar to areas in
the C-1 zone, just North of Los Gatos-Saratoga Road on N. Santa Cruz Avenue, a similar
semi-permanent parklet incentive program could be extended to these businesses and
staff could work with them individually to decide if the parking space placement could
support an on-street parklet.
• For businesses with private commercial parking lots, the Town Council could consider
allowing the parklets or similar outdoor service areas that are allowed as a part of the
Economic Recovery Resolution to become semi-permanent rather than sunsetting with
the Economic Recovery Resolution.
• As an alternative to one or both of the options above, the Council could allow the
temporary parklets and patio areas in private parking lots and commercial centers to
continue as long as the Economic Recovery Resolution is in place, as previously directed
by the Council, or consider a sunset date at a later point in time.
PAGE 10 OF 13 SUBJECT: Discuss and Approve Actions Related to the Continued Support of Economic Recovery and Community Vitality in Response to the Ongoing COVID-19 Pandemic DATE: January 12, 2021
DISCUSSION (continued):
Additional Process Streamlining and Community Vitality Opportunities
The Town was an early adopter of an Economic Recovery Resolution, creating opportunities for
existing businesses to adapt their business models frequently and attracting new businesses to
fill vacancies. As the time of the pandemic lengthens, there may be a need to increase
flexibility on a temporary basis to continue to promote retention and attraction. Staff
recommends considering the following:
• Given that full economic recovery is deeply dependent on adherence of Public
Health safety guidelines (e.g., mask wearing), staff is requesting funding of
$2,500 for increased public safety signage throughout Town.
• After experiencing the attraction of tree lights and holiday lights, staff is requesting
that $35,000 be allotted to additional holiday lights on street poles, and the
electrical upgrades that would be required to support them.
• At the Town Council’s special meeting on May 26, 2020 discussing Economic
Recovery, Council moved to absorb 50% of all commercial Conditional Use Permit
(CUP) fees for a period of one year. This incentive has been especially attractive for
new and existing businesses. Staff recommends that the Council consider extending
this incentive through the end of the calendar year, December 31, 2021.
• During the Council’s discussion on May 26, 2020, staff recommended removing the
need for personal service businesses to require a CUP during the period of Economic
Recovery starting with a limit of ten Personal Service businesses that may open in
downtown (the C2 zone) without a CUP to understand the impact this change may
have. The Council agreed to a limit of ten in the discussion, however it was not
adopted in the resolution or captured in the motion. While the limit of ten has not
been reached yet, we are close, at about eight businesses with little to no impact on
the retail vacancies. Before allowing additional personal service businesses beyond
ten, staff felt it was appropriate to raise the question with the Council. It is
important to note that the Economic Recovery Agreements are not transferable and
do not run with the land as a CUP does. Thus, they are meant to assist a specific
business operator with recovery during this time and this provision would sunset
with the Economic Recovery Resolution.
PAGE 11 OF 13 SUBJECT: Discuss and Approve Actions Related to the Continued Support of Economic Recovery and Community Vitality in Response to the Ongoing COVID-19 Pandemic DATE: January 12, 2021
DISCUSSION (continued):
• Currently only restaurants and group classes are heard by the Development Review
Committee (DRC) while bars, markets, and other commercial CUP uses are assigned
to the Planning Commission and Town Council, creating a time and cost hurdle that
is less than attractive at this time. Staff recommends expanding the business use
types that the DRC may hear to include markets, bars, and/or other miscellaneous
type CUPs on a temporary basis as a part of the revised Economic Recovery
Resolution (Attachment 4). There has been an increase in interest for businesses to
open to-go style markets with the option to sell beer, wine, and other craft cocktails
as a part of the to-go meals. Because they are not defined as a restaurant use by the
Town Code, such a use would require Town Council approval, increasing the time
and cost significantly. To take a cautious approach, the proposed revision to the
Economic Recovery Resolution limits up to five new non-restaurant CUPs to be
approved at DRC before further review by the Town Council.
• Staff recommends that the Council consider a joint study session with the Planning
Commission at which retail industry professionals would be invited to explain what it
takes to attract and lease spaces in the changing economic environment. This could
provide the opportunity for those doing the work in Los Gatos to share real time
examples of trends, thus giving the Council insight for future streamlining decisions.
CONCLUSION:
Staff is recommending that the Council consider to public testimony, discuss the ideas
contained in this report and those provided by the public, and take action on items to continue
support of economic recovery and community vitality in response to the ongoing COVID-19
pandemic.
Discuss and approve the following actions to continue the Town’s support of economic
recovery and community vitality in response to the ongoing COVID-19 pandemic as noted in the
Recommendation section of this report.
PAGE 12 OF 13 SUBJECT: Discuss and Approve Actions Related to the Continued Support of Economic Recovery and Community Vitality in Response to the Ongoing COVID-19 Pandemic DATE: January 12, 2021
PUBLIC OUTREACH:
Though email, What’s New, and other social media outlets, staff provided outreach and
welcomed input from the community regarding this agenda item. It is anticipated that there
will be some written and verbal comment ideas that come forward not contained within this
report. Those received before 11:00 a.m. on Thursday, January 14 have been included with this
report as Attachment 5. Staff is available at the direction of the Council to explore the
feasibility of any additional ideas. See public comments in Attachment 5.
COORDINATION:
This report was drafted in collaboration with the Town Manager and Town Attorney’s Offices,
and the Finance, Police, Community Development, and Parks and Public Works Departments.
FISCAL IMPACT:
If Council were to approve all of the proposed recommendations contained in this report, the
costs will be dependent upon the number of parklet grants provided, and should be funded
from remaining $1.5 million in the former streetscape bucket unless otherwise specified by the
Council. An estimated summary of the major costs of the recommendations in this report are:
Rent Forgiveness $ 433,000
Business License Recommendation 40,000
($20k per quarter)
Semi-Permanent Parklet Grants 300,000
(30 @ $10k each)
Health Order Signs 2,500
Light Upgrades 35,000
TOTAL $ 810,500
Some of these costs may be reimbursable through future federal or state COVID-19 recovery
funding.
ENVIRONMENTAL ASSESSMENT:
This is not a project defined under CEQA, and no further action is required.
PAGE 13 OF 13 SUBJECT: Discuss and Approve Actions Related to the Continued Support of Economic Recovery and Community Vitality in Response to the Ongoing COVID-19 Pandemic DATE: January 12, 2021
Attachments:
1. Economic Vitality and Land Use Streamlining
2. Economic Recovery Resolution
3. Parklet Application
4. Proposed Revised Economic Recovery Resolution
5. Public Comment received before 11:00 a.m. on Thursday, January 14.