HomeMy WebLinkAbout2016-08-22 City Council Summary MinutesCITY OF PALO ALTO CITY COUNCIL
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Special Meeting
August 22, 2016
The City Council of the City of Palo Alto met on this date in the Council
Chambers at 5:36 P.M.
Present: Berman, Burt arrived at 5:45 P.M., DuBois, Holman, Kniss,
Scharff, Schmid, Wolbach
Absent: Filseth
Closed Session
1. CONFERENCE WITH CITY ATTORNEY
Subject: Written Liability Claim Against the City of Palo Alto by Gilles
Boccon-Gibod (Claim No. C16-0026)
Authority: Government Code Section 54956.9.
Vice Mayor Scharff: Now we'll go into Closed Session on a conference with
the City Attorney regarding a written liability claim against the City of Palo
Alto by Gilles Boccon-Gibod, Claim Number C160026. Before we do that,
can we have a vote whether or not to go into Closed Session?
Council Member Wolbach: I'll move that.
Council Member Berman: Second.
MOTION: Council Member Wolbach moved, seconded by Council Member
Berman to go into Closed Session.
Vice Mayor Scharff: If you could all vote on the board to go into Closed
Session. I think we're good. Five votes, we're good. Now we'll retire into
Closed Session.
MOTION PASSED: 5-0 Berman, DuBois, Scharff, Schmid, Wolbach yes,
Holman, Kniss not participating, Burt, Filseth absent
Council went into Closed Session at 5:38 P.M.
Council returned from Closed Session at 5:59 P.M.
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Mayor Burt: We had a Closed Session item, and we have a reportable action
in the case of potential litigation against the City of Palo Alto by Gilles
Boccon-Gibod, Claim Number C16-0026. The Action is a settlement of this
claim in the amount of $59,434.42. (7-0 Burt, Filseth absent)
Special Orders of the Day
2. Proclamation of the City Council Honoring Robert Kelley.
Mayor Burt: At this time, we'll move on to our second item, which is a
Special Order of the Day, a Proclamation of the City Council honoring Robert
Kelley. We have a second Proclamation, I believe, that Senator Simitian will
be providing. Thank you. First, maybe I'll read the City's Proclamation and
then ask Supervisor Simitian to come forward and speak to his. [Mayor Burt
read the Proclamation into the record.] Mr. Kelley, before we invite you up,
we'd like to ask Supervisor Simitian to come forward.
Joe Simitian, County Supervisor: Thank you, Mr. Mayor. Thank you,
members of the Council. I would be here under any set of circumstances to
express my appreciation and the appreciation of 1,918,044 Santa Clara
County residents for the extraordinary benefit that TheatreWorks and Kelley
himself have shared with us over these 46 years. It really is an
extraordinary thing. To have the vision is one thing. To engage scores,
hundreds of thousands of folks to work with you in realizing that vision is
another. To then fully realize the vision is still a step beyond. To be able to
carry that forward for 46 years with never so much as a hint or a suggestion
that it has become old or tired or routine is really just extraordinary. As I
say, I have a real sense of appreciation that I want to convey by my
presence here tonight and, of course, the obligatory Proclamation that goes
with it. I also want to express my admiration for the individual work that has been multiplied, as I said, through the good works of so many others
that Kelley has been able to enlist over the course of the 46 years. As I say,
I would be here under any set of circumstances, but as I listen to you
describe the early days of TheatreWorks, I should perhaps note one of the
reasons I'm here is because in the summer of 1970 I was the stage manager
for TheatreWorks' first production called Popcorn. Yet, they prospered. I
want to tell you that if you're privileged with somebody like Kelley, you will
learn a great deal. One of the things I learned—it has stood me in good
stead—is that it is possible to be both rigorous and mellow at the same time.
That knowing laugh you hear is from all of the people who have worked with
Kelley over these 46 years. Being a stage manager, which I had never done
before and have never done since, is a little bit like being an air traffic
controller. Largely because he didn't have any choice, Kelley trusted some
17-year-old kid off the street to be the stage manager for his first show in
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what was to become TheatreWorks. Of course, I was sure that it would just
come crashing down on me at any moment. I got anxious, perhaps a little
bossy. He kept telling me, "Mellow out. Mellow out." I kept saying, "But
Kelley, you want it to be perfect." He kept telling me, "It can be perfect.
We can have high standards and still be mellow and respectful with one
another." All these years later, if you ask what did I learn from that summer
in 1970, not knowing at the time what Kelley's work would amount to over the course of the next five decades, I learned that you can be rigorous and
mellow at the same time. It has stood me in good stead. If I could ask my
staff to hand me the Proclamation, I will not read the "whereas and
therefore be it resolved." One of the things I also learned is when to get off
the stage. If I could ask Kelley to come forward so we could do a quick
photo opportunity, so I can in the digital age post it on Facebook and bask a
little bit in the reflected glory. Kelley, thanks so much.
Robert Kelley: I have to get a bigger house now, I can see. Thank you so
much. This is a surprise. Thank you all so much. Supervisor Simitian, Joe,
Mr. Mayor, Pat, and members of the Council, all the great members of the
City Staff who are here, thank you for this. It's just incredible. As I said to
Joe on the closing night of our first show, Popcorn, "I'll see you in 46 years,
okay?" Here we are. I have to specially thank Pat Briggs who has been a
great part of Theatreworks' journey and who I still regard as one of the
greatest treasures that we have in Palo Alto. Thank you, Pat, for all you've
done at the Children's Theatre and all. I very much want to thank all the
friends and members of TheatreWorks' Board who have come tonight. I
don't think they'll be staying for the whole meeting, but thank you for being
here for this. TheatreWorks started in 1970. One of our very first shows was here at City Hall; I think it was in 1971. It wasn't actually in the Council
Chambers; it was down in the basement on the third floor down
underground with the audience sitting on one of the down ramps and the
performers performing right out in front of the elevator. It was a version of
Alice in Wonderland, an original musical of it. We have deep roots in Palo
Alto. We really do feel part of the community. The actual founder of
TheatreWorks is the City of Palo Alto. The chance to start a theatre here
and develop it came directly through the City. In 1976 the City came up
with a new plan for how to create theatre in Palo Alto instead of having City
employees do it or, in my case, a contractor to the City. They proposed to
the groups that were making theatre at the time or helping to make it that
the City become a partner with those groups and came up with what I think
is a unique method of making theatre happen. It involves the City providing
the space and the equipment, and these groups on their own would need to
take care of the employees, the people who made the art and all the
expenses that went along with that. To say it was a successful idea, if
unique, is a tremendous understatement. It's led to TheatreWorks being
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one of the major regional theatres in the country. It has led us to continue
our work—we began as an education program—in education in Palo Alto
with, as you mentioned, 25,000 kids a year. We are also in partnership with
Palo Alto Unified School District (PAUSD) on school tours that go out every
single year on subjects that they think children need to address in their lives
but done in a theatrical way that they will never forget. It also has led to us
developing a national reputation for the creation of new works. We just finished our 15th New Works Festival, but we've done 66 world premiers at
TheatreWorks since we began. Our shows are now seen all over the country
and, of course, in New York as well. The most successful one being
Memphis, which we premiered, and it went on to win the Tony Award for
Best Musical in 2010. To say that this has been a successful partnership
with the City of Palo Alto is what I really want to say. I say it all the time. I
can't thank you tonight but also the City as a whole for letting us grow and
supporting us every step of the way. Thank you so much for this. Thanks.
Appreciate it.
Mayor Burt: Now, on to our second act.
Agenda Changes, Additions and Deletions
Mayor Burt: Our next item is Agenda Changes, Additions or Deletions.
James Keene, City Manager: Mr. Mayor?
Mayor Burt: Yes.
Mr. Keene: I had a couple of items to report on at the right point.
Mayor Burt: On the Agenda you say?
Mr. Keene: Yes.
Mayor Burt: Go right ahead.
Mr. Keene: Thank you, Mr. Mayor. If I might, rather than under City Manager Comments, would point out that under Item Number 8 on the
Consent Calendar, approval of a contract amendment with Van Scoyoc and
Associates for federal legislative representation, extending their contract for
two years at a cost of $202,000, there is an At-places Memo that we
submitted to the Council, a request that you actually adopt this particular
item as part of the Consent Calendar under Number 8. We have changed
the contract amendment from two years to one year at half the cost for
$101,000. I'd gotten some questions from Council related to the federal
legislative program and integration with some of our other areas of concern.
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It seemed that reducing this to one year would allow us to be able to engage
sometime in the course of this year's contract with the Council in a
discussion about where we go. We've talked to our lobbyists, and they're in
support of the change. That would be recommended as the change to the
Consent Calendar when you adopt it. As is typical, you have a couple of
potentially meaty items on your Action Agenda. We also have a report on
Number 14, intergovernmental legislative affairs status update and potential City responses to the Governor's by-right housing bill and pending bills
addressing housing issues. I did want to just let you know that it doesn't
look like there will be much to discuss on this item. You'll still take it up
when it comes up. Folks who might be interested in it, the Governor's by-
right housing bill is dead for this year, so there wouldn't be much to discuss
there. The other housing bills, which are included in the Staff Report, are
already on the floor of the Legislature, eligible to be taken up at any point in
time. In talking with our Sacramento lobbyist, he expects them to be acted
upon before August 31st, which is really next week. I just do point that out.
We're not pulling it off the Agenda, but anticipating the fact that you would
have a short, if any, discussion. That's all I have to report.
Mayor Burt: Item Number 13 is being rescheduled.
Mr. Keene: Yes.
Mayor Burt: That is for next week, August 29th. We can move on to City
Manager Comments.
City Manager Comments
James Keene, City Manager: Thank you, Mr. Mayor, members of the
Council. If you happen to look behind you, I think the backdrop for the
Council Chambers looks much improved and certainly for TV. I was thinking that maybe we should put an extra edition there, maybe a slogan
underneath that says rigorous but mellow. I don't know what you think, but
I thought that might be transferrable. A little update on Southgate and
Evergreen Park Residential Preferential Parking Permits (RPPs). Our Staff is
hard working toward the Evergreen Park and Southgate Residential Permit
Parking efforts as directed by the Council. Community workshops were held
in July and focus group meetings have been scheduled in Evergreen Park
and will soon follow in Southgate. As discussed at the May 9th Council
meeting, we have been exploring opportunities with Palo Alto High School
about their permit process and engineering solutions such as signing and
striping in the Southgate neighborhood that don't exist in Evergreen Park.
At the Southgate community workshop in late July, several interim parking
options were presented for resident feedback; one of which involved a one
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hour parking restriction similar to the existing one hour restriction near
Gunn High School. Based on positive input at that meeting, Staff sent an
online survey to the full neighborhood last week, but the majority of
respondents thus far are not supportive of the idea. The Council received at
least one email over the weekend in this regard. Based on this input—I did
not have those results until late today—I did want to inform Council that we
will not be proceeding with any one hour parking restriction. We will go ahead with development of the RPP program design concurrent with a
number of other activities. We'll continue to meet and talk with Palo Alto
High School. We have been working on adding parking along El Camino Real
between Embarcadero Road and Churchill Avenue, increasing the amount of
parking available for Palo Alto High School. Staff will host a focus group for
residents related to the Evergreen Park RPP later this week to receive input
on its program design. Staff expects to bring a resolution on the Evergreen
Park RPP to Council in November. In addition, Staff will be responding to
any Southgate residents who wrote to raise a concern about the 1-hour
parking restriction concept and saying that that is off the table. Tonight's
Council packet includes an informational progress report on our new zero
waste collection and management program for organic materials, which
means yard trimmings, food scraps and soiled paper. Since its beginning in
July 2015, participation in this single-family, residential, food-scrap
collection program has soared to over 60 percent, and more than 1,500 tons
of food scraps and soiled paper have been diverted from garbage cans and
landfills towards composting and soil augmentation. This level of
participation, you will be happy to know, is among the highest in the entire
state of California and is unusually high for the first year of a program. The Council also adopted a new composting ordinance this year that requires all
commercial customers to subscribe to compost service. It's being
implemented in three phases. I'm happy to report that 100 percent of the
664 Phase 1 customers have now added compost service and have their
green carts. Phase 1 includes our biggest customers including restaurants
and multifamily complexes. Full compliance was achieved by the last
customer earlier this month, a bit after the April 1, 2016 deadline but
without the use of any formal enforcement or fine. A lot of great uptake by
our community in this important matter on our path towards zero waste.
Both our residential and commercial organics are going to a dry, anaerobic
digester in north San Jose, which moves us ever closer to the energy and
compost production goals of Measure E adopted by Palo Alto voters. These
early results are very encouraging and continue to make us a leader in the
state and the nation. Lastly, the Stanford-Palo Alto community fields turf
replacement project was completed on August 12th. The park is back open
to the public. The parking lot is scheduled to be slurry sealed on
September 1st. The 45-day improvement project was completed on time
and on budget. The fields, originally constructed a decade ago, have never
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looked better. That's all I have to report other than to announce that next
week I hope to have a brief set of pictures identifying the range of various
Bike and Pedestrian Plan improvements that have been taking place around
the City this summer as part of our Bike Plan. Thank you.
Mayor Burt: Thank you. Council Member Kniss.
Council Member Kniss: Because I think our food scrap program is so
interesting and you've given some pretty substantial data, how are they actually measuring that? What was the amount you said? Some huge
amount.
Mr. Keene: It was our sense 60 percent of the residential food scraps are
being diverted. That question I don't know the answer to. I'll be happy to
get it to the Council. I mean, exactly the methodology.
Council Member Kniss: We pretty much know 60 percent are being diverted.
Mr. Keene: That's correct.
Mayor Burt: Thank you.
Council Member Kniss: Love more information when you have it.
Oral Communications
Mayor Burt: Our next item is Oral Communications. We have four speakers.
If anyone else would like to speak, please bring a card forward at this time.
Our first speaker is Stan Shore, to be followed by Hank Sousa. Welcome.
Stan Shore: Thank you, Council. My name is Stan Shore. I live at 242
Kellogg Avenue, directly across the street from the Castilleja—one of the
entrances. Castilleja has recently submitted plans to increase student
enrollment from 415 to a huge 540 students, the largest increase ever. I'm
100 percent opposed to the 125-student increase. I'm also 100 percent
opposed to the mass and scale of this project, which is not compatible with this residential neighborhood. This huge project is totally out of character
for this neighborhood of single-family homes. The project, when finished,
will result in more students, more faculty, more staff and more visitors than
all of the combined residents living in the households surrounding Castilleja.
This project will overwhelm the neighborhood, will increase traffic and
congestion and negatively impact Professorville and Old Palo Alto. Most
neighbors are strongly opposed to the 540 students; however, some
neighbors are okay with 450 students providing Castilleja constructs an on-
premise, underground garage that holds 125 or more vehicles. Should City
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Council allow Castilleja to proceed with this huge project, then the below
suggestions should be part of the new Conditional Use Permit (CUP). One,
enrollment is not to exceed 450 students. Two, all new constructed
buildings are to be set back 75 feet from the curb. This will reduce the
visual mass and scale of the project. Three, new constructed buildings
should not exceed the average height of all the residential homes
surrounding Castilleja. This will further reduce the mass and scale of the project which will help to retain the residential character of the
neighborhood. Thank you very much for listening. Sure appreciate it.
Mayor Burt: Thank you. Our next speaker is Hank Sousa, to be followed by
Ken Horowitz. Welcome.
Hank Sousa: Hello, Mayor Burt and City Council Members. I also am
wanting to talk a little bit about Castilleja. I have a slightly different take on
it than Stan. I live on Melville, in the 100 block of Melville Avenue. It's
about 185 feet from the school. Over the last 20 years, the flavor and
enjoyability of the neighborhood has definitely declined. In my opinion, it's
due to too much traffic, too many school events. They last into the evening.
At one point during the past school year in a 14-day period, there were
school events every day. They weren't all after school. Some were in the
mornings; some were in the afternoon; some were in the evening. They all
brought more traffic into the neighborhood. As the school readies the
additional information to provide to you to process their CUP, many of us
concerned neighbors would like the enrollment to be capped at 415. Stan
says 450, but somewhere in that neighborhood would certainly be
acceptable. Part of putting some teeth into the new CUP might be to say roll
back the enrollment over the next few years, so it gets to that low-400 level. The density of the school is certainly greater than some of its—not
competitors but other private schools in the area. The second concern that
our group has is the idea to build the underground garage. If the school has
fewer events, if they can acquire an offsite parking area, either purchase or
lease, and then shuttle kids to the school, that would eliminate the need to
build the garage. With high speed rail coming, planes are flying lower and
directly over us, it would be nice to have a modest win in our little
neighborhood. With your assistance, we can restore some peace and order
to the neighborhood and have quiet restored. Thanks for listening to our
concerns. Appreciate it.
Mayor Burt: Thank you. Our next speaker is Ken Horowitz, to be followed
by Rita Vrhel.
Ken Horowitz: Good evening. My name is Ken Horowitz; I live on Homer
Avenue. I want to talk about a topic that I spoke about, about two years
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ago, that's currently in the news again. That's about bicycle safety. As you
know, last week we had the death of a bicyclist on Greenwood Drive. It was
actually the most viewed story on Palo Alto Online, and also Dave Price
talked about it today in the Palo Alto news. We just need to do something
about this. I think the foremost role of the City government is to protect the
safety of its citizens. Yet, we see and I'm sure all of you that drive in the
City or even ride your bicycles in the City see what's going on with all the bicyclists. Now that we have school back in session and also that darkness
is going to be coming earlier and earlier, we need to enforce some of these
bicycle rules. My hope is that the City Manager in conjunction with Chief
Burns and also Superintendant McGee at PAUSD can work together to work
out some kind of plan to make these streets safe for not only the bicyclists
but also for the drivers. You can read tons of stories online about how close
bicyclists have come to getting hit by a car and vice versa. I know one of
the biggest problems today is staffing. We have an undermanned police
force and, as a result, some things have had to be cut back. Our traffic
team, which we used to have at the schools, is no longer functioning. We're
also having a shortage of police officers. I know I've talked to Chief Burns
about this. This is not a problem just unique to Palo Alto. I don't know if
you saw today's news. The City of San Jose may declare a state of
emergency because they have a shortage of police officers as well. I don't
know what you need to do, but I think you need to look at safety, the bicycle
safety. I was thinking maybe you should have some checkpoints just like we
have automobile checkpoints, maybe on Bryant. We could have some
officers every once in a while check pointing to see if the bicyclists are
having their lights and have all their safety equipment. Also I would think that maybe you can take some of that Track Watch monies that you
allocated, almost $1 million, for those security guards. I think you need to
do something before there's another tragedy in Palo Alto. Thank you for
your time.
Mayor Burt: Thank you. Our next speaker is Rita Vrhel, to be followed by
our final speaker, Mark Mollineaux.
Rita Vrhel: Thank you. There was lots of news in the paper this week about
the mega mansion over on Newell and Embarcadero with 11 bedrooms and
13 bathrooms and a single-car garage. There was also this really excellent
article in the paper regarding the housing shortage and the prices of single-
family homes increasing and the candidates for the City Council race. I
think this brings us back to again housing and traffic and how is this all
going to be solved. I think there's a couple of things that concerned citizens
might agree on. One is that the practice of putting in mega basements, like
at 736 Garland, have in my opinion contributed to the phenomenal increase
in the house costs for single-family residents. If you put in a 3,500-square-
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foot basement and you have a one-story house, I think I'm correct in that
you do not have to go through any City Council review, which you would
have to go through if you had a two-story house of the same size. I would
recommend that all two-level houses—if you look at real estate ads now,
basements are no longer being called basements. They're actually being
called lower level, which I think makes them into a house. If the City
Council could review all two-level buildings in residential areas, that might help stop the huge expansion in basements and these houses becoming
unaffordable for all except a small number of people. I think the other thing
that could be done would be to put basements—now we call them lower
levels—into the floor area ratio. Again, this would help limit the size of
mega mansions and keep them more in the range of affordability for more
citizens. I think also the Individual Review process can be stiffened and
strengthened so that neighbors who have these concerns will actually have a
voice that counts, rather than simply being heard and left by the wayside. I
think the mega mansion and the 736 Garland mega basement offer the City
Council and the citizens a chance to revisit current zoning laws and decide if
this is the way they want the City to grow or whether they would like to see
some changes. Thank you.
Mayor Burt: Thank you. Our final speaker is Mark Mollineaux. Welcome.
Mark Mollineaux: Hello, good evening. My name is Mark Mollineaux; I live
in Redwood City, but I have been a fan of the City Council here in Palo Alto
for quite some time. I'd just like to comment on the approval process last
week for the Lytton Avenue development and just how it went. A good deal
of time was spent on local issues that were caused by this possible
development and effect on local traffic, the effect that temporary construction would have on local traffic, roof patterns, oddly shaped lots,
uneven massing of buildings. Relatively little time, however, was spent on
the issue of housing. This would have added the modest amount of housing
units to the City. Much less time was spent to this issue that affects the
community at large rather than just the local issues. Some time was
spent—I commend the time that was spent. This is reasonable. The people
that are of Palo Alto have every reason to prefer the local responses this
creates. It's important to remember that the powers of zoning, approval
process and so on are not just a local, natural right of cities but, in fact, are
a state right. The state of California entrusts this to local communities with
the idea that it will serve the larger community as a whole. It's awfully hard
to justify extremely restrictive zoning laws and approval processes as
serving the greater community and not just the people who are lucky
enough to be able to live in Palo Alto. I would just like to remind the
responsibility to its own citizens, also to neighboring communities and to the
state at large. I think it would be very well for Palo Alto as well as for other
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communities to reconsider restrictiveness of zoning laws and the approval
process to justify the fact that the zoning power is entrusted to the cities.
It's a responsibility they should take in hand. This also goes with
communication and cooperation with local cities. I think the issue with the
water rights to East Palo Alto—I'd like to certainly urge Palo Alto to work
with them to have all the cities work together to have these needs. These
needs aren't going away of more housing. It's every city's obligation to work together to make this happen. Thank you for your time.
Mayor Burt: Thank you. That concludes our Oral Communications. Mr. City
Manager, did you have a comment?
James Keene, City Manager: Mr. Mayor, we had a couple of speakers this
evening. I think we had five or six last week speaking about the Castilleja
School Conditional Use Permit. I just did want to share again with the public
that, before any decision that the Council would ultimately make, there will
actually be an Environmental Impact Report, an EIR, required as part of the
Castilleja process. My understanding is that's not yet really underway.
Thank you.
Mayor Burt: Thank you.
Consent Calendar
Mayor Burt: Our next item is the Consent Calendar. We have one speaker,
who wishes to speak on Item Number 7. Doria Summa, welcome.
Doria Summa, speaking regarding Agenda Item Number 7: Good evening,
Mayor and City Council. Doria Summa. I'm here tonight as President of the
College Terrace Residents Association. The Board met last week, and we
wanted to thank you for Item 7, your continued support of neighborhoods
and working with neighborhoods and especially making meeting rooms more available to us. It really, really helps. Thank you.
Mayor Burt: Thank you. We will now move on to the Consent Calendar with
an understanding that Item Number 8 is being modified with the changes at
place to reduce the contract term to one year with a corresponding 50
percent reduction in the amount.
Vice Mayor Scharff: I'll move approval.
Council Member Kniss: Move approval.
MOTION: Vice Mayor Scharff moved, seconded by Council Member Kniss to
approve Agenda Item Numbers 3-10, including changes outlined in the At-
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Place Memorandum for Agenda Item Number 8 - Approval of Contract
Amendment Number 4 With Van Scoyoc Associates Inc. ...
3. Approval and Authorization of the City Manager to Execute a Contract
With Builders Protection, LLC in a Total Not-to-Exceed Amount of
$4,620,000 for Three Years for Water, Gas, Wastewater, Electric,
Storm Drain, and Street Resurfacing Construction Inspection Services;
and Finding That the Contract’s Approval is not a Project Requiring California Environmental Quality Act Review.
4. Resolution 9618 Entitled, “Resolution of the Council of the City of Palo
Alto Correcting Clerical Errors in two Items Previously Approved as
Part of the Palo Alto Clean Local Energy Accessible Now (CLEAN)
Program.”
5. Approval of Contract Number C16163335 With Sierra Traffic Markings,
Inc. in the Amount of $850,000 to Provide On-call Traffic Safety
Services, Allowing Them to Implement Minor Roadway Improvements
in Response to Community Service Requests.
6. Approval of a Revenue Agreement With the County of Santa Clara in
the Amount of $250,000 Over two Years for Support of Intensive Case
Management in Connection With Housing Subsidies to be Provided by
the County of Santa Clara for Palo Alto’s Homeless.
7. Policy and Services Committee Recommendation to City Council for
Next Steps in the City's Neighborhood Engagement Initiative
Including: Establishing a Yearly Goal of Three Town Hall Meetings;
Updating the Co-Sponsorship Agreement; Adopting a List of
Neighborhood Associations; and Amending the Annual Budget to
Reduce the General Fund and Increase the General Liabilities Insurance Program Fund by $5,000.
8. Approval of Contract Amendment Number 4 (Contract Number
C12146667) With Van Scoyoc Associates Inc. for Federal Legislative
Representation to Extend the Contract for two Years Through July 31,
2018 and add $202,000 for a Total Not-to-Exceed Amount of
$606,000.
9. Approval of an Amendment to the Existing Joint Powers Authority
Agreement With the Silicon Valley Regional Interoperability Authority
to Include Participation by the Santa Clara Valley Transit Authority.
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10. Approval for the Consolidation of the Unscheduled Vacancy on the
Planning and Transportation Commission With the Fall 2016 Board and
Commission Recruitment.
Mayor Burt: Motion to approve by Vice Mayor Scharff, seconded by Council
Member Kniss. Please vote on the board. That passes 8-0 with Council
Member Filseth absent.
MOTION PASSED: 8-0 Filseth absent
Action Items
11. Resolution 9691 Entitled, “Resolution of the Council of the City of Palo
Alto Adopting a Net Energy Metering Successor Rate E-EEC-1 (Export
Electricity Compensation); Establishing the Net Energy Metering
Transition Policy; and Amending Rule and Regulation 2 (Definitions
and Abbreviations) and 29 (Net Energy Metering and Interconnection)
(Continued From June 27, 2016).”
Mayor Burt: We will now move on to Item Number 11, which is a
recommendation from the City Council Finance Committee that the Council
adopt a Resolution adopting a Net Energy Metering successor rate, EE-EEC-
1, which is Export Electricity Compensation, which establishes the net
metering transition policy and amends the rule and regulation of two
different ones, the definitions and abbreviations, and Section 29, the Net
Energy Metering Interconnection. This was continued to us from June 27th
of this year. Welcome, Mr. Shikada and colleagues.
Ed Shikada, Interim Utilities Director/Assistant City Manager: Thank you,
Mr. Mayor and members of the Council. Ed Shikada wearing my hat as
Interim Utilities Director. This evening, we've got a presentation which,
perhaps in reference to the City Manager's earlier comment, is in typical Palo Alto rigorous style. I'm not sure it's too mellow, but it is nonetheless
rigorous. We would like to spend a few minutes walking through the
particulars of this Net Energy Metering issue as it is a fairly complex
technical one and also obviously drawing quite a bit of attention from solar
industry advocates. The Council may have noticed that you received quite a
few emails this afternoon with the title "Protect Rooftop Solar in Roseville."
If nothing else and a little bit tongue in cheek, the emails you received do
reflect some industry concern about how cities are dealing with the Net
Energy Metering regulations and moving into successor programs as the
regulations are moving into a new phase. I would say that as Staff has met
with industry reps, we recognize the concern that they have about Palo
Alto's trendsetting ability. I would, as we get into the particulars, use it as
an opportunity to push the perspective that, rather than being concerned
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about where Palo Alto is and where Palo Alto is headed, this is an
opportunity to perhaps identify the uniqueness and unique circumstances
that exist in Palo Alto. The fact of the matter is that it's a combination of
factors unrelated to Net Energy Metering that do make it a bit perhaps more
difficult to push rooftop solar in our market. It's the combination of our low
electric rates in comparison to Pacific Gas & Electric (PG&E) surrounding
areas, 30-50 percent below comparable rates, as well as the high level of conservation that our residents have undertaken. Using some benchmarks
that California Solar Energy Industries Association (CALSEIA), the industry
association, put forward reflects average usage, average loads on the order
of 25 percent below what perhaps other reference points might suggest.
Both of which contribute to a very difficult market for rooftop solar. The last
point there would be simply to note that the Council's leadership, City's
leadership in the area of local solar plan and other methods to advance solar
through our Palo Alto CLEAN program, group buys, to improve and maximize
cost effectiveness of purchases, community solar program also being
undertaken, and other elements of Palo Alto's long history of supporting
solar development locally. With that, let me ask Jon Abendschein to report
for Staff on the particulars of our Net Energy Metering successor policy
recommendations.
Jon Abendschein, Utilities Senior Resource Planner: Good evening, Council
Members. Thank you, Ed. I'm Jonathan Abendschein; I’m a Senior
Resource Planner with the Utilities Department. I'm here to talk to you
tonight about the Net Energy Metering successor rate proposal. It is a
complex proposal, and I'm going to try and move quickly through it. If at
any point on one of these slides you'd like me to talk in more detail or have some questions, please feel free to interrupt. I'd also note that I am
substituting here for a Staff member, Amy Bailey, who developed this
proposal after extensive research over the course of a year. She
unfortunately left us in the last month for a job at PG&E. I worked with her
quite a bit on this proposal. I'm hoping I can do full justice to the extensive
work that she did. In brief, I think Ed has done an excellent job of giving us
the background and context that we're working in as far as Palo Alto's
historical leadership in supporting solar. I'll just briefly run through that. I'll
continue on. I'll give you a summary of Net Energy Metering as it stands
now, the successor rate we are proposing, and how we plan to transition
from one to the other. I'll also give you a rundown of the alternatives that
we looked at. Again, we really, I believe, exhaustively considered the field
of possible successor programs. Again, just reiterating some of what Ed
mentioned to you. Palo Alto does have a long history of supporting solar.
We have been in advance of other publicly owned utilities in providing PV
rebates. There are some specific things that are unique to Palo Alto: the
low electric rates, which is a wonderful thing, as well as the fact that we
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have a carbon-neutral electric portfolio, which reduces some of the non-
quantifiable benefits to local generation. Of course, the constraints of
Proposition (Prop) 26 we face. At the bottom of this slide, you can see the
list of programs that Ed reiterated that were adopted as part of the local
solar plan and that are under that umbrella. Net Energy Metering is a
current program, is one more program on top of the several others that
were shown on the previous slide. It's a longstanding program. It's mandated by State law. Essentially what it does is it allows customers to
roll their meters backwards. If they're generating more than they use in one
more part of the day, they're essentially able to use that energy later in the
evening when they're consuming. State law requires that Palo Alto offer this
incentive up to the point when solar penetration reaches five percent of Palo
Alto's peak load. It doesn't provide a lot of strong definitions on what peak
load is. Based on our current definition, that penetration level is 9.5
megawatts. We are expecting to reach that this year. The State law
requires that we offer this incentive up to that point but makes no statement
about what we need to do after that. That's led to a really wide variety of
different programs at other publicly owned utilities around the state and, I
think, has contributed to some of the concern and discussion among the
publicly owned utilities and the solar industry. We are proposing to bring a
successor program to you that we believe is cost-based but also does not
provide any additional, unnecessary, undue burdens on solar. Because
we're getting close to reaching the cap this year, we began working on the
successor program over a year ago. We did extensive research, sought
feedback from stakeholders including members of the solar industry and, in
fact, incorporated some of that feedback that we received early on into our proposals. We also coordinated with the electric utility's cost of service
study to make sure it was cost-based. Before we even started on this
program, we actually had a number of policy discussions with the Utilities
Advisory Commission and the Finance Committee and Council. In January
2016, the Council adopted successor program design guidelines. The two
really key policy points that we received were that rates must be based on
the cost of service and also that the successor program should minimize
negative impacts on solar and essentially ensure that, while this was cost-
based and did not impose any costs on non-solar customers, it also didn't
provide any undue burdens on solar. We took that into account and made
an effort to scrupulously search for every quantifiable benefit that could be
assigned to solar. We believe we've come to you with a proposal that does
that. Again, I alluded to the wide variety of publicly owned utility programs
out there. I don't believe that necessarily—I think this proposal stands head
and shoulders—I think actually provides some leadership in how to actually
approach this issue in contrast, I think, to some of the other proposals that
have come out in the last year or so. I'm going to move quickly through this
slide. If anyone would like me to address a little more carefully, but this
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essentially illustrates how Net Energy Metering works. You have a typical
customer load, a lot more consumption in the morning and the evening. You
have solar generation represented by the yellow line, which typically comes
in the afternoon. You essentially end up with, from the utility's point of
view, something that looks like this, where the customer is a consumer in
the morning and a consumer in the evening and a producer at night. In the
morning under Net Energy Metering as it is now, the meter moves forward. The meter moves backward during the day and at night will typically move
forward. If you have a large enough solar system, what this can mean is
that a customer can eliminate their entire bill. This means that certain
services that the utility provides, such as maintaining the connection to the
utility, providing billing services and providing a variety of other
maintenance and operational services, don't get paid for. These have to be
paid for by the customer's neighbors. Essentially that's why it's an incentive
program subject to eventual sunset. Net Energy Metering has been going
for a while. I think there's an open question out there about why don't we
just continue it. We've had Net Energy Metering up until now as required by
State law. Our most recent cost of service study demonstrated that solar
net metering customers in Palo Alto only pay for about 90 percent of the
cost to actually serve them. As I mentioned earlier, we're subject to very
strict requirements that essentially say that our rates must be set up so that
each customer is charged exactly what it costs to serve them. That presents
a real difficulty in trying to continue Net Energy Metering beyond the State-
mandated cap. What we're proposing to transition to instead is a two-part
rate with an hourly netting period. This is sort of a confusing statement, but
let me try and break it down into something a little simpler. Essentially any energy that the customer consumes—that's that section in the morning and
the evening that we were looking at—they pay for that energy at the retail
rate that every other customer pays for energy at. When a customer
generates solar energy and they use it onsite, they're not paying for
anything. They're paying just for the cost of their solar system. They have
no relationship with the utility for that energy. To the extent that they're
generating more energy than they use onsite and sending some back to the
utility, we pay for that at a rate that is equal to the value solar provides to
the utility and all the customers. That's roughly 7 1/2 cents. I'll talk a little
more about that in a moment. This illustration shows those three different
areas, those three different types of compensation. I can go into this a little
bit more if you'd like me to. For now, I think the key thing to look at here is
these evening areas and morning areas. This is where the customer is
consuming, and they're paying at the retail rate. This section here is energy
that's being generated and used onsite. This section here is surplus energy
that's being generated, and then we will compensate the customer at 7 1/2
cents per kilowatt hour. This is how that 7 1/2 cents per kilowatt hour was
calculated. This is a methodology that we've developed over time. It
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includes all of the values that solar provides. It's the energy savings. It's
the value of the green energy. It includes things like capacity and ancillary
services which are fairly esoteric products, values that they could provide to
the electric system—I can go into those in a little more depth if anyone
wants me to—savings and transmission costs as well as transmission and
distribution losses of energy because the energy is generated locally instead
of being transported. This is a higher rate than I think has been proposed in any other publicly owned utility around the state. I think it really goes to
the fact that we've exhausted the search for value that solar provides. This
just summarizes the way the charges and the credits work. I think the key
thing to take from this slide is this is a summary of the customer example
that was included in the Finance Committee report. Essentially what it says
is that a customer who has no solar—the example customer that we've
included, that has no solar, might pay $1,800 a year. If they were on our
current net metering rate, they might pay $820 a year after putting in a
solar system that meets 50 percent of their annual use. Under the
successor rate, their annual bill might be a little bit higher, about $1,000.
They're losing a little bit of value at that size. This shows how the payback
period increases. This takes into account the actual cost of the solar system
and how long it takes to pay off. I think one of the key points to see here is
that the payback period is very similar for smaller-sized solar systems. For
the largest solar systems, this is where you start to see a divergence in
payback periods. What this program will likely end up doing is you'll have
more people installing solar, but they'll be smaller solar systems. Again,
talking about how the successor program compares to Net Energy Metering,
I think we've struck a balance here, trying to minimize the impact on solar customers while still adhering to cost of service. Customers are still able to
use what they produce onsite. This is one of the pieces of feedback we
actually received from the solar industry earlier that we incorporated into
our proposal. They're still compensated for surplus energy. I think the
really important part here is that solar is still receiving compensation for
every bit of support that they're providing to other utility users. The main
difference is that an hourly netting period is used rather than a monthly
netting period. I can go into that in a little more detail, but that's sort of the
key point. That's that illustration that we saw earlier showing how in the
mornings and the evenings you end up consuming energy, and in the middle
of the day you end up generating it at a different rate under this proposal.
The alternatives we considered. We examined and rejected a number of
alternative designs. These designs either didn't meet the cost of service
requirement or they were much less favorable to solar. The first was
continuing Net Energy Metering, which we couldn't make feasible from a
legal standpoint. Another proposal was using a monthly carryover period
instead of an annual or hourly period. This unfortunately also doesn't meet
the cost of service requirements. It reintroduces a lot of the incentives. We
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looked at having a separate Net Energy Metering program with fixed charges
that would eliminate the subsidy. This is no better for solar than our current
proposal, and it also introduces some of the inequities that you could get
from fixed charges. Different-sized customers have different impacts on the
system, so having one uniform fixed charge for all those customers can
introduce some inequities. The last one is actually a buy all sell all. It's
called a value of solar tariff. This is something that we heard some pretty negative feedback about early on from the solar industry. This requires
some separate metering, and it compensates all energy generated at that 7
1/2 cent rate. It doesn't allow you to use any of the energy onsite, which
definitely decreases the value quite a bit. It also introduces some additional
metering costs to the customer, so we chose not to go down that road.
That's our proposal. As far as the transition goes, we're proposing to
grandfather the customers that are already within the Net Energy Metering
cap. Customers that have already installed solar systems already have Net
Energy Metering. Those customers would get a full 20-year period to
recover the value of the solar systems they installed. Those customers can
modestly expand their systems and still remain eligible. Implementation of
this program is actually pretty urgent. We're expecting that the Net Energy
Metering capacity could be fully reserved in the next 3-6 months. We do
need some time to actually get this program implemented. This is partially
why we started over a year ago and tried to seek as much feedback as we
possibly could. We'll be doing a lot of outreach to existing customers as well
as to customers that we know are looking to actively consider solar and
outreach to the installer community. For those customers, we plan to set up
a program to make sure that there's an equitable reservation system for the remaining capacity in the Net Energy Metering program and also provide
calculators and guidance to installers who are looking at the new successor
program as well. That's it. This is the Motion that we're requesting, the
proposal we're requesting that you adopt. I really believe we've put a lot of
thought into this program, and I really believe it's going to maintain—it's
achieved the goals that we set for this program. I think it's one more way—
eventually Net Energy Metering is something that's going to end throughout
California. I think this is one way that Palo Alto can show leadership in
showing what the future can look like.
Mayor Burt: Thank you. If that concludes the Staff Report, we can go to
the Council for any technical questions before hearing from members of the
public. So far I have four speaker cards. If anybody else would like to
speak, please bring a card forward. Council Member Schmid.
Council Member Schmid: Thanks very much. I'm an enthusiastic supporter
of the program until I got to the next-to-last page on your document. On
Packet Page 275, it has the Utilities Advisory Commission (UAC) Minutes.
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The Chair in the last paragraph there, Chair Foster asked for Staff's
comment on the disparity between the proposed credit rate of 7.5-cent and
the Palo Alto CLEAN price of 16.5-cent. Staff mentioned that the Palo Alto
CLEAN rate is available to all customers including residential customers, so
customers are free to participate in the Palo Alto CLEAN program and get the
16.5-cent rate for all the energy generated by their PV systems. I don't
recall that connection made anywhere else.
Mr. Abendschein: I'll just reiterate that answer. The Palo Alto CLEAN
program is open to residential customers, but it does require separate
metering and essentially providing all of the power from the solar system to
the City at the 16.5-cent rate.
Council Member Schmid: Anyone participating in the Net Energy Metering
(NEM) program can shift ...
Mr. Abendschein: This would not be available to ...
Council Member Schmid: ... to the CLEAN?
Mr. Abendschein: Could they shift to the CLEAN program? I think that's a
good question. We haven't had any inquiries on that front. I would have to
get back to you and look at the program rules on that.
Council Member Schmid: I thought the CLEAN program was very clearly
identified for a specific number of commercial projects. It was ...
Mr. Abendschein: It's a program that is mainly oriented at commercial
programs. It's mostly going to make sense for commercial customers. It is
technically available to residential customers; although, we don't really
expect many residential customers to take us up on that.
Council Member Schmid: Why shouldn't every one of them say, "I want the
16.5-cent return"?
Mr. Abendschein: I think one thing to remember is that customers—our
current top tier rate is more than 16 1/2 cents. Some of these customers
are able to—because you're able to use some of the energy onsite, some of
these customers are actually able to offset an even higher retail rate even
than the 16 1/2 cents. That's part of the reason. Also it's a bit of a complex
program for a smaller system. It really makes more sense for a larger
commercial system.
Council Member Schmid: That wasn't my understanding.
Mr. Abendschein: I think we actually have something ...
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Jane Ratchye, Utilities Assistant Director: Jane Ratchye, Assistant Director.
The other difference is this is—the CLEAN program is a fixed price for 20-25
years. That doesn't change as rates may go up over 20 years. Presumably
the electric rates will increase over 25 years. In the CLEAN program, that's
a fixed rate for 25 years.
Mr. Abendschein: Twenty years from now, retail rates would be expected to
be even higher than they are now. Whereas, a customer in the CLEAN program would still only be paying 16 1/2 cents.
Council Member Schmid: I guess I don't recall when we voted on the CLEAN
program that it was open to individual households. I thought it was clearly
identified as a major commercial program.
Mr. Abendschein: I may need to check on the history and get back to you
on that one.
Mayor Burt: Council Member Kniss.
Council Member Kniss: Both of Council Member Schmid's questions are
interesting as well. How many are involved in the CLEAN program, which is
the one Greg just spoke about, versus how many will be involved in the NEM
program, roughly?
Mr. Abendschein: The CLEAN program, we don't have a completed project
yet. We're looking at a relatively small number of large projects. Two.
Council Member Kniss: How many?
Council Member Berman: Two.
Council Member Kniss: Two?
Mr. Abendschein: Four. Are we looking at (crosstalk).
Mr. Shikada: Four, if we count the (inaudible) garages.
Mr. Abendschein: Two to four customers. Whereas, we're looking at hundreds in the Net Energy Metering program, and we would expect
hundreds more in the successor program.
Council Member Kniss: There's quite a difference.
Mr. Abendschein: Yeah. They're different programs focused on different
markets.
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Council Member Kniss: In the Net Energy, are we talking about 500, 1,000,
1,500? What number are we really dealing with that are actually in what is
a rather dramatic program actually?
Mr. Abendschein: I believe we're up to about—it's between 800 and 900
right now.
Council Member Kniss: It's how many?
Mr. Abendschein: Between 800 and 900 right now.
Council Member Kniss: It's getting close to 1,000. How are you divvying
that up as far as apartment houses? Are they counted as one user?
Mr. Abendschein: The limitation is really more on solar capacity. You may
have someone who counts as one customer. If they are a large commercial
customer, they may have a megawatt of solar on. A small customer may
only have 0.3 percent of that. You could have hundreds of small users and
then one large user equivalent to hundreds of small users. Does that help?
Council Member Kniss: Yes. If you were to make a prediction about this, I
think what you would say is this encourages the use of more solar in our
community. Agree?
Mr. Abendschein: Yes in that it continues. Yes.
Council Member Kniss: In the end, this is a very good deal for the customer
and really a pretty good deal for us as well.
Mr. Abendschein: Yes.
Council Member Kniss: Good. Thanks.
Mayor Burt: Council Member DuBois.
Council Member DuBois: I had a question about the grandfathering clause.
We got a letter about the 10 percent cutoff, and they were suggesting a
sliding scale if any customers want to add additional capacity. Was there any discussion or consideration of a sliding scale that would allow people to
maintain their current rate?
Mr. Abendschein: We did have some Staff turnover, so we haven't had a
chance to extensively examine that particular proposal. I wouldn't say.
Council Member DuBois: As far as you recall, there wasn't a discussion at
UAC or has it been considered and rejected for any reason?
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Mr. Abendschein: I think it was heard but maybe not extensively discussed,
and then the proposal was adopted. That was my understanding.
Council Member DuBois: Do you guys have an opinion?
Mr. Abendschein: I'm sorry?
Council Member DuBois: Do you have an opinion about the idea?
Mr. Abendschein: I'd have to spend some more time looking at it. I'm
sorry.
Mr. Shikada: If I could add. From a Staff perspective, the issue is one of
administrative complexity. Part of the path going forward would be to look
at how difficult it would be to implement something like that over the course
of time based upon the kinds of applications we would anticipate. Certainly
if the Council were to want to proceed with the recommendation or some
variation on the theme, it would give us the basis for which to do that
additional analysis.
Mayor Burt: Council Member Berman.
Council Member Berman: Sorry, Ed, I actually just missed your last answer.
I was going to ask similar questions that Council Member DuBois asked. It
sounds like Staff hasn't had a chance to analyze the proposal we got for
expanding existing systems and grandfathering them in. Were you saying
that there would be a possibility of doing that and possibly updating the
successor plan once you've done that analysis?
Mr. Shikada: In terms of the grandfathering policy, I think we have talked
some about whether—again as an example, if the Council were to direct us
to proceed with the successor program as described, then we'd use that as
the base to do the additional analysis of the transition and how we could
maximize the ability to provide some flexibility under the transition policy. It would take additional analysis.
Council Member Berman: Would you guys be looking at both the, I guess,
the equation that was proposed by the residents of our community and also
the idea of it applying to expansions of up to 25 percent, not just expansions
of up to 10 percent, which is what's in the current proposal? Apparently 10
percent is quite small and not likely to actually be useful to residents. At
least that was the assertion that was made. I guess I'll ask you guys what
your thought was on that.
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Mr. Abendschein: We could look at both those aspects. I think the way
we'd want to do it is return and amend the successor program so that we
could get started on implementation but then clean up.
Council Member Berman: In your presentation—thank you for your
presentation. It's always difficult giving a presentation that somebody else
made. You talked about how Palo Alto got to its NEM cap. I guess the State
legislation was kind of vague in how different municipally owned utilities derive that cap. What analysis did we use to get to that cap? Are there
options? I had a meeting with—I won't hog the ball too much, but I had a
meeting with Staff last week where it's my understanding that there might
be a different equation that we would use, that gives us a little more, that
would increase the cap a little bit and maybe give us a little more time as we
make the transition and maybe analyze other improvements that could be
made.
Mr. Abendschein: The cap that we have now, we brought it to you for
adoption—I think it was last year. It was based on a formula we'd been
using internally that was based on what's called coincident peak load, which
is the actual measureable load where we take energy off the California (Cal.)
ISO grid. That's a clear measureable standard. We used the peak from
2006, which was when Senate Bill (SB) 1 was adopted, and it represented
the highest level of the peak in the last ten years or so. There are two other
ways that you could look at defining peak. One is the way the investor-
owned utilities do, that they're mandated to do by the California Public
Utilities Commission. That is to take the peak load of every individual
customer throughout their service area and add it up. That generates a
much higher cap, but it also requires analytical capabilities that we don't have.
Council Member Berman: Smart meters.
Mr. Abendschein: Smart metering, yeah. A middle ground is the peak load
of every customer class, so residents, commercial customers. It's not as
clear cut, but it is something we're able to estimate. We chose a very
clearly measureable standard. Customer class, non-coincident peak load is
something that we can estimate.
Council Member Berman: You think that if we were to use that analysis that
would increase the cap a minimal amount?
Mr. Abendschein: Yeah, maybe by around five percent or so.
Council Member Berman: The last question I have for now is there's been a
lot of debate—this is more a legal question than a technical question.
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There's been a lot of debate about the applicability of Prop 26 to the NEM
successor plan and folks from the solar industry asserting that it doesn't
apply to NEM successor plans. I don't know if the City Attorney can give
some high-level thoughts on whether or not it does.
Molly Stump, City Attorney: Sure. Thank you, Council Member Berman.
City Attorney Molly Stump. Proposition 26 was adopted by the voters in
2010 and went into effect in 2011. It grandfathered existing rate structures, but when new rates were imposed or rates were increased, then its
requirements would come to bear. That happened for the Palo Alto electric
utility just this summer, I think. That's when we were really looking very
closely then at complying with those requirements, which boiled down
essentially say that the rates charged to customers need to be supported by
the cost of providing services to those customers. That's a paraphrase, and
the law is more complicated than that. To comply with that, we—the electric
utility and the gas and the water utility as well under a parallel law—work
really closely with cost of service consultants to carefully document all of the
components of cost of serving groups of customers and try to very closely
align the rate structure to those costs of service. That's what we're looking
at here. These issues become very present for a utility at the point when
the State mandate concludes. When we reach that five percent threshold,
then we no longer have a State mandate for the incentive program. We're
able to continue with the program, but we need to do that in compliance
with all of the relevant rules and laws. Chief among those for us is Prop 26.
We're looking very closely at that, and we're able to get the cost of service
consultant support around the proposal that's before the Council tonight.
That's the one that we do feel comfortable with.
Mayor Burt: Council Member Schmid, you have a follow-up question?
Briefly.
Council Member Schmid: Yes, for the City Attorney. Actually on the next
page of that UAC meeting, Deputy Senior Assistant City Attorney Jessica
Mullen said that rates are cost-justified such as the NEM. When someone
asked about the CLEAN price, they said any rate that was changed would
need to comply with the cost-based requirement of Prop 26. My
understanding from the presentation is this is the analysis of the real cost
that is justified under Prop 26. The CLEAN price of 16.5 is not. If anyone
requests to get into the CLEAN, they would have to have an economic
assessment like this, wouldn't they?
Ms. Stump: You may recall that the subject of the rates that are paid under
the CLEAN program has been before the Council quite a number of times
and before Council Committees as well. We have worked very carefully to
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assess the particular characteristics of that program including the local
benefits that are somewhat unique to the CLEAN program in order to
support that rate. This is more of an art than a science. That rate is not
before us tonight. I haven't completely studied up and reviewed all the
various cost and benefit components that went into that rate. As a general
rule, Ms. Mullen who works in my office, her statement is correct. That's the
standard that we are always looking at when we're looking at proposals from the Utilities Department, the UAC and the Council.
Mr. Abendschein: I think one of the key differences here is that the CLEAN
program is available not just to customers but to anybody who can develop
a solar system in Palo Alto. In that sense, it's a wholesale energy purchase.
You can, for example—this is actually the way a lot of these projects are
developing—have a billing owner in Palo Alto who rents a roof out to a solar
developer. The solar developer essentially treats it as land. Essentially we
are buying at a certain contract rate from that developer. It's different in
that it's not a rate that's imposed on a specific customer activity.
Council Member Schmid: I guess I could read what you say as though that
800 solar power customers can request to get the CLEAN rate than the NEM
rate. Is that what you have said? Is that we're voting tonight?
Mr. Abendschein: They would have to sign a 20-year contract, reconfigure
their metering. It would be an expensive conversion. We think that's a very
unlikely outcome of this.
Ms. Stump: Council Member Schmid, this is an important point. Power
purchase agreements, which our CLEAN program involves a power purchase
agreement, is a different category. There is an element of buying power in
the NEM program, of course, but it's really at a consumer level, and it involves this give and take of someone who's primarily a power customer.
The power purchase agreements are somewhat different. The utility is not
required to always purchase only the least expensive power. Prop 26 and
Prop 218 on the water side don't require that. They do allow reasonable
decisions about entering into contracts for perhaps a slightly more expensive
power source for appropriate reasons. Our utility has pursued that, pursued
some green goals on purchasing, and perhaps in some cases has paid more
for power, paid more for longer-term contracts, more secure contracts,
contracts with companies that have a more sound financial footing, etc. All
of those are business negotiations that are appropriate, and they're
somewhat different than the consumer level.
Mayor Burt: We don't want to have tonight's discussion be principally
around the CLEAN program. It's around the net metering. Just to help on
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that clarification and this issue about resident participation eligibility in the
CLEAN program, frankly I do remember we've had a series of discussions
and Staff had always explained that the CLEAN program really wasn't
available to individual residents. It may technically be so, but that's not the
way, I believe, Staff had framed it. However, I do recall that one of the
participation methods is through solar co-ops. We had had some interest,
and that's how residents would potentially collectively participate in a CLEAN program. Is that correct?
Mr. Abendschein: I would say yes.
Mr. Shikada: The simple answer is yes.
Mr. Abendschein: If we want to talk a little more about community solar, I
would defer to Assistant Director Ratchye.
Mayor Burt: That’s all right. One of the questions was about how the
resident benefits from the Net Metering program. We're staring at the 7 1/2
cents or whatever it is. That's when you are producing beyond your need as
a resident. Slide 12, I want to make sure I follow why the first two sets of
bars show no change between the two programs, the current and the future
one, and a higher, faster payback if we are putting solar on our homes that
only produce 30 or 50 percent than if we go up toward 100 percent. As you
mentioned, when we have the—with Net Metering when we're getting credit
against our retail bills, it can be at a higher tier. I'm not sure whether
everybody's understanding that. Our higher tiers go up to how much a
kilowatt hour?
Mr. Abendschein: It's roughly 16 1/2 to 17 cents.
Mayor Burt: If I have this and I'm offsetting a high tier, the first chunk that
I sell back to the City, I'm selling at 16 1/2 or 17 cents.
Mr. Abendschein: Yes, that's it.
Mayor Burt: I think that helps people understand why this isn't principally a
7 1/2-cent benefit to the resident. It's stepping down. It starts at 16 1/2-
17, and then goes down depending on how much solar you put on your roof.
Mr. Abendschein: Yes. I would just add to that that when we have a
smaller system, more of it ends up getting used onsite and at the higher
tiers that you're talking about.
Mayor Burt: The other thing, you noted that the pricing structure for when
we do buy the surplus in a Net Metering program is based on all quantifiable
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costs. That's always a challenging context. I'd put it more accurately, and
what we've captured here is all readily quantifiable. What we can ultimately
quantify as we dig deeper, we find some other things that there may be
ability to quantify. One, for instance—this goes kind of two steps removed.
Solar on rooftops reduces for buildings that have air conditioning—this would
be more on the commercial side than on the residential—they help keep the
buildings cooler. We subsidize energy efficiency programs. I'm sorry? We don't in any way subsidize our local energy efficiency?
Ms. Ratchye: All of our efficiency programs are cost-effective. It's cheaper
for us to do efficiency than not. There is no explicit subsidy on pretty much,
I think, any of our efficiency programs.
Mayor Burt: When you say they're cheaper, we have a cash outlay. You're
saying that we have cost avoidance as a result of that?
Ms. Ratchye: Yep.
Mayor Burt: Is that cost avoidance the same as what's captured here?
Ms. Ratchye: Right. We calculate the avoided cost for efficiency based on
the shape of the saved energy. The avoided cost for this program is based
on the shape of the generated energy. There's more value in solar.
Mayor Burt: They're captured in both programs. I'll just say that there is a
value that we don't quantify in that solar on rooftops that to some degree
helps us achieve our energy efficiency goals even if that economic cost
savings is already captured here. This is an area that I recognize is even
harder to quantify, the present and more importantly future value of local
generation toward resiliency. We have two levels. One is if I put in a
storage system at my home, then I have my own independent resiliency. A
tougher question is whether the community benefits from that. There are probably some ways that they actually do in the event of an outage.
Whether we in the future will have a broader local generation and a micro-
grid system in that this is creating the building blocks for that. The more
local generation we have, the more of a foundation we have for a potential
future micro-grid that provides some resiliency. We're seeing Long Island
has gone in this direction, and other places. Those are a couple of areas
that, I think, we have less tangible benefits, but they're ones that are out
there. I just had one clarifying question. Mr. Shikada, you mentioned our
comparative rates versus PG&E. I've been using recently a 30 or 35 percent
lower—I think you said 30-50. Is that based on different tiers? Actually
there are tiers where we are not 30 percent cheaper than PG&E; we're
actually 50 percent cheaper?
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Mr. Abendschein: We don't have the graph in front of us. Yeah, 30-50, it's
on that scale.
Mayor Burt: In our community, that is a grossly underappreciated fact. I
think it's something that we really need to get out there to the community,
how much cheaper our electricity is than PG&E. In one sense, it goes into
our broad discussions. We've been able to achieve—I'm sorry. I'm going to
cut myself off, because that goes more into the comment period. I'll bring that up later. Final question. We've talked briefly about how this program
fits within our various local solar initiatives. Can you just briefly update us
on what is the present and, from a utility Staff perspective, future role of
PACE programs in our local generation initiatives and efficiency for that
matter?
Mr. Shikada: I'll opine on it to start with. We have had a number of
conversations with Property Assessed Clean Energy (PACE) program
providers. There have been some mixed feedback with respect to success
on issues of the contractor used, some of the customer service issues, and
particularly some issues as residential properties turnover and are up for
sale and how it can complicate the sale transaction. That said, we
understand that Association of Bay Area Governments (ABAG) recently
adopted something of an umbrella program that would make it easier for
Palo Alto as with other cities to adopt more of a general authorization for
PACE programs to come to town. Staff is looking at how we could best bring
that forward. I think one of the policy discussions that the Council will have
is the extent to which the City would want to be in the middle on the issues
of customer service and somewhat customer protection as those are issues
that have come up of late.
Mayor Burt: Thank you. Now we'll turn to members of the public. We have
four speaker cards. If anyone else would like to put in a card, please come
forward at this time. Our first speaker is Gina Goodhill, to be followed by, I
believe, Carter Lavin. Excuse me if I didn't read it right. Welcome.
Gina Goodhill: Hi there. My name is Gina Goodhill Rosen with SolarCity.
Thank you for taking public comments tonight. I've spoken before this
Council a couple of times in the past on this issue. We once again urge the
Council to vote against this proposal and to direct Staff to work directly with
the solar industry on something that works for all parties. I'm trying not to
be duplicative and say things that I've said in the past. On June 27th, as
you know, Staff came to Council with this same proposal. Once again, the
solar industry opposed it because it doesn't fairly compensate customers for
the benefit that they provide to the grid. We've submitted a letter in the
past with more details on what we think all those benefits are. Additionally,
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as several Council Members brought up, we are confused by the rate, that it
compensates solar customers when there is another program, as mentioned
the CLEAN program, that compensates solar customers at more than double
the rate. To us this is something that really sets a double standard. It's
confusing and sends mixed messages about the value of solar. It implicitly
recognizes that there is value to solar greater than the 7 cents suggested
here, that's not being recognized for customers who are not commercial customers, who want to put rooftop solar on their house. To answer Council
Member Schmid's question before, another big difference with the CLEAN
program is that while it is technically open to residential customers, there's a
$34 per month charge that most residential customers just wouldn't be able
to handle. On June 27th, as you know, City Council chose not to vote on
this issue because they thought more discussion was needed. Since that
time, very little discussion has been had. The solar industry had one
meeting with many of the Staff that was here. I think it was a good
meeting, but the Staff made it clear that they had no intent to change the
program. This is the exact same proposal that you saw on June 27th. We
would love to work with your Staff on coming up with a new proposal that
meets their needs and doesn't kill the solar industry in this area. This is the
same proposal that the utilities in Modesto and Alameda both proposed.
Both of their Councils or their Boards ended up rejecting the proposal,
because they knew it would get rid of the solar industry. I know that you
said you're going to be hitting the cap in the next 3-4 months. We can work
quickly with the Staff in the next two months to come up with something
new. We're not asking for a continuation of NEM. We're asking for a
proposal that is fair to all parties. Finally very briefly on Prop 26. I am not a lawyer; I definitely am not qualified to speak to it, but I can tell you that our
legal counsel has a different take on how this applies, not just for Palo Alto
but for other municipal utilities. We'd love to have the opportunity once
again to work with Staff, to work with your legal counsel and make sure that
we're coming up with a solution that works for all parties. Thanks so much.
Mayor Burt: Thank you. Our next speaker—I'll let you get it right.
Carter Lavin: Sure, it's Carter Lavin. You got it right.
Mayor Burt: I did.
Mr. Lavin: Hello. Thank you all very much for talking about this and
opening up the floor to public comment. My name is Carter Lavin; I'm with
the California Solar Energy Industries Association, CALSEIA. We're the voice
of the solar industry. We have over 400 members, companies throughout
California, large and small from companies like SolarCity to four people in a
truck doing solar projects in the area. Our stance is that of SolarCity, that
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this program as it is currently proposed will decimate solar development in
Palo Alto. We hope that the Council votes to pull the issue, direct Staff to
work with the industry and the public to discuss a proposal that works for all
parties and allows us to meet the goals that we all want to do together. One
thing I think, while this slide is up here, that's very important to recognize is
a 16-year payback for a solar project is something that no one would sign up
for. Currently, if you're a nonprofit who can't take advantage of federal programs, your payback period is about 12-13 or 14 years. Five percent of
solar customers or thereabout are nonprofits. Moving ahead, if we are
pushing these types of project development timelines to this period, that
would have a significantly detrimental impact to solar jobs and also
hamstring Palo Alto residents' and business owners' ability to go solar.
Regarding the value of solar, this is obviously a hot topic and has been
researched very thoroughly. The investor-owned utilities throughout
California have done their own research. That number that they are
proposing is somewhere around 15 cents, which is very similar to the CLEAN
program. I think if we are to all get together, sharpen our pencils and work
our way to something more comprehensive, we'd recognize that this frankly
wholesale rate of around 7 cents is the tip of the iceberg. Solar provides a
great deal more value. I think in terms of what's happening for this issue
about saying our hands are tied and the time is running out, we do have the
ability to move very quickly at CALSEIA, and we'd love to work with Staff
and the Council and the public on this in terms of making this work out for
everybody. There's numerous examples like Alameda and Modesto and also
Los Angeles Department of Water and Power (LADWP) that are working
together to create a future where people in Palo Alto and people throughout the state of California can take control of their electric bill and have some
more certainty going forward. Once again, Carter Lavin with CALSEIA
asking for you to table this for further discussion. Thank you very much.
Mayor Burt: Thank you. Our next speaker is Gary Gerber, to be followed by
David Coale. Welcome.
Gary Gerber: Good evening. Mr. Mayor and Council, my name's Gary
Gerber. I'm president and founder of Sun Light and Power Company. We're
out of Berkeley, but we're very familiar with Palo Alto. I've been in business
for 40 years. A lot of my points have actually already been made, so I don't
want to belabor them. I will speak, though, as a solar contractor with
approximately a megawatt or so of commercial projects underway in Palo
Alto right now. I will say I'm very afraid of what's going to happen here if
you go ahead and adopt this plan. My customers will probably—if they don't
back out of these projects, they certainly won't do anymore projects in this
City. I can pretty much tell you that. This example here, any project that
has a 11-year or greater payback, if it's residential, you can forget it.
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There's no point in trying to sell those projects anywhere. No one will buy in
any quantity at all. This is just going to make it worse. That's the best it
gets here, and it just goes worse than that. We're in a City where you have
very low rates. That works against solar admittedly. Making solar even less
attractive is just going to drive solar out of the City. Making it more difficult,
it doesn't seem like that goes with what I saw as a clean initiative that was
adopted, I saw, in 2014 here. Killing solar in the City shouldn't be part of your CLEAN program, I wouldn't think. I would ask—also the other thing is
that the NEM cap is available for the Council to set however you want to set
it, if you want to raise the NEM cap, if you want to ignore the NEM cap. The
urgency is artificial. You do not have to act on the cap. If you want to give
yourselves some more time, very easily go to the non-coincident peak load.
That's what most of the rest of the state's already done. You can do the
same. That'll raise the cap and give you time to consider this thoroughly.
Thank you very much.
Mayor Burt: Thank you. Our final speaker is David Coale. Welcome.
David Coale: My name is David Coale. I'm with Carbon Free Palo Alto, and
I'm also a solar installer here in Palo Alto. In our view, the Net Metering
successor plan largely does a good job of navigating a compromise and the
constraints of Prop 26 and delivers many benefits that the old system did.
We support the plan. This will have virtually no effect on large commercial
installations in that they use all their power during the day and never net out
positive even during the day. That's 85 percent of Palo Alto's electricity
usage, so there's virtually no effect there. The economics of solar has
improved radically in the last several years and will continue to improve.
This program will not kill solar in Palo Alto. It will change the payback and, for some, that will be a deal breaker. This new rate will in fact incentivize
storage in Palo Alto. This will be precedent setting, and perhaps this will be
one of the benefits as including solar. If we look at the larger view of the
context of this, I would much rather have the citizens of Palo Alto invest
their discretionary funds in fuel switching rather than in solar. In Palo Alto
we have carbon-free electricity. When we take the greater, larger view, with
all due respect to the solar industry, of climate change, the discretionary
funds that could be spent on an electric vehicle (EV) or heat pump water
heater are going to reduce our emissions far more than adding more solar
where we already have carbon-free electricity. In that sense, in that larger
picture, I support this plan as well. What does need to change and what has
been before some of you but Staff has not reviewed adequately is the
grandfathering clause. It is great that they're grandfathering this in. With
the 10 percent addition, that means nothing. No one's going to pull a permit
for a 10 percent addition on any residential system, just not worth it. That's
a non-starter. Staff kind of pulled that out of other proposals wanting to
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look at the industry. What would be fair is to change the grandfathering
time such that if you were to double your system in size, that would cut your
grandfathering time in half. This way your initial investment is still realized
with the same investment. You're not changing the investments of your
earlier system in the middle of the game. That would be very unfair. I think
the grandfathering could change. This would be precedent setting because
other utilities are looking at this all over the place. They still have this similar grandfathering. This part, I think, needs to change. Thank you.
Mayor Burt: Thank you. We'll now return—I'm sorry. We have Mike
Danaher from our UAC. Welcome.
Mike Danaher, Utilities Advisory Commission: Good evening. I was asked
by others on the UAC to represent our discussion. I'll be very brief. The last
speaker made some of the points. We've been guided in our discussions to
look for the maximum carbon reduction at the lowest price. Since we're
carbon neutral with our large utility-scale projects, we didn't feel the need to
pay a premium for local rooftop solar. We worked very hard to find reasons
why there's an extra benefit from that. Mr. Mayor, nobody quantified that
part of reducing the temperature for the air conditioning. We looked for
otherwise. It doesn't help resiliency at the grid, given the type of inverters
we have now. Unless Council advises us otherwise, that's been our guiding
philosophy on the UAC. Thanks.
Mayor Burt: Thank you. We'll now return to the Council for discussion.
Vice Mayor Scharff.
Vice Mayor Scharff: Thank you. First of all, I'd like to say that I really
appreciate the effort that Staff's put into this. I know that they've really
thought long and hard about this. I know that Staff has really focused on how do we get more solar in Palo Alto. I think, given the state of the law
and Prop 26 and the requirements we have, Staff's really done a good job in
balancing that and coming up with a proposal that's legal and helps the solar
industry. I thought it was really interesting. When we have these kind of
proposals that come before us, if there is a problem with it, there are a
number of citizens who live in Palo Alto and who come out and speak and
say you have a particular problem on this. I haven't seen these people who
usually come out complain about this. I haven't gotten emails from them.
In fact, I've had David Coale, who just came up and spoke, and I thought
did so very articulately and eloquently about why we should support this.
On the other hand, the people that have spoken against this don't live in
Palo Alto and have a vested financial interest in trying to do something
differently. I think that really plays in the way I think about this. I think
Staff has done a really good job on this. I think we are protecting the
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investment back to expectations, is the way I'd put it, of the people who
have installed the solar. I do agree and would like to see Staff come back
and look at the grandfathering provision, but I think we should pass this
tonight, and then Staff should come back and reevaluate the grandfathering
provision of how that works. What else do I want to say about this? I think
it is really important. I do think it doesn't do any good to say Prop 26
doesn't apply and we don't have to adhere to the cost of service principles. I think we clearly do. I think this does a really good job in doing that. With
that, actually I'd like to actually move the Staff recommendation, which is
adopt a Net Energy Metering, NEM, successor rate EEC-1, Export Electricity
Compensation; establish the NEM transition policy; and amend utilities Rule
and Regulation 2, definitions and abbreviations, and 29, Net Energy Metering
and interconnection. I'd also like to direct Staff to come back with some
options on a grandfathering policy and a recommendation.
Council Member Holman: Second.
MOTION: Vice Mayor Scharff moved, seconded by Council Member Holman
to adopt a Resolution adopting a Net Energy Metering (NEM) Successor Rate,
E-EEC-1 (“Export Electricity Compensation”) and amending Utilities Rule and
Regulation 2 (“Definitions and Abbreviations”) and 29 (“Net Energy Metering
and Interconnection”); and direct Staff to return with options and a
recommendation for the NEM Transition Policy.
Mayor Burt: Would you like to speak further to your Motion?
Vice Mayor Scharff: Just briefly. I think I've said everything other than to
say that I really do appreciate the hard work of the UAC that really looked at
this, Staff's contributions. I know that the Finance Committee also spent
quite a bit of time on this.
Mayor Burt: Council Member Holman.
Council Member Holman: I don't have much to say other than concur with
the comments the Vice Mayor just made. I do have one question for Staff.
The grandfathering matter, is there going to be any issue with going ahead
and passing this Ordinance and wanting you to come back with a
grandfathering? In other words, in the interim is there going to be an issue
that people are going to get caught in?
Mr. Abendschein: It's not impossible that in the few months it might take us
to get back that there might be somebody who ends up getting a little
delayed on an expansion they were trying to do. I wouldn't expect that to
last for that long. I think it's unlikely there's going to be that much impact,
if any.
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Council Member Holman: You think you can be back to Council within four
months maybe?
Ms. Ratchye: If we can come straight to Council with the proposal, we can
do it relatively quickly.
Council Member Holman: Looking at the maker of the Motion, do you see
any reason for this to go back to Finance or just come back straight to
Council?
Vice Mayor Scharff: I'm actually fine with it going straight to the UAC and
then coming to Council. If that would delay it excessively, then I think it
should come directly to Council. I don't think we need to go to Finance
Committee, with all due respect. I'm really looking to Staff to sort of get a
sense of what they think about that. I want to honor the UAC a little bit in
the process.
Council Member Holman: I should have said UAC in addition to Finance. Is
Staff okay with that just coming straight back to Council, it sounds like?
With that as a stipulation, do you think you could be back within four months
so any impact on folks would be pretty minimal, if any? You're confident in
that regard? I see lots of nodding of heads but nothing on the record.
Mr. Shikada: Yes, that would be fine. Can do.
INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE
MAKER AND SECONDER to add to the Motion, “to Council within four
months” after “direct Staff to return.”
Council Member Holman: With that, I'm happy to support the Motion.
Mayor Burt: Council Member Kniss.
Council Member Kniss: Equally happy to support the Motion with one other
question or request. How are you going to publicize this? Not everybody is watching tonight who lives in Palo Alto. This is a change, and this should
motivate people with using solar energy.
Mr. Abendschein: I can talk about a few ways that the word will get out.
First off, we have a Staff member who's devoted to solar. She actively looks
through building permits and keeps in touch with customers who are
considering solar, to keep a status on have they signed a contract yet, how
far are they in the permit process. She's in contact with all of those
customers. Those folks will receive information. We'll also be doing the sort
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of publication that we always do with new programs, whether that's online
or working through installers or working through the building division.
Council Member Kniss: Included in the utility bill and so forth.
Mr. Abendschein: Yep. We have all of our regular channels available to us.
Mr. Shikada: We definitely would want to be active in pursuing this last
piece. I would make note of this, recognizing CALSEIA has obviously a
pretty high level of mobilization in communicating with their stakeholders, that they work with us in getting the word out, that this is simply the next
step in Palo Alto's continued commitment to the development and expansion
of solar and hope that they will also be a partner in getting the word out
throughout the state really in a positive manner.
Council Member Kniss: I'm not going to prolong it. I wanted to make sure
that we had brought it up tonight, so that we don't forget that what we've
done is something that, I think, is advantageous to the community. I want
them to know and be able to participate.
Mr. Shikada: In fact, I think we've got a couple at least of related programs
that are getting close to being able to launch along the lines of group buy as
well as continued progress on our community solar program. We'll factor
this in with other marketing communication efforts that we have coming up.
Council Member Kniss: Thanks. Appreciate it. I will be supporting the
Motion.
Mayor Burt: I guess I'll first say that I want to make sure that we are not
stifling an important program for local solar. It's really hard for us up here
to know whether we will continue to have adoption of residential solar
through Net Metering with this new program or we won't. One question
would be, if we wanted to include a report back on the impact of the program, what would be a reasonable timeframe to get that.
Mr. Abendschein: I think one year is likely too short, because we're going to
be going through the transitional period. I would defer to ...
Mayor Burt: When you say that, if you can ...
Ms. Ratchye: Clearly we can report on this on a quarterly basis in the
quarterly report too. We can see trends, and we can see if the line is
bending down or whatever. We will be tracking it on an ongoing basis. I
think we can easily report it on a quarterly basis.
Mr. Shikada: Do we have an existing report?
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Ms. Ratchye: Yeah, the quarterly report.
Mr. Shikada: I should know this. That said, I would be cautious about
drawing too close a connection between NEM and the rate at which solar
systems are being installed, given that there are a variety of factors; the
cost of the systems as well as the extent to which perhaps the early
adopters are already there. We'll certainly report on that and draw any
conclusions we can.
Mayor Burt: Does the quarterly report distinguish which program is being
utilized, whether it's NEM or ...
Ms. Ratchye: We can put whatever we want in the quarterly report. We can
put that. We can identify when we've met the cap, how many people are
over the cap, where we are with respect to the cap and things like that.
Mayor Burt: Really what I’m looking for is once we've gone past the cap and
we go into the new program what then happens on Net Metering. I think it
was the CALSEIA representative who referenced that investor-owned utilities
are looking in the range of 15 cents a kilowatt hour under new NEMs. Are
we familiar with that at all?
Mr. Abendschein: My guess would be that that's looking—I'd have to get
more information, but my guess would be that's looking at their retail rate,
which is a lot higher than ours. Fifteen cents is on the low end of their
average rate, so anybody would receive that in compensation under Net
Energy Metering. One thing that wasn't discussed is that there are non-
bypassable charges that are being added into Net Energy Metering for the
investor-owned utilities. That's also affecting the compensation rate.
Mayor Burt: In comparison, if we're comparing to an investor-owned utility
that charges 30-50 percent more, then their cost recovery is different. It's higher.
Mr. Abendschein: I don't think it's the same model. It's not representative
of an avoided cost rate.
Mayor Burt: I think that David Coale's point that this won't affect
commercial accounts was informative, and it makes perfect sense, since
they're typically not nearly approaching full generation onsite and they're
operating at some high tiers. That makes good sense there, and that's a
little reassuring on that side. I think a lot of the discussion that we've had,
where some of the colleagues have pitted this against a CLEAN program, it
makes me recall when we had the discussion around our school funding and
basic aid districts and Palo Alto benefits from being a basic aid district.
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Ultimately, the argument was we want to lift everybody up; we don't want to
bring down beneficial programs. The same thing here. I don't think we
want to pit one good program against another, because the Net Metering
program is now being forced to reduce its rates basically against some Prop
26 requirements that's really the primary trigger along with the fact that
we've ended our old program. I have searched for a way to make this a
stronger incentive, because I am concerned that we're going to see a drop off, but I don't know it. I guess I'd like to hear one final thing from a
CALSEIA representative. I think there were basically two. What we heard
was kind of a generalized "give us time, work with us." We didn't hear
enough about any specific changes that could be done outside of really
disagreeing with the applicability of Prop 26. If Prop 26 was interpreted
differently, then that opens the door to different things. If you would take a
moment and if you have any specific recommendations for us to consider,
I'd value that.
Mr. Lavin: Sure. Our Director of Policy would have a little bit more of a
detailed answer. I do think the Prop 26 question is a very critical one,
particularly as this is something that will be happening consistently
throughout the state. Having a very firm answer on this is going to be great
for not only the solar industry but for every municipal utility throughout
California. Regarding the 15 cents/7 cents question, the 15 cents was
regarding the value of solar, not necessarily the rates but saying the
transmission, distribution. Sharpening our pencils and going through those
numbers a little bit more openly, those two places are great places to start.
From there, I'm sure there's a lot of other things that we can talk about as
well.
Mayor Burt: Thank you. The other CALSEIA representative.
Council Member Berman: She's SolarCity.
Mayor Burt: I'm sorry. SolarCity.
Ms. Goodhill: I'm sorry. I think that's a great question. The Staff sent us
some of their data about a week and a half ago which we've been analyzing,
which was a really important part of this to make sure that you're not just
giving a blanket proposal, that it's actually modeled specifically for Palo Alto.
I can tell you that in other cities some things that the industry has
suggested have included a very high minimum bill to ensure that solar
customers are always paying a significant part of their bill each month even
if they are, let's say, zeroing out their electricity. Other things that have
been suggested is you're no longer getting compensated at the retail rate.
It's maybe a cent or two haircut, but it's not as low as what's being
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suggested here. It really depends on what the specific rates look like in
each city and what the modeling looks like. I think that's going to be a key
part of it, really having some more time to go through the information that
was sent to us, so we can craft a proposal that actually makes sense for this
community. Those are two examples of what happened in other places.
Mayor Burt: Thank you. It does occur to me that another part of the
difference in equating the value of solar through Net Metering that is being done by investor-owned utilities compared to the City of Palo Alto is the
comparative cost of renewables. Palo Alto has drastically lower cost of
renewables than the investor-owned utilities. I won't even say "most," than
all. We did very opportunistic buying. When they compare the value of
their Net Metering purchase or cost avoidance, it's a higher cost avoidance.
It's not just the base electricity rate, I assume. What you were starting to
say, it sounds like it's against their solar or other renewables which, I think,
are even comparatively higher than Palo Alto. It's kind of making sense
there. What I think would be important for me—I'll see whether the maker
and seconder are open to it—is to be able to have this come back to the
Council within a year from when it triggers, meaning when we run out of the
old program and start the new, to have a report out on what is occurring in
other agencies and whether what we've anticipated or interpreted as the
requirements are bearing out. I would offer an amendment that these Staff
return within 1 year of what I'll call the implementation date of the new ...
Vice Mayor Scharff: Why don't you say reaching the cap, because
(crosstalk).
Mayor Burt: Okay. One year of reaching the cap from the old NEM program
or the expiring NEM program. The report would provide an update on NEM programs elsewhere in the state and a comparison to the Palo Alto program
as well as the effectiveness of the new Palo Alto program in incentivizing
local residential solar adoption. Instead of incentivizing, I'd say spurring.
Vice Mayor Scharff: Right now it says including. I think it needs to say
spurring.
Mayor Burt: Yes.
Vice Mayor Scharff: Is that (inaudible)?
Mayor Burt: Wait a minute.
Vice Mayor Scharff: I think you're right.
Mayor Burt: I think we've got it. Is that ...
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Vice Mayor Scharff: It's acceptable.
Council Member Holman: It's okay.
INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE
MAKER AND SECONDER to add at the end of the Motion, “return to Council
within 1 year of reaching the cap from the expiring NEM program with a
report describing other NEM programs in California with a comparison to the
Palo Alto program including the effectiveness of our program in spurring local residential solar options.”
Mayor Burt: I have spoken enough to that. Council Member Berman.
Council Member Berman: Thank you. I think that's a good addition. One of
the things that we talked about the other day on a different issue was the
responsibility the City has of not locking ourselves into a lawsuit. Our City
Attorney's Office, who I have 100 percent faith in, has clearly stated to
Council and to the public that Prop 26 applies to our NEM successor rate. I
know that CALSEIA and the industry have a different opinion. I would
encourage the CALSEIA rep to go back to your attorneys to let them know
they need to do a better job of explaining why they think Prop 26 doesn't
apply. Without getting into too much detail, the recent effort didn't achieve
their objectives. Whether it's a better understanding of municipally owned
utilities and how Prop 26 applies. We can't pass policy that would likely
open ourselves up to a lawsuit. We shouldn't pass policy that would likely
open ourselves up to a lawsuit and kind of be the guinea pig. If other
communities want to do that, if other municipalities want to do that, that's
great. We can find out about it in a year. We have a responsibility not to do
that. One thing I did want to suggest—since I see that some colleagues on
my left have already indicated their vote, I'm going to offer an amendment since I know they're going to vote in support of it. Offering an amendment
to change the way that we currently calculate the NEM cap to something
that I talked about earlier, the customer class no-coincident peak demands,
and using that as the equation, which would increase the cap, I think,
maybe half a megawatt and extend this current program a little bit longer.
I'll offer that up as an amendment. What this would essentially do is
increase the cap from 9 1/2 megawatts to maybe 10 megawatts or
something like that and allow more customers, more residents to take
advantage of the current NEM program before we switch to the successor
program that isn't quite as advantageous for customers. The amendment
would be that Palo Alto change the method for determining the NEM cap to
the five percent of the sum of the customer class non-coincident peak
demands.
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Vice Mayor Scharff: I heard Staff being fairly negative on that as not being
clearly calculable. It'd be more of an estimate. I'm going to not accept it.
Council Member Berman: I'll offer that as an amendment.
Mayor Burt: I maybe be open to seconding it, but can you explain that
calculation before I do so?
Council Member Berman: I would happily ask Staff to.
Mr. Abendschein: There were two ways of calculating non-coincident peak. The first was the investor-owned utility method, which was the sum of all
the individual customers' peaks. That was something we couldn't do without
smart meters. The other was the customer class, which is what I heard you
speak to. Customer class non-coincident peak is something that we can
estimate using cost of service methodologies. It's not a directly
measureable number, but it is something that we can estimate using
routinely used cost of service methodologies.
Mayor Burt: Can I ask a follow-up?
Council Member Berman: Please.
Mayor Burt: What I think I just heard is that because you can estimate it,
it's not a big—it's imprecise but not a big Staff chore to do so. Is that
correct?
Mr. Abendschein: Correct.
Vice Mayor Scharff: Can I ask a follow-up question?
Mayor Burt: Sure.
Vice Mayor Scharff: Are there any legal or other reason why we wouldn't do
this? You just indicated now that it's not a hard chore to do, that it seems
okay. I'm sympathetic to the idea of raising it. If there aren't legal
impediments to doing it, it just seemed to me funny that we're changing it at the last minute. If this is not a problem, I'm on board.
Mr. Shikada: We believe that it's effectively a refining or a variation on the
method that does not in and of itself create a new concern. In fact, I believe
the recent bill that was working its way through the Legislature proposed
that this would apply to public power as well. Given that, we believe that
this is in the range of doable.
Vice Mayor Scharff: Then I would accept it, if Karen would.
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Council Member Berman: Thank you.
INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to add to the Motion, “change the method for
calculating the NEM cap to 5 percent of the customer class non-coincident
peak.”
MOTION RESTATED: Vice Mayor Scharff moved, seconded by Council
Member Holman to adopt a Resolution adopting a Net Energy Metering (NEM) Successor Rate, E-EEC-1 (“Export Electricity Compensation”)
amending Utilities Rule and Regulation 2 (“Definitions and Abbreviations”)
and 29 (“Net Energy Metering and Interconnection”); direct Staff to return to
Council within four months with options and a recommendation for the NEM
Transition Policy; return to Council within 1 year of reaching the cap from
the expiring NEM program with a report describing other NEM programs in
California with a comparison to the Palo Alto program including the
effectiveness of our program in spurring local residential solar options; and
change the method for calculating the NEM cap to 5 percent of the customer
class non-coincident peak.
Mayor Burt: I see no more lights, so please vote on the board. That passes
unanimously on an 8-0 vote with Council Member Filseth absent. Thank you
all very much. Why don't we take a brief break. We'll try and be back in
close to five minutes.
MOTION AS AMENDED PASSED: 8-0 Filseth absent
Council took a break from 8:08 P.M. to 8:17 P.M.
12. Interim Retail Preservation Ordinance: Request for a Waiver at 100
Addison, Discussion Regarding Applicability to Retail and "Retail-Like"
Uses Which do not Have Required Entitlements, and Discussion Regarding Potential Ordinance Improvements and Next Steps.
Mayor Burt: Our next item ... Our next Agenda Item is Item Number 12,
reviewing the Interim Retail Preservation Ordinance. We have before us
both a request for a waiver on the property at 100 Addison as well as a
broader discussion about how the Council would like to proceed with the
Interim Retail Preservation Ordinance and the new non-interim Ordinance on
the horizon. There's a real question from a process standpoint tonight, what
would be the best way to go about this. I'm open to input from colleagues.
We could first look at the more global issues, and they perhaps would inform
a subsequent discussion about this specific request for a waiver, or we could
dive into the request for a waiver and allow that and other examples of
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requests for waivers that have gone to Staff to inform our thinking about
what we might want to do on a more broad level. Council Member Holman.
Council Member Holman: I agree with your approach of looking at the
broader issues. I think that will help inform the individual and specific
issues.
Mayor Burt: Hearing Council Member Kniss have a similar perspective.
Council Member Wolbach.
Council Member Wolbach: I would just recommend that even if we break up
the questions like that, when it comes time for motions and for some
discussion maybe allow across all the topics. Completely segregating one
topic from another might actually limit the range of conversation.
Mayor Burt: I think the review of a specific waiver is going to need to be
separated. We can have a variety of topics that are discussed in the same
broad discussion about any ways we implement or contend with requests for
waivers on the Interim Ordinance, and then the discussion about direction to
Staff on the permanent Ordinance. I think then we have to deal discretely
with a specific waiver request. Unless others feel differently, then I think we
can begin with the discussion about—the Staff Report first—where we stand
on the broader issues of both where we're going on the long-term ordinance
and kind of the set of problems that Staff is being presented with on
properties that are seeking waivers to the Interim Ordinance. I don't know if
I've just muddled the Staff presentation or helped you divide it. Why don't
you go ahead and proceed within that context as best you can.
Hillary Gitelman, Planning and Community Environment Director: Thank
you, Mayor Burt and Council Members. Hillary Gitelman, the Planning
Director. I'm joined by Jonathan Lait and Cara Silver of the City Attorney's Office who is also going to chip in this evening. We do have, as the Mayor
indicated, kind of a complicated set of issues associated with the City's
Interim Retail Preservation Ordinance. This presentation was put together
before the discussion you just had, so it deals with these things in the order
that they were presented in the Staff Report. I hope you'll let me present
them in that order, and then we can (crosstalk).
Mayor Burt: How about if you skip over the specific waiver things, and we'll
then come back to that with a focus after we've done the broad discussion?
Ms. Gitelman: I really wanted to start with kind of a review of the
Ordinance. It sort of all blends together.
Mayor Burt: Okay.
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Ms. Gitelman: Just in terms of our objectives this evenings, we want to
review the overall Ordinance with you. It was adopted in May of 2015 and
extended one month later. You really have to look at the original Ordinance
and the extension together to get the full scope of the program. Those were
provided in your Staff Report. The Ordinance expires April 30, 2017, so
that's our deadline for developing and adopting any permanent restrictions.
This evening in addition to reviewing the Ordinance, we wanted to consider this request that's specific to 100 Addison. It's a request for a waiver using
the provisions of the Ordinance. It was originally on your Consent Calendar
and pulled for discussion by the Council and scheduled for this evening. In
addition, there are three other properties discussed in the Staff Report. In
each of these three cases, we don't have a fully fleshed out request for
waiver with supporting documentation, but each one has raised different
questions about the applicability of the Ordinance and how they should be
treated under the Ordinance. We wanted to discuss kind of that issue of
interpreting the current Interim Ordinance with the Council. Finally, as the
Mayor mentioned we wanted to receive direction and have some discussion
with you about the prioritization of permanent retail protections. As I
mentioned, the whole purpose of an Interim Ordinance is to give the City
time to develop those permanent restrictions. Just in general, the ordinance
prohibits the conversion of ground-floor retail and what we defined in the
Ordinance as retail-like uses from converting to other uses. Where that
Ordinance was "permitted or operating on March 2nd, 2015," that's the
operable date at which these controls or these restrictions start to apply. It
specifically applies under the ordinance to legal and nonconforming uses,
which is an unusual provision that creates some complexities. It also applies in some instances to basements that are being used as retail or retail
support functions. Again, that's an unusual provision that brings with it
some complexities; although, that's not really the subject of any of the
specific interpretations that we're bringing to you this evening for your
conversation. This is the list of retail and retail-like uses from the ordinance.
This was discussed at length when the interim Ordinance was adopted. The
Ordinance contained a minor edit to the definition of retail service, and then
it identifies by section of the Code all of these other uses as being protected.
Essentially, if you have one of these uses on the ground floor of a building in
Palo Alto that was permitted or operating as of that March 2nd date, it
cannot convert to a use that's not on this list under the terms of the
ordinance. If you had a retail use, it could convert to eating and drinking
and, likewise, other uses could convert to other uses on this list. It just
can't convert to office, for example. That was really the motivation of the
ordinance, to prevent conversions to office and non-retail-like uses. Since
adoption, the Ordinance has effectively prevented the conversion of ground-
floor retail space to office space. Obviously, we don't know how many
spaces would have converted in this time if the Ordinance hadn't been in
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effect. We know that we've been able to control that conversion from
happening. We've also found some provisions in the ordinance difficult to
administer. We've gotten a lot of questions particularly from property
owners like those that are listed in the Agenda report this evening, where
the properties are located not in the retail core but kind of in the outer areas
of the commercial districts. The interpretations that have been difficult have
related to this issue of nonconforming uses and to that term "permitted or operating." Since adoption, we've also taken a number of steps to put
permanent retail protections in place. Council adopted an ordinance
protecting retail uses in the California Avenue area. The Council adopted an
Ordinance as part of the big cleanup ordinance that closed a loophole that
was allowing conversions of ground-floor retail spaces in the CS, the CN and
the CC zoning districts. Those are two things that have already been
accomplished. In addition, we've begun the analysis that will lead to
preparation of a Downtown Ordinance. We've outlined a number of things in
the Staff Report that we think will be worth looking at in the context of that
review. Just getting to the administration of Interim Ordinance and the four
properties before you this evening for discussion, 100 Addison is the one
that's ripe for a decision on their request for waiver. There was a bunch of
correspondence including some that came in over the weekend on that
property. I'd be happy to answer questions about any of those issues.
There are three other properties. In the case of 3241 Park Boulevard,
there's an auto service use that the property owner is arguing was not
legally established; although, I think there's some question about that. 425
Portage Avenue, again there's a retail use at that location, which the
property owner is arguing was not legally established. In both of those cases, retail and auto service are permitted uses, either permitted by by-
right or permitted with a use permit in the zoning district. The issue is that
the business owners didn't obtain the appropriate permits. In the case of
the auto service use, there was no use permit. In the case of the pet
warehouse, there was no variance for parking requirements. Finally, there's
the request from the property at 999 Alma Street, which was phrased as a
request for waiver, but it came in without supporting analysis or
documentation, which is what is required in the Interim Ordinance. It was
simply a statement of the property owner's objectives. We've provided that
to the Council for their consideration this evening. I have two...
Mayor Burt: I'm sorry. Could you explain?
Ms. Gitelman: There was correspondence; it's in your Packet. It’s a request
for waiver from the property owner—it's actually the long-term leaseholder—
at 999 Alma Street. The Interim Ordinance calls for the Council to make
decisions on waivers after they're received by the Planning Director and
requires them to be supported by evidence including economic analysis. I'm
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paraphrasing, but we can look at the terms of the ordinance. What we got
was a simple letter saying, "I wish we could do something different on this
property." We didn't get the kind of economic analysis and backup
information that we requested and then received on the 100 Addison
property. This slide shows a map of the two properties, 100 Addison and
999 Alma Street. As you see, they're right across the street from each
other. One was the location of the Addison Antiques until that business left. The other was the location of Anthropologie until that business left. I'm
sorry. Just going back, both of these properties are zoned RT-35. They're
in the South of Forest Area. If the Interim Ordinance didn't exist, they
would be allowed to convert to office uses and other uses. The RT-35
district, as I understand it, does not require ground-floor retail. It allows
retail, but it also allows these other uses. It's really the interim Ordinance
that is preventing conversion of these buildings. 425 Portage and 3241 Park
are also proximate to each other. One is zoned GM; that's the one on Park
Boulevard. The other one on Portage is zoned CS. Both of those districts
allow the uses, as I've mentioned. On 3241 Park, auto service uses are
permitted with a use permit; although, in this case no use permit was ever
obtained. It sounds like the use has been there since 1969, potentially
predating the requirement for the use permit. The pet warehouse at 425
Portage was established as a warehouse use. It was a warehouse for pet
supply distribution, and then they started doing retail activity. The retail
activity really should have not commenced unless there had been a
discussion and a granting of a variance for parking, which was never applied
for or obtained. Again, it's a permitted use in the sense that the district
allows retail uses, but it was not properly permitted. Getting to the larger question that the Mayor indicated we'll be taking up first. We have, as I
mentioned, until April 30th of 2017 to identify and adopt any permanent
restrictions to protect ground-floor retail in the City. We have underway our
analysis of Downtown. We are, I think, at the Council's direction in prior
forums looking at adjustments to the GF boundary. That's the combination
zone that protects ground-floor retail in Downtown. At one point in the
recession, the boundary was shrunk. We're looking at increasing the size of
that boundary again. We're considering to what extent protections should
apply outside of that boundary, if at all; the extent to which protections
should apply for retail uses and support uses in basements and how that
would be couched so that it's easy to administer; updating definitions as
needed in the Downtown zone; and then something to address legal and
nonconforming uses and just the appearance and the presentation they
make to the street. We have a number of cases where office uses are
permitted because they're legal and nonconforming, but then the store
windows or the frontage is completely boarded up. It seems like a small
thing to ask those businesses to open those windows or put some kind of
display window in place. We're hoping to get some discussion from the
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Council on these ideas for Downtown, but more broadly the priorities for
other retail protections that we should look at in the time remaining while
the iInterim Ordinance is still in place. Again, there are really three things to
discuss this evening: the specific request for waiver affecting 100 Addison;
the properties where we've been forced to interpret this ordinance and any
suggestions or input the Council has on those interpretations; and then
prioritization of permanent retail protections affecting Downtown and other districts. Thank you.
Mayor Burt: Thank you. There was one, I think, from the applicant, a claim
that Staff had granted a waiver without going to Council. Is there any
clarification that you have on that?
Ms. Gitelman: Yeah. I'd be happy to speak to that. We haven't actually
granted what we would consider a waiver. We have, as the Staff Report
indicates, found some sections of this ordinance challenging to administer
over time. One of them was the provision that the controls or protections
apply to legal and nonconforming uses. We had an instance in the south
part of town where there was a retail use in an industrial district where retail
is not permitted. In that case, we found that use to be—it had been
established without permits. It was both nonconforming in the sense that
that use was not allowed and it was not permitted properly. In that case,
we decided it was an illegal use and this Ordinance would not apply. We
have not been able to make that same chain of logic work for the uses that
we're discussing this evening. As I mentioned, both the pet store and the
auto service use, we believe, are permitted in the districts in which they
occur. They just didn't obtain all of the permits that they should have.
Mayor Burt: Thank you. We'll now go to colleagues for technical questions. Council Member Holman.
Council Member Holman: I have just a few questions of clarification, if I
could. Mayor will stop me if these aren't technical questions. Both in the
Staff Report and also on Page 5 of the presentation, the second bullet here
talks about some provisions that have proven difficult to administer. Can
you tell me what the difference is between the first and the third bullet?
Interpretation of permitted or operating. Why is retail uses that were not
permitted properly not the same as operating?
Male: (inaudible)
Council Member Holman: Slide Number 5. The first and third bullets.
Ms. Gitelman: Thank you for that question. We could have phrased those
bullets a little more artfully. I think those are related subjects, but there is
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this nuance about uses that are operating but not—they're the two cases
that I talked about. The uses that we have are permitted in the districts
where they occur, but they were not permitted properly. They didn't get the
appropriate permits. There's this other case that I just mentioned in
response to the Mayor, which is a use that's just not permitted in the district
in which it occurs and it wasn't permitted properly. It's an illegal use.
Mayor Burt: Maybe we can use the term allowed under zoning, and then permitting meaning a permit granted.
Council Member Holman: Thank you for that clarification. Is B2B, business
to business, covered here anywhere? Is that considered retail in any of our
aspects of this ordinance? I don't remember reading about it anywhere.
How is that treated and handled?
Ms. Gitelman: We are guided by the definition of retail service in the Code.
I think retail service is sale of goods to customers. A business to business, if
it's like a wholesale, that wouldn't necessarily fall under the retail use.
Council Member Holman: Even though it's sales, it's more wholesale or big
scale?
Ms. Gitelman: I'm distinguishing between retail and wholesale. I'd have to
look at the exact definitions in the Code to respond with more precision than
that.
Council Member Holman: I did have one other question, and I'm not finding
it here. About basements. By the way, before I go any further, I so super
support what Staff's doing here. When you brought this forward, we had
asked you to, but you've done a really great job in this. Appreciate how
you're administering it and all the effort that you've put forward in this. On
Slide 3, the third bullet, basement retail and retail support. How is Staff informed about what spaces are actually in retail use and retail support? I
know this is a concern of the Mayor's as well.
Ms. Gitelman: Thank you for the question. This hasn't come up as much as
I thought it would. We haven't really been asked for interpretations or seen
conversions of basement in the time that this ordinance has been in effect,
that I'm aware of. I think we anticipate it will be difficult to administer
because we don't have a good baseline, other than in Downtown we have
the engineer's report for the Parking Assessment District, which we've
referred to on occasion when we get questions like this. That's one of the
issues, I think, we want to address in an ordinance about Downtown
specifically, which is can we create a bright line test for when is a basement
considered supportive of retail versus the building owner storing a bunch of
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stuff. We're going to have to give that some thought. If you had any ideas,
we'd be open to them.
Council Member Holman: When you were seeing the conversions previous
to this Ordinance, applicants were coming forward with permits to convert to
other uses or tenant improvements. Not that this would happen, but do you
have any reason to think that conversions are happening but without
permits?
Ms. Gitelman: We're really not aware of any that have happened during the
life of this Ordinance.
Council Member Holman: That's great. I think my last question—I have a
good number of comments—at this point is—lost it. Updating the definitions
as needed. Does Staff have some thought about what definition updates are
needed?
Ms. Gitelman: I know that when the Council adopted the Interim Ordinance,
they made a change to the wording of the definition of retail services. At a
minimum, we would want to carry that change forward into the permanent
Ordinance. There may be other updates. As the Council's aware, the nature
of retail has changed to the point where you don't see a lot of travel
agencies anymore. There are a bunch of uses that we call out in specific
that maybe it doesn't make sense to call them out anymore. That might not
be a good example, but I think we just want to take a look at the definition
of retail services and any of the other definitions that are in force and make
sure that they make sense in light of 2016.
Council Member Holman: Actually, I did err. There's one other question.
You don't have to answer this now. When we get into the heart of this and
start making comments and our lower-level questions, if you will, I think we're going to be interested in what level of change we can make in an
Ordinance going forward that's either not going to affect Staff's work
priorities as the Council has set or what it would affect depending on how
wide we go with updates to this Ordinance. You can think about that and
answer that later, if you would. Is that question clear enough?
Ms. Gitelman: I guess I'm just wondering whether you're talking about
making changes to the Interim Ordinance or whether you're talking about
this subject we're focusing on, which is the permanent Ordinance that we
would (crosstalk).
Council Member Holman: The permanent Ordinance. If we make many
changes and what level of changes to the Interim Ordinance in the form of a
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permanent Ordinance, is it going to affect Comp Plan Update schedule?
What's it going to affect? You can answer that later if you wish.
Ms. Gitelman: Thank you.
Council Member Holman: Thank you.
Mayor Burt: Council Member DuBois.
Council Member DuBois: I think Council Member Holman covered a couple
of my questions. Could you just remind me what's the definition of personal service?
Jonathan Lait, Planning and Community Environment Assistant Director:
Personal service means a use providing services of a personal convenience
nature and cleaning, repair or sales incidental thereto including beauty
shops, nail salons, day spas, barber shops, self-service laundry, repair and
fitting of clothes, quick printing and copying services, internet and other
consumer electronic services, film, art, dance and music studios, things of
that nature.
Council Member DuBois: Thank you. The other question I had was kind of
what are our legal options. In terms of the priorities you have, if we say
stay on your current priorities, can we extend the Interim Ordinance and
maybe only have it apply to areas like the community commercial districts or
El Camino that you may not get to for a while or would we have to pass a
new Interim Ordinance for those areas or would we have to make this one
permanent and change it later?
Cara Silver, Senior Assistant City Attorney: Thank you. Cara Silver, Senior
Assistant City Attorney. You have adopted this Interim Ordinance under the
safe harbor provision of State law regarding moratorium ordinances. Under
that statutory scheme, there is a two year limit to these types of ordinances that essentially freeze development rights on particular pieces of property.
After the two years expire, you would have to adopt a permanent ordinance
that would get at some of the issues that you want to regulate. That's one
option; you can adopt a permanent Ordinance. You might be able to extend
the Ordinance if you can make a different set of health and safety-type
findings, but that would be rather difficult in this case.
Council Member DuBois: Even though we've created some permanent
ordinances, say, for Cal. Ave. and University, if we created an Interim
Ordinance for the Midtown commercial district, as an example, it's already
been under the two years that the current Ordinance has. We would have to
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create a new, somewhat different Interim Ordinance. Would that be
possible?
Ms. Silver: That's a slightly different question. There are different concepts
that we're talking about. One concept is the Urgency Ordinance that you
created, setting a moratorium on retail conversions. That's considered a
moratorium Ordinance. It's a ban on converting retail ordinances.
Properties have to retain the retail use on the property. There are limitations. You can only adopt that as a ban for a period of two years. On
the other hand, you're always free to adopt interim Ordinances. You can
adopt a new Zoning Code or a new zoning provision on California Avenue
(Cal. Ave.) that you want to apply for only three years or three months.
That's called an Interim Ordinance. You're always free to do that under your
police power.
Council Member DuBois: Just so I'm absolutely clear, we've had this two
year clock that's almost over. There's not a problem with then adding an
interim Ordinance onto the end of that clock as a different ordinance?
Ms. Silver: Right. As long as it's a different Ordinance and it does then
allow some kind of development. As long as it's a new regulation, you can—
that new regulation can still get at some of the underlying problems that you
were trying to address with this Ordinance. We can help you with that in the
permanent drafting stage.
Ms. Gitelman: I guess I had an observation. We've talked about this quite a
bit today, just trying to figure out what would be some logical next steps. I
think we were hoping, first of all to Council Member Holman's point, that we
didn't spend time amending the Interim Ordinance, just because we only
have so much time left. It'd be better to focus on the future of permanent protections. We thought that in addition to focusing on Downtown
permanent protections there might be a way to draft a permanent Ordinance
that was more far-reaching for either most of the City or a portion of the
City, as you point out, that had a similar provision about not allowing retail
conversions but had a lower bar for people who wished to seek those
conversions. It wouldn't, for example, require a Constitutional taking
argument to be made if you wanted to convert. We could set in place, with
your help, a set of findings that if the site is located really far away from
everything else and it's been vacant for a year, we could come up with some
conditions that the ordinance could put in place, that could apply. That
might be one way we proceed with a permanent Ordinance.
Council Member DuBois: Thank you.
Mayor Burt: Council Member Kniss.
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Council Member Kniss: Pat, I'm trying to get a sense of where we're going
on this. You want us to still stay within this so-called technical range as
much as possible?
Mayor Burt: This is technical questions, then we'll hear from members of
the public, and then we'll come back for discussion that we'll probably break
up into two parts.
Council Member Kniss: Let me keep it technical then, as technical as I can. If not, just say off the range. Looking at the South of Forest Area (SOFA)
map that you included on this, I know that both Pat and Karen know a lot
about this one. This indicates on here, I presume, what was devised at that
time. Was there any indication then of where retail would be or not be?
Was that stipulated or is what I’m seeing here something different than
that? It's the attachment that's on Page 303.
Ms. Gitelman: As I understand the SOFA controls—I'm not an expert in this
by any means—there are some areas of SOFA where an existing retail use
cannot be converted to another use. That is not true of these sites that
we're talking about this evening.
Council Member Kniss: The two sites in question tonight, Anthropologie and
100 Addison, are not subject to a long-term retail use under the SOFA plan.
Did I misunderstand?
Ms. Gitelman: No, I think that's correct. The retail protections that are
preventing them from converting at this point are in the Interim Ordinance,
not in the underlying zoning.
Council Member Kniss: If the Ordinance were to be renewed, would that
continue to affect those properties?
Ms. Gitelman: Again, this gets to the question that Council Member DuBois just asked.
Council Member Kniss: Pat answered it. That's a big help. Currently of our
openings, I'm counting three on Alma. Is that correct? Right now, North
Face has shut down and the other two.
Ms. Gitelman: That's correct.
Council Member Kniss: I don't see North Face on your list tonight, and I
don't know what their address is.
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Ms. Gitelman: We haven't had a request from the property owner of the
North Face property. We're only bringing to you this evening the properties
where we've heard from the owner or the lessee and they want to convert.
Council Member Kniss: In my technical questions, I'm trying to figure out
where these other areas are going to be that are somewhat difficult, hard to
get to off Alma and so forth. That hasn't come to us yet, but we do know
that it's empty and has been for a while. Right. I'm not going to go into a soliloquy on retail and so forth. I might just observe technically that
Stanford Shopping Center is successful because they have a great deal of
control over who goes in and who goes out. It's one of the things we don't
have in the Downtown. That's the end of my technical questions for the
moment.
Mayor Burt: That's technical questions we're trying to do as opposed to
rhetorical questions which are comments. Vice Mayor Scharff.
Vice Mayor Scharff: Thank you. Just briefly, what does the GF stand for
again, when you say the GF boundary?
Ms. Gitelman: That's the combining district or the overlay zone in
Downtown.
Vice Mayor Scharff: What does GF stand for?
Ms. Gitelman: Ground floor.
Vice Mayor Scharff: It's the ground floor combining district. Is that what we
call it?
Ms. Gitelman: Yeah.
Vice Mayor Scharff: When you talk about prioritizing Downtown, you're not
including SOFA in that. If we wanted you to prioritize Downtown and SOFA
and look at it together, that would be a separate request. Is that correct?
Ms. Gitelman: If you'd like us to look at the SOFA area as part of that, it'd
be nice to hear that (crosstalk).
Vice Mayor Scharff: I just wanted to make sure that's—when you say
Downtown, you don't mean SOFA.
Ms. Gitelman: That's correct.
Vice Mayor Scharff: I think there's some confusion, and I just want to clarify
it. We talk about the current Ordinance expiring, the temporary Ordinance,
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and putting in a new Ordinance. Isn't the reality actually it's several
ordinances, that you'd have a different Ordinance for Downtown and you'd
have a different Ordinance for Midtown commercial, you'd have a different
ordinance for El Camino? It would be actually more than one Ordinance,
what we're thinking about.
Ms. Gitelman: I guess the idea that I was just articulating was that we
would do Downtown as a separate Ordinance just like we did Cal. Ave. Because we don't have time to do Midtown and Charleston and all the
others, we could lump them all into a ...
Vice Mayor Scharff: It depends on your priorities. If we said drop
everything else, you could do it. I assume you could.
Ms. Gitelman: We could certainly evaluate our ability to do more than one
or two ordinances, but it's ...
Vice Mayor Scharff: Let's assume what you're saying is correct. What I'm
really hearing is you could prioritize Downtown and maybe add SOFA into it,
and then there's a couple of other little things that you've added in here. I
forgot exactly what they were. They were things like—anyway, there's a
couple of other things you've added. That's sort of the scope of what you
thought we could do. That gets us to the other ordinance that how do we
maintain the status quo, which I think is where Tom was getting to. What I
heard you say as a possibility—I wanted to make sure I understood this—is
that we could pass another Ordinance, which we could either make interim
or not interim until we have time to look at the other areas. That Ordinance
would, for instance, just have a different standard for an appeal. Basically
we could say we don't want no conversion Ordinance without a CUP, for
instance. You could do that, and that has to come to Council or it has to go to the Director or whatever you want to do. Is that within your scope of
what you believe we could get done before the 17th? Obviously that would
be a really important part, to maintain the status quo on areas we haven't
had a chance to look at.
Ms. Gitelman: What we discussed today is that if we proceed expeditiously,
we understand the Council's direction and we have a clear set of priorities,
we could potentially undertake a Downtown Ordinance and then some other
ordinance that addressed those areas of the City that had not been yet
addressed. We'd have to talk about what exactly that would look like.
Vice Mayor Scharff: There's a fourth Ordinance we sort of talked about,
which I would call core retail and retail-like, which would be the notion that
we'd go back and look in our definitions and say on University Avenue, on
California Avenue we want real retail. We don't want nail salons, for
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instance. We don't want personal services. Whereas, on the side streets,
maybe we want a broader definition of retail and maybe even in the outlying
areas, which are further out, say the 100 Addison, the 99 Alma type things.
It's much more of a different definition. That would be another Ordinance
you could do. Is that the kind of Ordinance that would take a lot of time to
do different definitions? I understand the implementation may take a lot of
different times. Would actually setting up the Ordinance and drafting that kind of an Ordinance take a lot of time?
Ms. Gitelman: Again, when we worked on the Cal. Ave. Ordinance that the
Council adopted, we had this discussion about what type of retail uses
should be permitted. In that case, the combining zone is the R zone, I
think. We had this conversation. We ended up looking at the definitions
closely and adding some provisions related to formula retail, if you recall.
We've kind of had that conversation on Cal. Ave. I think it would be a redo
to go back and have it again about Cal. Ave. and the surrounding streets.
We could have that conversation in the context of the Downtown Ordinance
we're working on, if that's something that's really of concern or interest to
the Council. To do that more broadly in other areas of the City, I think that
wholesale redo of how we think about our retail districts Citywide would be a
little more complicated.
Vice Mayor Scharff: Some of the things that—I don't know what kind of
Ordinances these would fit into. I'm a little unclear on it. For instance, the
CineArts Theatre, right now that's a retail use. Under our interim Ordinance,
you couldn't change it to a non-retail use, because it's a theatre and the
theatre is clearly there. There's the Summer Winds Nursery, for instance,
which could be developed, which is clearly a nursery use, which would therefore be a retail use. There's a lot of those sort of last-type things in
Palo Alto. When they go away, there's not going to be any more of them.
What our current interim ordinance is doing is keeping those in place. My
question really is how do we buy time. What would that ordinance look like?
To buy time to have those discussions about how we protect certain uses
like that, that may not be as obvious. They're not El Camino; they're not
Downtown' they're not California Avenue. They're really spread sporadically
around the City frankly. It's that discussion too as an ordinance I'm
interested in. I don't know how we get there.
Ms. Gitelman: Just two responses to that. One is the CineArts Theatre is
not just protected from converting by this Interim Ordinance. It's really by
the PC Ordinance that contains the development plan for that site. A
legislative change would be required if the theatre were to be converted to
another use regardless of what we're doing here. Your question about other
kind of far-flung retail uses like the nursery, I think that would be addressed
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by the idea that we were discussing with Council Member DuBois, which is a
Citywide look at the areas that have not been covered by these individual
ordinances with some standards or findings that need to be made when a
property owner seeks conversion of one use to another.
Vice Mayor Scharff: Thanks.
Mayor Burt: You touched on one of my questions in your answers to Vice
Mayor Scharff. I want to follow up on the question whether Staff has been evaluating different zoning definitions. One of the questions was around real
retail in the core downtown areas, along Cal. Ave. and along University, and
maybe certain key perpendiculars. You spoke that we had really addressed
it through formula retail. My recollection at the time is that we looked at
formula retail, and we also had discussions that restricted even within, say,
restaurants not having too many formula, but that doesn't address whether
we get Cal. Ave. turning into a bunch of nail salons and fitness centers. We
just lost our stationery store that's turning into a fitness center on a vital
corner in Cal. Ave. Has Staff not been looking at that issue of distinguishing
between true retail, selling goods and food, versus other retail services that
are in a much broader definition?
Ms. Gitelman: We already distinguish between retail services and personal
services, which is the nail salons and typical uses. I'll have to look back at
the record. I thought when we talked about the Cal. Ave. ordinance and we
did the outreach to the business community there and others, we asked
people if they wanted to further limit the uses that were allowed in the R
combining district. I'll just have to go back and look if we had that
conversation. Certainly when we talk about Downtown, we will be able to
consider whether we want to adjust the uses that are permitted in the GF combining district and potentially eliminate personal services from the list if
we think we want to focus on retail services instead of personal services.
Mayor Burt: You're right. I misspoke in terms of mixing up personal
services from retail services. The other flip side of this—Vice Mayor Schmid
alluded to it—is outside of that area we have a broad definition of uses that
are permitted. They include all the way from things like medical offices that
we have traditionally seen as being a community value and ones that have
existed in the buffer areas to our downtowns versus the sorts of office uses
that we've been seeing proliferating and really that we have a question
whether they're actually a properly permitted use even in the Downtown
areas; although, they've been proliferating there for the last couple of
decades. Has there been any consideration of distinguishing amongst what
types of uses we might permit in an area like—what's the SOFA zoning that
we have for this?
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Ms. Gitelman: RT-35.
Mayor Burt: RT-35. We might allow medical offices and schools and some
of those things that are not pure office but are in a more expansive
definition than our current retail.
Ms. Gitelman: We haven't looked specifically at how we might address the
RT-35. The SOFA controls, as you know, are complex; there was a lot of
site-specific planning done there. I think schools would be permitted on these sites and a range of office type uses. I'd have to go back and research
those. I don't know that we're going to really want to look at changing the
SOFA controls.
Mayor Burt: That's right. I think in this area, if we didn't have the
moratorium, yes, those things would be permitted. My question is when we
created the SOFA plan, we weren't envisioning Palantir and Amazon as the
tenants in those kinds of uses. We have a different circumstance today.
Our zoning hasn't adapted to that. I'm interested in something that is
capturing uses that don't permit high-density office but do capture things
beyond our retail definition, like medical office and schools. If we did an
adjustment and relieved some of these properties from the retail
moratorium, might we go to something that gives them a broader range in
potential tenants, ones that probably would be viewed as having some
community value to them, but doesn't mean we've given Palantir another
location for expansion?
Ms. Gitelman: Again, I think one of the approaches we've been throwing
around here is the idea of an Ordinance to replace the interim Ordinance
that restricted conversions of ground-floor retail space but allowed
applicants to apply for a conversions if certain findings can be met. One of those findings could be that the underlying zoning allows a school and the
school would be a good thing and we could come up with some other
findings. That's one direction we could go in.
Mayor Burt: Finally, some of our problems around retail go back for a long
while. For instance in Midtown, we had prior Staff interpretations of
permissible uses that really seemed to stretch the intended boundaries. You
now have some—I'm not refreshed on what they were, but I think last year
we adopted that you create administrative definitions that give applicants
greater clarity on how Code is being interpreted. I haven't reviewed those.
Do you happen to know whether they shed light on some of the issues that
would give the Council greater confidence that if we gave some relief for the
retail moratorium, we weren't going to see some of the changes that had
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been happening, that we were concerned about and the community was
concerned about?
Ms. Gitelman: I think what you're referring to is in the Code cleanup
ordinance. We created a process for affirmative and formal Code
interpretations. Staff could initiate an interpretation. If we had a number of
situations calling into question one section of the Code, we could make a
formal interpretation and publish that for review. Similarly if we made an interpretation that an applicant or someone interested in a property didn't
agree with, we could make that available in writing. We included an appeal
provision in the Code. We haven't had occasion to use that provision, but
it's available. In fact, we could have used it for a couple of the cases this
evening. It seems unnecessary in the case of an interim Ordinance where
we could just bring it and have the kind of conversation we're having this
evening. That provision does exist in Code, and we could use it in the
future.
Mayor Burt: Thank you. Let's proceed to the public. We have 12, 13—I
have 12 already. We have a lot of speakers. Each speaker will have up to
three minutes to speak. Given the number of speakers, if somebody else
has represented your thoughts and you want to attribute yours to say, "I
agree with the last speaker" or whatever, feel free to do that. It'll speed up
the process. Our first speaker is Michael Morris, to be followed by Soroush
Kaboli. Welcome.
Michael Morris: Mr. Mayor, Honorable Council, thank you for listening to us
this evening in regards to our waiver request for 100 Addison. The Morrises
are not developers. We are a small family with close to 100 years of Palo
Alto residency. This building is part of the future for us and generations to come. The lack of any income has caused a financial strain on the family.
We have had no income from this property since July 2015 but have had to
bear the carrying costs all the same. We've offered the property at a major
discount, below what is considered market rate for the area. We've also
cooperated with the City every step of the way in applying for this waiver,
offering anything requested by the Planning Department. We wish to remain
in harmony with the residential homes directly on the other side of the alley
from our building. We have sent you letters, emails and a petition about our
request for a waiver from the Ordinance. As my Cubberley High School
forensics teacher once told me, "Tell them. Tell them you told them. Tell
them again." We have, and thank you for that. In our request for the
waiver, in our opinion, there has been a few inconsistencies in implementing
the ordinances. Section 18.85.104(a) talks about economic hardship.
We've presented documentation requested by Planning. The result of no
income and continuing expenses, according to Planning, does not constitute
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a hardship. We disagree. The definition of hardship, according to
dictionary.com, is a condition that is difficult to endure, suffering and
deprivation. No income and expenses, I think that fits. Section
18.85.104(c) of the Ordinance talks about documentation. We have
supplied all the documentation that the Planning Department has asked for,
and they say we have not offered enough to justify a waiver. We disagree
with that also. We've had to fight for over a year to get before the Council. We first met and communicated with the Planning Department in June of
2015. We do not believe the Staff did what the Ordinance said and brought
our waiver request to you in a timely manner. Staff says we still don't have
hardship when there's been zero income. We've marketed the property
without a square-foot cost with no takers. The City says that we want retail
in the building, but when a prospective tenant presented a plan to the City
about splitting the building, Staff said no. This is not a retail area. I think
we all know it. I know I have to sum it up, so I'm just going to end real
quick. Please bear with me. This location which is proximal to single-family
residences would not be conducive for a lot of the retail categories that are
listed in the ordinance. We are the perfect building for the RT-35 SOFA
description. We're a single-story building owner. If we can't lease it and it's
a single-story, we're out of luck. Thank you for your time and your
consideration for our waiver.
Mayor Burt: Thank you. Next speaker is Soroush Kaboli, to be followed by
Jeff Levinsky. Welcome.
Soroush Kaboli: Mayor Burt, Council Members, good evening. My name is
Soroush Kaboli. I am a resident of Palo Alto, and I've worked as a
commercial real estate broker for over 30 years in the area. I'd like to thank you for allowing me to continue my comments from our last meeting of
June 20th. Since our marketing efforts have been the subject of the Staff
Report, I would like to offer a quick update since our June 20th meeting.
CBRE commercial and myself and our efforts for 100 Addison have not
produced any results. To the best of my knowledge, the marketing of
Newmark Cornish and Carey for the Anthropologie building at 999 Alma and
Premier Properties for the North Face building at 217 Alma has not produced
any results either, while other properties such as 441 University have joined
the ranks of available properties in the core area of the Downtown.
Additionally I would like to bring to your attention that the marketing effort
for each of the mentioned properties is not limited just to the listing agents
of said properties. It is a common practice for brokerage firms and the
agents to cooperate fully with each other and each others' efforts. Lastly, I
would like to express my opinion that for a variety of the reasons that have
been discussed in the past with the Staff and also in my last conversation
with you, 100 Addison and a number of other properties on the fringe areas
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of the subject discussion are among a handful of properties that deserve
your consideration for the waiver as it was intended. Thank you.
Mayor Burt: Thank you. Our next speaker is Jeff Levinsky, to be followed
by Winter Dellenbach. Welcome.
Jeff Levinsky: Good evening, Mayor Burt, Council Members and Staff. You
have before you tonight—where did my slides go? Technical problems. We
have before you tonight three cases where the owners of buildings are trying to claim that they're not covered by the Retail Preservation Ordinance or to
get out of it. The first one is, I think, perhaps the funniest to ever show up
in a Council Packet. The owner of 425 Portage is trying to claim that the
tenant, Pet Food Depot, is not a store. Rather, he says they were a
warehouse for other locations and sold things only from financial desperation
and then only wholesale. Incredibly, the City wrote back and acknowledged
that last November, saying it's not a store. It is a store. This is their
website for the location in Palo Alto. It says store location and store hours.
It's also listed on Yelp as a store. It's listed on Groupon as a store, and it's
listed on the Shop Palo Alto site as a store. That site is, by the way,
produced by the City. Just to double check, I went there yesterday and I
bought this. It's a little squeaky toy for a dog. They didn't ask me if I was a
wholesaler and going to be reselling this at all. It's a store. The second
case is 3241 Park, where the owner claims incredibly that the shop is illegal.
I've never heard someone try harder to claim that their use is illegal. That's
because they hope that frees them of having to continue some retail-like
use. They even submitted this page; this is from an old, old Code. They
highlighted for your benefit that it wasn't a body and fender and repair shop
or an auto painting shop, so it's not legal. If you look up above, it says that repairing products is one of the legal uses of the property. Unfortunately for
them, I think it was legal. Case 3 is 100 Addison. The owner claims that it's
not viable for retail, that Addison Antiques was uninterested given
Anthropologie's departure. The tenant said otherwise. Here's The Mercury
News interviewing the tenants. They say, "We had to renegotiate our new
lease, and the price was just going to be too high to continue operating,"
and that they were unable to secure another affordable location in Palo Alto.
In other words, they were willing to be a tenant there without Anthropologie,
but the rent went up. They couldn't afford to stay. There are three cases
here, but all one verdict. The owners are fighting hard to avoid the
ordinance, but the ordinance knew that would happen. It knew that retail
would not produce as much rent. I ask that you not grant these
exemptions, which would only trigger a whole flood more. Thank you.
Mayor Burt: Thank you. Our next speaker is Winter Dellenbach, to be
followed by Herb Borock. Welcome.
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Winter Dellenbach: I would like to identify with what Jeff just said. Thank
you, Staff. I fully support your recommendations on 100 Addison. I
enjoyed your quote in the paper, Jim. It was a very lawyerly quote
regarding the operation and the permit quote. I shop at Pet Food Depot all
the time; it's where everybody in my neck of the woods gets their pet food.
It certainly is a store. I really plead with you to keep a very, very strong
retail Ordinance over, at this point, the whole City. I don't hear a lot about El Camino, south Palo Alto and El Camino. There are a number of individuals
that have been actively involved for the past year, literally fighting to keep
retail there. There are many building owners that are trying legal and illegal
work-arounds to get rid of retail and convert it to all kinds of other uses,
warehouse use, office use, wholesale distribution uses, some of which is
known by Staff and Code Enforcement, some of which they don't know about
yet at this point. Certainly if south El Camino is not protected, the residents
in Ventura and Barron Park won't have a lot of services that they have.
They have already lost some of what is there. It's very important that we
have strong retail protection. I have some suggestions for some things to
do. If you're going to have strong retail protection, you have to have strong
and effective Code enforcement. I suspect that Code enforcement needs
more staffing. There has to be more funding for that staffing. One of the
things that is happening in more and more ground-floor retail is the windows
are covered up. You can't see in, and you don't know what's going on there.
There should be some way to uncover those windows, so that there isn't the
opportunity for the kinds of work-arounds that are going on so people can't
see them. It bothers me that there's a loophole that you can take a retail
space, convert most of it to office, and have some window dressing of a little bit of retail in a little section of it. I know that that's legal now, but we have
examples of that in El Camino and south Palo Alto where there's a tiny little
bit of a retail olive oil sales going up front and the rest of it is just a real
estate office. It's just really too bad. Please keep a strong retail protection
in this market. A huge amount will be lost without you staying the course.
Mayor Burt: Thank you. Our next speaker is Herb Borock, to be followed by
Boyd Smith. You're going off of what's posted. I was looking at the cards in
front of me. We'll try and reconcile those. Sorry.
Herb Borock: Thank you, Mayor Burt and Council Members. The first
speaker said that he wanted to have something that would be compatible
with the residential properties behind him. You have in the Staff Report a
copy of the zoning district map for the area, but you don't have something
that shows the uses. In those blocks, it's essentially residential uses. The
ordinance allows a project that has at least one-third of the total square
footage in multiple family uses to see if it's possible to make the finding of
hardship. I believe the best way to have something compatible with those
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surrounding residential uses is to have a project that's entirely residential. I
would suggest, in addition to the Code, that a project that's 100 percent
residential at 999 Alma or 100 Addison, which also has the address 1015
Alma, that a 100 percent residential project that complies with the existing
zone district should be exempt from the retail requirement. The suggestions
that the Mayor made for certain kinds of office uses, I disagree with.
They're going to be impacting the neighborhood and the transportation and the parking just as other office uses. I wouldn't make a distinction of one
office use versus another. In regard to the property that complains it should
be exempt because there was a former illegal use, I'm disappointed that
Mr. Levinsky showed us that it was a legal use, because a new property
owner gets all the rights and also the obligations that go with the land. It
seems if a property had been violating the Zoning Code for a period of time,
that owner is obligated to pay fines on a daily basis for that continued
violation. I think it would be worthwhile and would set a good example to
go back and count up all those days and fine the existing property owner for
the use that he says had been illegal. Thank you.
Mayor Burt: Thank you. Our next speaker is Boyd Smith, to be followed by
Heather Young. Welcome.
Boyd Smith: I handed out some material. Do you have these pictures in
front of you? These photographs show the inside of this building. That's it.
Thanks. I'm at 301 Coleridge Avenue in Palo Alto, and I'm the owner of this
building at 425 Portage. The building was constructed in 1951 as a
warehouse building, and it's been that since that time. There are only nine
parking spaces associated with this, because it was warehouse. A retail
building of that size would require 34, so we're not even one-third there. Prior to moving into the building in 2011, Pet Food Depot closed their retail
operations on El Camino and opened a store in Redwood City. They were
given permission by the landowner at that time—not me, someone else—to
open an existing warehouse at 425 Portage, the property we're talking
about. It was clearly understood in a meeting with Amy French and Russ
Reich at the time that Pet Food Depot would expand the warehouse
component of their business at 425 Portage and no change in use from
warehouse would occur; therefore, an application was not filed by the City.
In other words, they were permitted to move in there because it was a
warehouse. Our leases, which are attached to there, indicate that it's to be
used only for a warehouse. There's no retail component listed in the lease.
It was never built as retail. There's no central HVAC. There's no insulation.
It's rough concrete floors. There's no customer restrooms. It was never
intended to be leased as retail. If the City had intended that the space be
converted from warehouse to retail in 2011, they would have required
restrooms, Americans with Disabilities Act (ADA) improvement, and none
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was requested. The tenant still uses that primarily as wholesale. They have
done some minor retail sales out of there. We were not totally aware of
that. I still don't know exactly what the percentage is, but it's been
primarily warehouse. If you see the photographs, you can see that it's
warehouse. I do not see how a tenant improvement application would be
allowed to be submitted to the City when the parking requirement cannot be
met. If this was designated as retail, again it would have 34 parking spaces. Because of the current interpretation of the Staff that we are a retail-like
use, we have been actively marketing the property as retail since Pet Food
Depot is moving out. We've been unable to lease it. We request that the
property—is this red light on?
Mayor Burt: You're all done, yeah.
Mr. Smith: We request that the property not be clouded by the Retail
Ordinance, that the practical use of this property be maintained and it stay
as warehouse. That's what we want. Incidentally, there's a shortage of
warehouse in Palo Alto.
Mayor Burt: Thank you. Our next speaker is Heather Young, to be followed
by Jonathan Satz. If any other speakers wish to speak on this topic, they
need to bring cards forward at this time. Welcome.
Heather Young: Good evening. My name is Heather Young. I'm an
architect and a small business owner in Palo Alto. Mayor Burt, Vice Mayor
Scharff and members of the City Council, thank you for giving me the
opportunity to speak with you this evening. A primary goal of the retail
Ordinance is to retain existing ground-floor uses that bring people, liveliness
and diversity of uses to our commercial neighborhoods. This is implied
throughout but stated in the Ordinance when it quotes the Comprehensive Plan. It envisions inviting, pedestrian-scale centers with a mix of uses as
focal points for the neighborhoods. It is a means of retaining local services
and diversifying the City's economic base. The Ordinance in place has begun
to address these goals. It's clearly written to prevent office uses from
moving into ground-floor locations while encouraging and fostering a broad
diversity of retail and retail-like uses that vitalize our streets and storefronts.
As you discuss the Interim Retail Preservation Ordinance, please consider
strengthening the ordinance by expanding the definition of retail use to
include educational uses such as private educational facilities and business
and trade schools to the list of permitted retail uses. Ask yourself if yoga
and dance classes are allowed, why exclude tutoring and SAT prep. If the
retail Ordinance already allows daycare, shouldn't small-scale private
education like the AltSchool be allowed? The people you envision supporting
retail uses are the same people who will be supported by and enrolled in
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educational classes. These uses include private K-8 schools, tutoring
businesses, SAT prep classes, business classes, language schools, computer
training and graphics classes, video camp and art classes. These uses
attract students of all ages and all stages of life. Private education is a retail
endeavor in which students are the customers who support retail-like
educational uses. Moreover, regular attendance at these classes will bring
these customers back week after week, month after month to the larger retail districts that traditional retail, like travel bureaus, may not. Like other
retail uses, educational uses activate the street frontage by creating
pedestrian activity and visual interest on the ground floor. The services
provided in these uses are similar to the intensity of use provided by the
daycare center and personal service uses already permitted. Allowing
educational facilities and schools to be included is a good thing, and it's
already allowed, as you can see, in the CC, CC(2) and CS districts and CN.
Please consider adding this as you examine the retail Ordinance. Thank you.
Mayor Burt: Thank you. Our next speaker is Jonathan Satz, to be followed
by Robert Moss.
Jonathan Satz: Thank you for the opportunity to speak at this meeting. My
name is Jonathan Satz, and I work at AltSchool. AltSchool operates a small
kindergarten through eighth grade school in Downtown Palo Alto that
opened in the fall of 2015. We currently serve an enrollment of around 80
families and are a proud member of the community. As we are all aware,
finding and securing real estate in Palo Alto can be incredibly difficult. It
took us two years to find our first location as we competed with office users
on most properties that we identified. In the years to come, we would like
to add an additional school in Palo Alto. However, identifying properties since the adoption of the retail Ordinance has been incredibly different.
Even if we can identify properties that are not protected by the Ordinance,
most property owners are unwilling to lease to us out of fear that they may
not be able to convert back to office once they convert to educational use.
For these reasons, we would like retail-like services to include educational
uses in the definition of retail-like services. Thank you.
Mayor Burt: Thank you. Bob Moss to be followed by Robert Wheatley.
Robert Moss: Thank you, Mayor Burt and Council Members. Offices are in
great demand both nationally and especially in Palo Alto. Palo Alto office
rents are back over $7 a square foot. They're some of the highest in the
country. During the dot com boom, we had the highest office rates in the
entire world. There's a real incentive to convert retail to offices. We do
have a 50,000-square-foot limit on office conversions, but this is for specific
areas. That should be made generic for the entire City, not just Downtown
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and California Avenue but everywhere. It'd also make it a lot easier for Staff
to manage and oversee it. We also should include the basements when
we're talking about areas that are being converted. Basements are being
used as office space in many cases, so that should be part of the conversion
limits. One of the problems that we have is retail in general is in trouble
nationwide. A number of businesses, chains have said they're going to close
their stores. There have been a number of articles in the press about malls closing up or being endangered nationwide. Some malls can survive quite
nicely, and Stanford is an excellent example. If you have the right
management and the right combination of stores, they work fine. Also, you
don't have to have retail clusters. You can have very successful stores all by
themselves. If you had an Apple store or an Amazon store—Amazon is
starting to open stores. If Amazon moved into 100 Addison, they'd be a
tremendous success. It's not a question of where am I located. It's a
question of who do I actually get and who are they and how successful are
they. It's not easy, but it can be done. One other thing, you have to have a
cluster of stores. Let me give an example of a store that's surrounded by
offices and does very well, one that some of you may have heard of. It's
called Fry's. I think what you should do is have Staff revise the Retail
Preservation Ordinance, make it apply Citywide, put a strict limit on how you
can convert retail to offices, and bear in mind that when you convert retail to
office, you increase jobs, you increase traffic, you increase parking, and you
lose retail vitality, you lose neighborhood vitality and neighbors being able to
shop locally, and you lose the sales tax revenues. We should not allow
conversion of retail to offices if we can avoid it.
Mayor Burt: Thank you. Our next speaker is Robert Wheatley, to be followed by Richard Brand. Welcome.
Robert Wheatley: Thank you, Council. I'm the owner of the long-term
ground lease at 999 Alma. I was interested in the discussion that mentioned
fringe area and maybe having it vacant for a year. We definitely check the
boxes as a fringe area for retail. We're five blocks off the core. We are
surrounded by other non-retail uses completely. We've had it marketed for
a year with no interest for a full user. All of 2016, we've been marketing; no
full building user. Anthropologie is a very difficult thing to replace as far as
a destination for a standalone building of a small nature. It's not big enough
to be a standalone like Fry's. The difference between an owner and a non-
owner is that we're not interested in having it sit vacant for a year to see
and test if it's okay. We market ahead of time for a year, well in advance.
That's what we're going to do. 100 percent or 50 percent? We can't find a
100 percent user; perhaps we could find a 50 percent user. We had one
expression of interest in a 50 percent use. What would that do with the rest
of it? It leaves a vacant 5,000 feet on the back alley without any frontage,
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which isn't going to be any more successful as a retail use. Under the
underlying zoning, we could have leased the front part. We could have
leased that to an Alma frontage, retail user, and then done something else
with the back. It allowed for some flexibility when you don't find an
Anthropologie. The current moratorium prevents that and just takes away
useful flexibility that the foresight of the previous ordinance left in place.
We do support the idea that Heather Young and Jonathan Satz put forward, that an education use is retail-like and should be included in that retail-like
use. I would just encourage you not to do a blanket, to draw the widest net.
Our property is the victim of kind of a straight-line approach. We're just
going to straighten that line out and move it all along. Even though the
property may not belong there, it's going to be included in an area. Don't
expand that and do it Citywide. A better approach is to look at the
individual areas, the individual properties and see what fits best. I
encourage you to do that and to also allow the education use and flexibility.
Thank you.
Mayor Burt: Thank you. Our next speaker is Richard Brand, to be followed
by Loren Brown. Welcome.
Richard Brand: Good evening, Council Members and Staff. Richard Brand,
281 Addison. I'm here to speak in support of the Staff's well-written Report.
I'd encourage you to stand by your Ordinance, which was done just for the
reasons that we're here. The previous speaker spoke about fringe retail
area on the Addison two properties. Ace Hardware, when they first opened,
people said that would never work because it's too far from Downtown. We
know how that's happened. The same thing about the properties on
Addison. Mr. Levinsky has made a good commentary about the other stores. I'm going to focus on Addison, because that's where I live. I drive
by that corner of Addison and Alma probably twice a day if not eight or ten
times. It's my entryway to going north and south. I can tell you that many
times I have to stop for people going across the street and not using the
crosswalk, because it's vibrant. The issue of finding somebody to take that
retail space—that's retail and very vibrant retail space. As we know, our
retail area has expanded with the growth of the City. Anthropologie became
a destination store, and a lot of people drive to that store that don't even
live in Palo Alto. I think with the right kind of marketing, the owners of that
property and both properties for that matter can find retail stores that would
like to come. If nothing else, they're going to get people returning to find
out where Anthropologie went. I want to speak about 100 Addison, which is
three blocks from my house. I know the story of that. It was my good
friend and neighbor, Ken Allsman, who was one of the owners. We were
working on our RPP at the time, and I said, "Ken, why are you closing your
store?" In fact, he said, "Because they won't"—Jeff Levinsky mentioned
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this—"give us a good deal in negotiating the lease. They were charging way
too much money, and we can't afford to stay here, so we have to go." While
the owners of the property are saying that they are in a bad situation,
they've created the situation for themselves. I think they have to find a way
to make this work. This Ordinance is put in place just for these kind of
situations. Property owners want to increase the lease—I'm a landlord. I
know how that goes. You really adjust your lease price based on the market. In fact, they went too high on the lease price. Now, they're paying
the piper for that. Once again, I encourage you to deny these applications
and keep the backbone in this ordinance. Thank you.
Mayor Burt: Thank you. Our next speaker is Loren Brown, to be followed by
Kristina Lawson.
Loren Brown: Hi. Good evening, Council. I'm Loren Brown, 334 Kingsley
Avenue, Palo Alto. I'm speaking tonight in regards to the 3241 Park
Boulevard building. My company is Vance Brown. We're commercial general
contractors. We've been located in Palo Alto since 1932. We've constructed
many, many, many projects in Palo Alto, Stanford, Menlo Park, Mountain
View over the years. We're a business with local customers and a genuine
need to be located near where we build our projects. We're currently
located at 3197 Park Boulevard, which is immediately next door to 3241
Park. We've been in the Park Boulevard area since 1950. We were
approached to buy the building at 3241 Park after Park Avenue Motors gave
notice that they were closing their business. Park Avenue Motors is owned
by a parent company, Auto Nation, which is associated with the Mercedes
dealership that is planning to go in at Ming's. We didn't evict anybody from
that building. They were leaving on their own to go off to Ming's and change that use from restaurant to automotive. The location at 3241 is perfect for
us to expand. We don't expand very often. We had 2,500 feet in 1960. We
grew to 5,000 feet by 1995. Between '95 and now, we've had 10,000 feet.
We are a growing business. At some point we need to have a little bit more
space. It's so hard to find real estate around. It's a perfect location for us.
There's a power station at one side, railroad tracks on the other side, the
creek and our building on the third side, and Park Boulevard on the fourth
side. We're competing with national law firms and national tech firms for
space in Palo Alto, and it's very tough for us to find space that we can
afford. One way to do it is to own our own destiny by buying the property.
I've drafted a letter and issued it to the clerk. It addresses the reasons that
we believe that the automotive services use at 3241 was never approved. I
hope you'll read that letter. One last thing is that the Zoning Ordinance
should not unfairly discriminate against a particular parcel of land. For the
past 65 years, the M2 zoning and the GM zoning that applied at 3241 have
effectively purged all retail uses out of that area. As a result, there's no
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other properties in the GM zone that's local to 3241, that either have a retail
or automotive services use. Under the City Staff's current interpretation, the
property at 3241 is required to have a retail or automotive services use, a
requirement that is not imposed on any other property in the local GM zone,
which is an unfair discrimination. For these reasons, we ask you to direct
Staff to make a decision to exclude the 3241 property from the provisions of
the urgency ordinance. Thank you.
Mayor Burt: Thank you. Kristina Lawson to be followed by Benjamin Cintz.
Welcome.
Kristina Lawson: Good evening, Mayor Burt and members of the City
Council. My name is Kristina Lawson. I'm a land use attorney with Manatt,
Phelps and Phillips here in Palo Alto. For over a year now, I've been working
with the Morris family in regard to their 100 Addison property here in Palo
Alto. I first wrote to the Planning Director over a year ago on August 19th,
2015, laying out the reasons why we thought a waiver was necessary and
why that would help the Morris family to mitigate the economic hardship it
was facing knowing that it could not lease the building. Just for some
context, there's been a lot of talk about what the building had been leased
for and what the proposal was, whether there was renegotiation perhaps
attempted by Addison Antiques. The Morris family had increased the rent
only 56 cents in the 10 years prior to Addison Antiques vacating that
location. At the time it vacated, it was being leased for $1.56 per square
foot. They were heavily subsidizing that use at that location in Palo Alto.
They left the building. They did not decide to renegotiate. There was not
negotiation over price. Addison Antiques simply vacated the building. Now,
I know you've received our extensive correspondence. I think we've written to the City four, maybe five times. You've heard directly from the owners of
100 Addison; you've also heard from their broker about this particular
location. Presumably when the Council enacted both the original
moratorium and then the extension to two years, it provided a mechanism
to grant a waiver or an adjustment from the retail conversion prohibition
because it recognized that there were situations that would result in such
economic hardship that the Ordinance should not apply. This is one of them.
I think it's a little bit unfortunate that tonight we're talking about 100
Addison in the context of the entirety of the ordinance and also these other
properties, because there are some very, very unique features to this
particular property. If you just take a look, it really has no windows. It's
not attractive to a retail end user and, in fact, upwards of 35 have inquired
to the brokers and have declined to even come see the space once they
realize what it's really all about. We do know that there have been some
retail uses that have spoken with City Staff. Again, they haven't pursued it
because it's just not the type of location. When they hear that
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Anthropologie is exiting the site across the street, they have no further
interest in this property. I want to run through just a couple of the points
we make in our letters. Staff's recommendation for denial of the waiver is
based on the erroneous assumption that our client must have suffered a
total economic loss of this property. This is not a claim for a complete
regulatory taking where the property has been rendered valueless. Our
client's request is that a waiver due to economic hardship be granted, because the continued imposition of this moratorium on the property results
in severe economic loss and a diminution in the property's value, which
thereby effectuates a partial taking. This isn't about profit. This isn't about
how much profit the tenant can make. Right now, there's absolutely no
value that's being derived from this property with an extensive amount of
carrying costs that continue to mount. Again, I would request that you
decline to adopt Staff's recommendation and instead grant this waiver this
evening for a property that's located on the fringe of the Downtown core
with some really, really unique circumstances. Thank you.
Mayor Burt: Thank you. Our next speaker is Benjamin Cintz, to be followed
by Leonard Ely. Welcome.
Benjamin Cintz: Good evening, Mayor Burt, Council Members and Staff. I
grew up and live in Palo Alto. I have seen many changes in retail, both
retail going up and retail going down, in the years I've lived in Palo Alto. I'd
like to address the interim Ordinance, my thoughts on that and also on the
waiver requests at least as to 100 Addison and as to 3241 Park. I think
what the City did by enacting the interim ordinance is give itself some
flexibility in trying to figure out what needs to be done. I think that was a
very good move. When looking at Alma Street, there is very little foot traffic outside of the core area. I think you see that in terms of what's happened
with North Face, what's happened with Anthropologie and, of course, there's
100 Addison as well. I think if the City wants real retail or quality retail, it
needs to realistically look at where that retail is going to be. It needs to be
in the Downtown core where it's always been. The SOFA area was either the
Palo Alto Medical Clinic or automotive use. The automotive use has gone
away. The Clinic has gone away. On Alma Street where there isn't much
foot traffic outside of the core, it's not realistic to expect retail. It's not
realistic to expect retail at 100 Addison to be able to be viable. You're not
going to get quality retail if you get anything. As to the Park, it's a
compelling argument. Here's a local business; they've acquired a property.
This seems like a perfect use for that property. I ride my bicycle by that
property—I won't say daily but often. There's no retail around it. It just
really seems like it would be a perfect use. I request that the Council
seriously consider granting the waivers based upon the circumstances, which
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I think is what the City had in mind when they enacted the ordinance.
Thank you very much.
Mayor Burt: Thank you. Our next speaker is Leonard Ely, to be followed by
our final speaker, Rita Vrhel.
Leonard Ely: I'm Leonard Ely. I live at 651 Seale. This is a good example
of things where you made a mistake, and it needs to be rectified. I would
imagine that when the lines were drawn for retail for this Interim Ordinance, they were drawn to where retail was at the time. That has changed. Mayor
Burt summed it pretty well. Zoning has not adapted to this area. A retail
core in Palo Alto is a great idea. I don't think this is part of the core. If you
look at the map, it looks more like an amoeba. One of the tests that either
the Council or the Planning Department should use in granting or considering
waivers would be what the contiguous properties are and what their uses
are. If you look in that area, there is one retail automotive use about a half
block away, and then the nearest thing is Ace Hardware. I go to Ace
Hardware quite often. As Mr. Moss stated, it's been done very well, but I
always drive. It's not some place where I walk to. When Anthropologie first
went in years ago, I couldn't believe that it would be there as long as it was.
As far as Apple and Amazon being located there, the properties are way too
small. Those kind of tenants have to have 20,000, 30,000-square-foot
buildings. I think that's about it. As I say, I think the real test here should
be what it buts up to. It was originally an auto repair shop years ago at 100
Addison. Again, as Mayor Burt said, the zoning has not adapted to this
space. Thank you.
Mayor Burt: Thank you. Our final speaker is Rita Vrhel. Welcome.
Rita Vrhel: Thank you. I think you've heard a lot of arguments today about why this Ordinance should stay in place. If you do away with the Ordinance,
you will have every business owner of a retail space coming before you and
requesting an exemption. As far as the property on Addison is concerned,
they can put some windows in. They can make it more attractive. I don't
know what the price is that they're trying to rent it at. If it was $1.56, I'm
sure that it will rent again per square foot. There's probably a lot of room
where that can be improved. If you're talking about having it be what it
buts up against, then maybe this is an ideal location to consider some below
market housing, not a huge project but maybe three or four units. Perhaps
that would work. The place where North Face used to be is in an area, if I
remember correctly, where there are a number of multiple-unit four plexes.
Perhaps that's the place to put a limited amount of below market or
affordable housing. That could render you eight units. It probably would be
profitable for the landowner. It's near Downtown; it's near transportation.
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That would fit the definition of housing in the transit corridor. Portage
Avenue, I would encourage you to go shop there. I've shopped there
before, and if Mr. Levinsky can buy something from this warehouse and I
have, then you can probably too. The fact that they don't have enough
parking spaces hasn't prevented them from running a business. I don't
think that should even be considered at all. The Park Avenue, the owners
when they brought this property, they knew what the property used to be. Things should be considered, but you should hold this ordinance and
strengthen it so that everybody doesn't come before you with a sad story.
Thank you.
Mayor Burt: Thank you. We'll now return to the Council for discussion.
Council Member Holman.
Council Member Holman: Thank you. Thank you to all the members of the
public who have come this evening to speak to us. Where to start? I guess
for lack of any specific place to start, it's better than another. I want to
address the suggestion about schools. I never remember the name of the
school, but the school that's on El Camino where Los Robles runs right into
it. My concern is schools, especially on primary streets, just create dead
spaces. Winter's still here and lives in Barron Park; maybe she can
remember the name of the school. It really is kind of the death knell to
creating active spaces. Private schools want to have private space. That's a
concern about that. The other concern I have about that is that in several
locations, especially in the SOFA area and other industrial areas—Mayor Burt
and I have talked about this—there are toxics that are likely present onsite.
Without the minimum of a Conditional Use Permit, we have no way to
protect sensitive receptors who might be on that site from the toxics from automotive use, for instance, on those sites. Schools on primary streets like
El Camino, Middlefield, for instance, Alma, I can't support. They wouldn't be
able to support University Avenue. Except there's another example of this.
We get many complaints about this. Institute for the Future is a great
entity, but people are not happy that Institute for the Future is not retail and
it's in the location that it is. It was an interpretation that Staff made to
allow them to be there. It's not retail. As much as I really like it and
appreciate the people there, it's not a good consideration as retail. I don't
remember who this was. Maybe it was Council Member Scharff who talked
about hair and nail salons. I would put in that gyms as well ...
Mayor Burt: Council Member Holman, I want to let you continue, but we
had discussed earlier how we might structure the discussion, whether we
would want to go into looking at the broad direction to Staff on both the
permanent ordinance and guidelines on how to proceed on the interim and
then specific action on the waiver before us tonight. I just want to look back
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to the Council on whether we want to try to break up the discussion that
way or we want to throw everything together.
Council Member Holman: Where I was sort of headed was setting some
parameters for the Ordinance and then address the 100 Addison situation.
Mayor Burt: Parameters for the interim Ordinance or parameters for the
permanent Ordinance?
Council Member Holman: It depends on how we—there's different ways of looking at this. The permanent Ordinance, I guess, could be an extension of
the Interim Ordinance with some changes. That goes to the question I
asked earlier, which is how much change can we make and not totally
disrupt the Staff's priority workload.
Mayor Burt: Let's hold off on the specific waiver before us for the time being
and discussion of that. Let's talk about broader guidelines to Staff, and then
we'll loop back after that and address the waiver request.
Council Member Kniss: (inaudible)
Mayor Burt: That's a good question. I think it can be either. We've heard
from Staff that the Interim Ordinance—they have real hesitancy about going
into major modifications and making the Interim Ordinance refined when we
have basically six months left on it. For the most part, we should be trying
to begin to give guidance on our direction for the permanent Ordinance. If
there are specific ways in which we might want to tweak the Interim
Ordinance that would not be big burdens to Staff, then we could consider
that.
Council Member Holman: My thinking and the points that I'm making is to
look at the Interim Ordinance and changes to it that would then become a
permanent Ordinance.
Mayor Burt: If you're really trying to get into a deep discussion tonight
around that, you may have one idea and we may have eight others on
where that would head. That would be probably a really involved
conversation. I wouldn't assume that you can begin to craft too much about
the permanent Ordinance tonight and fold that into the interim. I wouldn't
make that assumption.
Council Member Holman: It gets a little tricky then on how to give guidance
to Staff.
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Mayor Burt: The guidance on the permanent Ordinance, I don't think we'd
be attempting to give explicit guidance but greater direction to Staff on
where we want to head. We haven't visited this in over a year on where
we're thinking we want to head on the permanent Ordinance. If there is
certain guidance on the direction of the permanent Ordinance without trying
to specify what it would be, I think that would be useful to Staff. That's a
more broad stroke direction. Then, perhaps we could consider tonight something a little more explicit if there are readily doable changes to the
Interim Ordinance that aren't going to involve a bunch of Staff work. We
could consider that tonight, and then ultimately we have a waiver before us.
Council Member Holman: I think Hillary may have a question about that.
Ms. Gitelman: I guess I was just going to second what the Mayor was
suggesting. I guess we're hoping that we don't have to amend the interim
Ordinance. Because it has so little time left, that time would be best spent
focusing on the permanent Ordinance. We would be happy if the Council
would indicate their support for prioritizing Downtown, and then permanent
protections for ground-floor retail in other areas of the City with some lesser
standard than economic hardship for consideration of a conversion approval.
That's kind of where we thought the Council was interested in going. If you
are, that's the kind of direction that would be helpful for us to prioritize our
resources over the next six months.
Council Member Holman: I don't know that we're heading different places.
I think we just may be having some verbiage issues here. I'm not sure that
we're heading different places, I don't think.
Mayor Burt: Why don't you go ahead and proceed, attempting to frame it
within that context.
Council Member Holman: Speaking of framing, let me go to Packet Page
283. This is the Ordinance 5325. It's "G" I want to refer to, just so we don't
forget how we ended up where we are. It talks about the loss—this is "G" at
the bottom of Page 283. It talks about the Santa Clara Valley
Transportation Association’s (VTA's) congestion management plan indicated
that approximately 70,000 square feet of retail-type uses were lost in Palo
Alto from the period 2008 to May 2015. There may have been more than
that, because not everything requires discretionary approval. I actually am
looking for, yes, I would support Staff going ahead and working on a
Downtown Ordinance. For me, I would like to see the interim Ordinance
continued in a permanent Ordinance. I'm actually in a different place than
Staff. I still think the hardship should be the threshold. We have seen in
this community many times how property owners hold out for a year for the
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ability to be able to convert to office. Especially for long-term property
owners, that's not that hard to do. If you can go from—I'll just make up
numbers--$2 to $6 a square foot, why wouldn't you hold out for a year? The
hardship threshold is a good threshold. I have notes here. Hang on a
second. I would absolutely support in the permanent—you want me to just
make a Motion? Council Member Burt, do you want me to just make a
motion?
Mayor Burt: You can give it a shot.
Council Member Holman: Rather than say all this and come back and have
to do it again. I would move—I'm just talking about the Ordinance now,
going forward. I would move that the Staff make permanent the Interim
Ordinance with the following clarifications: on Slide 10, I support Staff
requiring display windows for nonconforming uses, all the four bullets on
that page. It really is four bullets, not three, because updating definitions as
needed is also a bullet actually.
Mayor Burt: Council Member Holman, you're free to go ahead and make
this. I think there would be a usefulness to hearing from the Council
Members first on what their higher level thinking is on where they want to
head in a future Retail Ordinance before diving into a specific proposal. How
about this? If we hold on this, I'll return to you. If colleagues are fine,
before we go forward with Motions I'll return to you and give you first crack
at it.
Council Member Holman: Then I'll make general comments and not make
the Motion. What I support is basically the Staff continuing the Interim
Ordinance as a permanent Ordinance and returning also with a Downtown-
focused Ordinance. I don't support reducing the threshold, because of what I just mentioned about gaming the system. I do support the bullets that
Staff has proposed to come back with. That's on Slide 10 and also in the
Staff Report. I think other Council Members have also mentioned some
additional qualifications for hair and nail salons. I might add personal gyms
to that. I've made comments too about schools, private schools. A question
for Staff. What level of effort is going to interrupt your priority workload?
The question is if we were to ask Staff to look at the viability of readdressing
or reevaluating the streets that were taken out in the 2009 ground-floor
retail reduction, if you will, would that be a major undertaking or would that
be we could pick our priority streets and it wouldn't be a major undertaking
that would disrupt your work flow. Help me out with that.
Ms. Gitelman: Thank you for that question. We do have Staff assigned and
resourced to do the Downtown permanent Retail Protection Ordinance.
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We're prepared to work on that issue and others that we've identified for
Downtown, if the Council prioritizes that effort. It's the other Ordinance for
continuing these protections in other areas of the City that we haven't
resourced or assigned Staff to yet. We're talking about how to do that. As
long as that effort doesn't get complicated with 14 different subparts, I think
we're going to be able to accommodate some amount of that work in the
time we have.
Council Member Holman: I think we continue it kind of as a lump and not
breaking it off into sections. I can't imagine that Staff has the time to do a
variety of different Retail Ordinances. I think just a couple of other things
here. I think we can quickly and easily clarify for Staff the questions that
are on Slide 5, that were asked about earlier. As a general comment, I
would just ask that Council Members think of retail not just what goes on
University Avenue, not just what goes on California Avenue, not even
necessarily just what goes on some of the side streets in the core areas.
Start thinking creatively. Palo Alto has been the incubator for tech
businesses for years and years and years. It's time we start thinking more
diversely. Think about Palo Alto and locations that might be appropriate for
incubator retail uses. I'll just use it as an example. I look at 100 Addison,
and that's an industrial building. I think of all kinds of uses that would be
wonderful at that site. I don't know what kind of marketing. I did go online,
and it just seems like it's kind of posted as retail space available, blah, blah,
blah, blah. It doesn't try to promote any kind of active uses there that could
be creative and wonderful. We lost Turner and Martin. There are other
kinds of antique uses like Big Daddy in San Francisco that are ...
Mayor Burt: I think we're now getting a lot of specifics that we're going to not have ...
Council Member Holman: I'm just trying to get us—when Council Members
are starting to think about what's retail and what should be in retail, what
shouldn't be in retail, to think about these other kinds of uses and more
creative uses, and not just think about University Avenue and California
Avenue and what kinds of uses we typically see there.
Mayor Burt: I want to be mindful of the clock. We had budgeted a certain
amount of time. We're clearly well beyond that and going to go beyond it. I
want to have us be able to get everybody a chance to wade in. Vice Mayor
Scharff.
Vice Mayor Scharff: Thank you. I guess I see it different than Council
Member Holman, but not that differently. I think we want to prioritize
Downtown. When we prioritize Downtown, I want us to also include SOFA
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into that. I really think that they're one area in terms of retail. I think we
want to look at how Emerson Street goes down there, how that connects to
Whole Foods, and how we build that whole retail corridor and do that. I
want Staff to look at those two in conjunction. I definitely want to focus a
little on the Downtown area. As part of that, I want us to actually look at
how do we change the uses. I clearly think, as Council Member Holman
mentioned, Institute for the Future is not a retail use. I also think the Wells Fargo building is clearly an office building on the ground floor. I realize it's
been there forever. I think we need to amortize it out if it takes 15 years or
20 years. We need to get that in Motion, so eventually that is no longer on
a prime corner a non-retail use. What else did I want to say about the
Downtown? I think we should also on the Downtown obviously look at
adjusting those boundaries. I agree with Council Member Holman that we
want to consider the definition of basements, those four items you have on
Slide 10. I would be very supportive of including those. At the same time, I
think we want a second Ordinance, which you've talked about, which would
continue the retail protections. Unlike Council Member Holman, I am not
going to support a Motion that doesn't have more flexibility. The standard of
a Constitutional taking is extreme. I don't think I can support something
that extreme in the long term. I also would like to see, at least for the
outlying areas, if we can come up with a definition of where you have what I
would call the Downtown core and then the outside areas, which would be
like 100 Addison frankly, and other places where you have a broader
definition of retail. That broader definition should definitely include
educational uses and may include other things. I might even be open to
medical office in a permanent Ordinance or something like that, something that activates the area, that serves the public. I think we could have a
broader definition there. On the interim Ordinance, the only change I
probably would make—I think it might give immediate relief to some
people—is the notion of an educational use. That actually would be really
helpful for those broader uses outside of the Downtown core. I would like to
obviously see a Motion that goes forward on those issues. The only other
thing, I think, we might consider is making a distinction on retail uses. As I
said, on the outside of the core, I think they're different. I think depending
on how much Staff time Staff has, I don't think we need for instance—I don't
know if we allow nail salons on University Avenue. I think they could be on
the side streets as opposed to that. I think that's sort of where I am on this.
Mayor Burt: Council Member Wolbach.
Council Member Wolbach: I kind of want to frame this by going back to the
question of what our overarching goal is. I think our goal was to prevent
losing retail and having it converted into office. If my memory serves me,
that was our original intent. We also have an interest in preserving local
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retail, for instance, on Cal. Ave. and not wanting to see a monoculture of
one particular thing just taking over an entire street, whether that's just
restaurants or just gyms or just nail salons. Within that broader definition of
retail, as long as it's not a complete monoculture, I'm not comfortable with
saying, at least at this point—I don't really understand this move towards
core retail in our Downtown core versus a slightly broader definition in the
periphery. It sounds like the core retail definition that I’m hearing some allusions to would be really restrictive. I'm wondering are we going to say
that the President Hotel barbershop, because it's on University, shouldn't be
there. Are we going to say is the Stanford Theatre not strictly retail, so it
shouldn't be on University? A yoga studio or a gym, as long as they're not
taking over the whole street but one or two, on a main Downtown street
adds a lot of vibrancy, adds a destination that people go to. They leave a
yoga studio or gym hungry, and they go spend money whether it's at Molly
Stone's or at a restaurant. I just don't see the need to be that
micromanaging. I'm not going to be looking for a long-term ordinance that
really micromanages in that way. I think the goals are—at least what I see
people are demanding in the community when it comes to retail is we don't
lose a vibrant street and we don't lose our local businesses and we don't lose
our retail in the broad sense and just see it all converted to office. If we
keep that in mind, I don't think that micromanaging is really the way to go.
There was an interesting proposal to exempt for 100 percent residential.
This might surprise people, but I'm not even sure that I'm on board with
that. There might be places where that would be okay. Maybe that's the
question of core versus periphery. Maybe that's where on the periphery we
allow an exemption if you do go full residential or (inaudible) kinds of residential. I kind of wanted to ask the question, because maybe I
misheard. I thought I heard Council Member Holman say that schools create
dead zones. I'd wonder if the businesses at Town and Country that enjoy so
much patronage from Paly students at lunch time, after school would agree
with that. Maybe I misunderstood. I don't want to misrepresent your
comments. The idea that schools aren't good for local business—I know
we're going to go back to her. I just want to say that I don't see schools as
inherently negative. Again, what I do see as negative is monoculture. If
everything in Midtown got turned into an SAT prep site, that's not what we
want. It's really, for me, having the diversity. I'll leave my comments at
that for now.
Mayor Burt: Council Member DuBois.
Council Member DuBois: I'd like to thank Staff for working through this and
toeing the line. I think the question we're faced with is how do we
distinguish between greed and hardship. How do we tell the difference?
Retail protection of ground-floor space isn't going to have any effect if we
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just grant exceptions when somebody complains. We know the economics
for office space is much greater than retail. That was kind of the purpose of
the ordinance in the first place. Generally, I think Staff has rightly seen
through maybe some weak arguments. I am interested in correcting a
loophole or a clarifying restriction for illegal uses and legal, nonconforming
uses. It's kind of the definition of chutzpah to say, "I have retail there, but
it was illegal so I don't have to follow the ordinance." Most of us have probably shopped at a lot of these places. I do have to say I found these
pictures particularly a blatant misrepresentation. I've shopped at Pet Food
Depot for years. Yeah, it looks like this in the back. The front's a pretty
nice retail area with cash registers. Everything is priced for retail. To imply
that it's not is just hard to—it's just a misrepresentation. Even though
there's not a lot of parking here, it's very easy to pull in, grab your bag of
dog food and pull out. It's not a place that you need to spend a lot of time.
If we started to grant exemptions for claimed illegal use or legal,
nonconforming, it's going to weaken the force of law. It really incents
people to have an illegal use, because then you get extra rights. I do agree
we need to consider the SOFA boundaries. It's certainly becoming a much
more vibrant area. It'd be a shame not to have any retail in that area.
Again, this isn't just about the retail core. Part of this ordinance is really
thinking beyond just the retail cores. I am also interested in figuring out
how to extend protection to the community shopping areas on El Camino,
whatever the best means to do that is, even if it's another interim ordinance
until we have time to get to it. As Mayor Burt mentioned, part of this
discussion is about the types of office uses permitted. It's a question of
scale of office, hardware/software development, product development, large-scale services which have traditionally been in our office park and on
Bayshore. Do we want to continue to allow those Downtown or do we want
to revisit those definitions and get back more to administrative office, locally
serving office spaces? If we were to grant exceptions, I'd like to clarify
those permitted uses, update the definitions. Perhaps we should consider an
exclusion if there's a lone, former retail use that is now completely
surrounded by non-retail, like nothing on the entire block in any direction.
Maybe we consider that. I think we'd have to have it very well defined.
Perhaps the Mercedes repair shop would fall into that category. On the
question of schools again, I don't think we're talking about large schools. I
think we're talking about SAT prep mostly. I'm not convinced that adding a
lot of SAT prep is necessarily in the best interest of our community. Those
are my high-level thoughts.
Mayor Burt: Council Member Schmid.
Council Member Schmid: In a way, we're talking about the future of the
City. It's important to recognize that the essence of the City is where people
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gather and mix, interact with each other. Retail plays a critical role in that.
I think we also have to recognize that commerce is changing. Every day
there are articles in the Wall Street Journal about traditional retailers having
trouble, losing market, changing, adapting. The next 10 years is going to
see quite a change in what we shop for, where we shop for it, how we do it.
How do we keep alive that essence of the City, of the mixing and gathering
with the commercial retail sector that's dramatically changing? I think it is good that we focus on our Downtown. It's the most dynamic and maybe
rapidly changing area of town and a place where we can get characteristics
that might work elsewhere. A good starting point is a definition. What is
retail? I note that the definition we used in the ordinance is retail is
primarily engaged in selling, and then turns into a 15-line sentence that lists
all kinds of things. If you go down those lists, those are the things that are
changing. What's on the list today might not be there tomorrow. I think it'd
be nice to have a definition of what we mean by retail. As an economist, I
think you go to any basic textbook, and retail is the sale of goods and
services to the public in relatively small quantities for final use or
consumption. It'd be nice to have a definition like that, and then you can
ask the question for each of those items in the next 15 lines does it fit
closely or is this moving further away from the essence of final use, small
quantities, people, public, moving in and out. I think that would be helpful.
One thing we're running into in our work is transitional areas. The other
night we had a discussion about Lytton. What is it? East of Waverley,
where offices are moving in, in denser and denser format, but we haven't
really worked out is this part of the core or not, should it be made part of
the retail core as well. Where does a retail core end and stop? We talked about major changes east of Hamilton that could bring big changes. Tonight
we're looking at Addison. We've looked at Waverley with the transitional
areas. What's the role of retail in transitional areas? How do you keep that
dynamic of the core and the transitional area? I think the point was made a
couple of times that the most obvious place for retail is probably in mixed
use. Retail and housing fit together very nicely. We can't recreate Paris,
but they have done a very good job of mixing housing and retail. I think it
is important to step back a little bit, to recognize the goals we want to
achieve, that retail is part of keeping the essence of a city where people
gather, mix, exchange ideas, work together, live together. We need to be
sensitive to where retail goes. While we're looking at these bigger issues
maybe in the Downtown and SOFA, we shouldn't give up what currently is
retail just because office today happens to have higher returns. Keep
options alive as we move down the road of deciding where it is best mapped
in our Downtown and other areas of town.
Mayor Burt: Council Member Kniss.
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Council Member Kniss: Greg and I don't always concur, but I think those
comments were particularly good. We are in an incredibly dynamic situation
as far as retail goes, as far as office goes, whatever we may be discussing.
I've forgotten how many stores Macy's closed within the last two weeks. I
think it was 160. I don't know about the rest of you, but my kids think
Amazon is just part of their everyday life. That's just been 10 years in the
making. So much is now just delivered to your doorstep. It may be coming by truck now; it'll probably come by drone at some time in the future. What
we're looking at tonight is a very long-term issue. While we may be giving
you some guidance, to Hillary and Jonathan, I think at the same time we're
very early on with this. I think this needs to be so fine-tuned. What has
just been described by you, Greg, as the definition of retail is just that. It's
a vital area of your community. I do see that there are some options for
100 Addison, also for 999. At the same time, I don't think they're the same
kinds of options you're going to find in that Downtown corridor. When I
stood there on Sunday at noon, it was absolutely jammed with people
coming and going, wherever they might be going. When I went by, with all
due respect to Richard Brand who's probably left by now, when I turned onto
Addison tonight, primarily 100 Addison was being used as a parking lot for
people who are going into Anthropologie, which is by the way having a 40-
percent off sale, if any of you are interested. They're going to be empty as
well. There may be some good retail uses for both those areas. I don't
know, but I think they're going to have to be altered from what we currently
think of as retail. Maybe a type of school. I actually think schools,
especially a school that might be a tutoring or might be teaching martial arts
which has become very popular lately, something like that is the kind of thing that we should be looking at for those outlying areas. In the core, you
have certain things that are expected. Also I'd reflect on what Cory said. Is
Stanford Theatre kind of a dead zone in the middle? Can you imagine us
getting rid of Stanford Theatre? That just wouldn't happen. It's retail. It is
retail. If you had a street full of theatres, it would be a pretty quiet street. I
think tonight—what I'd really like to do is hold a lot of my thoughts in
abeyance. This is going to evaporate essentially on April 30th. Between
now and then, probably sometime in the next few months depending on
who's sitting here, there will be a long discussion of what the ordinance is
going to be and what it protects. Those are my comments for now. I think
it's been a very thoughtful kind of evening. If there was one thing I would
leave with this is your core is going to be quite different from your outskirts.
We very carefully need to look at the SOFA area and what the anticipation
was back then, when two of you in particular were very involved with it. It
still doesn't look to me as though areas along El Camino should be held to
the same standard as the Downtown area. Thanks. Alma. Did I say El
Camino? No, I meant Alma. It's now 10:35 P.M. ; that's probably why.
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Mayor Burt: That's okay. Council Member Berman.
Council Member Berman: Some of the comments made by Council Members
Kniss and Schmid underlie the importance of flexibility, which ties a bit to
the comments of Council Members Scharff and Wolbach, even though they
claim to disagree or Wolbach claimed to disagree with Scharff.
Male: (inaudible).
Council Member Berman: Or that. It's true. Our economy is changing. The way we buy things is changing. The way we look at things is changing.
Because of that, it's important to have flexibility. Because of that, as
Council Member Scharff mentioned, I wouldn't support a permanent
ordinance that only had economic hardship and unconstitutional taking of
property as the threshold that had to be met for Council to provide an
exception to the rule. Clearly different parts of Palo Alto and even clearly
different parts of a larger Downtown area might be able to facilitate different
uses. I think we should create—if it's going to be a permanent Ordinance, I
think it's one that should have that flexibility in there to allow for different
situations. I like the idea of having certain rules for a Downtown core versus
an outside of the core. I disagree with Council Member Scharff that we
should get so specific as to say certain uses for University and this for Lytton
and this for Hamilton and that kind of thing.
Male: (inaudible).
Council Member Berman: I like the idea of different standards for the
Downtown core versus the areas outside. I also think we need different
standards for different parts of town, and we don't have that in the
temporary Ordinance. We should have different standards in the permanent
Ordinance. Obviously different parts of town should be treated differently. I'm intrigued by the idea of schools. Maybe it's partially because I've
become so much more acutely aware of the shortage of childcare facilities
and preschools that we have in the region. That's not to say that any of
these sites would be perfect for that use specifically, but there could be sites
that would be good for those uses. That's something we should consider if
there's a way that we can add it into the Ordinance in a way that wouldn't
create dead zones that some of my colleagues are worried about. We have
a desperate need for those types of facilities and services in Silicon Valley as
a whole. I think if we can encourage that, that would be a huge benefit to
our community. That's the high-level thoughts I have. I'm glad that we're
not going to totally rewrite the temporary Ordinance six months before it
sunsets. I think it's helpful to get some direction for what the permanent
Ordinance should look like.
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Mayor Burt: Let me try and take a crack at a few elements of this. First,
Council Member Wolbach had offered up a revisiting of the problem. I think
that's useful; although, I have a broader definition of the problem. My
recollection is that we really were concerned about two major things. Maybe
others would add in other elements. It was loss of local-serving retail. We
weren't saying that we're really acutely concerned about loss of revenue
from retail regardless of whether it was local-serving. We really cared about losing retail that people in the community used and valued, which is
interesting. In some of the discussion around this property tonight, people
talked about it being a destination retail. It's not solely; I mean, Palo Altans
go there as well. It's not the same thing as losing a hardware store.
Second, it's a concern of retail being converted to basically Research and
Development (R&D)/office space, software firms and the like. We put an
interim ordinance in, but one of the things that we had misgivings about at
the time—certainly I did—was that it was a pretty rigid ordinance without a
lot of flexibility to it. We tried to put in this waiver process. This applicant
has certainly made a case that they've been waiting a long time for that
process to work, to get a hearing on it. I'll talk briefly, kind of broadly about
my thoughts on where I think we ought to be going on the permanent
Ordinance. I don't think we're going to have really time tonight to try to
craft any clear guidance to Staff on that. I think we have input, and then we
may need to re-agendize this topic again so that the Staff gets an
opportunity to have stronger and more considered guidance on the
permanent Ordinance before they come back to the Council with a proposal
to reflect that input. My personal thoughts are that, first, we want to have
zoning that looks at strengthening the retail in our core areas of our downtowns, University and Cal. Ave. We've had a degree of a problem on
those real core retail areas where we have an overly broad definition of retail
there, one that might be overly restrictive in some other areas where it's
applied. One definition of retail doesn't suit us where we really have areas
that are strong retail areas and they shouldn't have a bunch of gyms, they
shouldn't have a bunch of nail salons in those core areas. This is where
people are having all the foot traffic. The notion that a gym is really a good
thing in a retail zone I just disagree with. The same thing with a bunch of
nail salons or other salons or who knows what. That doesn't mean we don't
grandfather in some existing, but I certainly don't want to see that go long
term and expanding that kind of use and really undermining what's retail. I
also think that El Camino is a different sort of retail. It's a drive-to retail.
It's really important that we not lose that second tier, more economical retail
for a lot of different services that are valued in the community. It's much
more affordable retail, and we need to retain that. That's the other thing
that I really want to see. This notion of really two retail definitions. Where
that goes, I think that'll be part of the next discussion. I think we've got a
core retail definition, and then we've got one that has greater latitude in
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uses in some of these other retail areas, but we allow more things. I also
think that, whether in the interim ordinance or the permanent one, the
intent of economic hardship shouldn't be that it requires total economic loss.
I don't think that was the intent. It's hardship, not elimination of revenue. I
think we need to give some better sense of what that intent was. Frankly,
the wording in the interim ordinance does capture it. Somehow maybe it's
being interpreted pretty strictly or overly strictly. On the Interim Ordinance, first I'll say there's a couple of properties that are part of the SOFA II plan.
In SOFA II, it was a very deliberate process over a couple of years. It did a
good job, probably an imperfect job at the time. Now we've had some
morphing that's occurred, and it's probably even less perfect today than it
was when we adopted it. I have regrets over having allowed some of the old
retail on Homer between Emerson and Ramona to have been lost. One of
the problems with that retail is there's no off-street parking. That's one of
the real problems in SOFA for retail. That'll be one of the struggles as we
envision that SOFA has some intrinsic demand. It's a walkable
neighborhood and an extension to Downtown, but it doesn't have parking.
We'll have to struggle with that. On the interim Ordinance, we went through
a very deliberate process, and we did not say that all those buildings, if they
went to and from retail, would then have to be locked into retail. We
actually had that discussion in the SOFA conversation, of whether some of
these properties might move in and out of auto dealership or some other
thing. We thought that over time we'd see some evolution there. I don't
think it was the intent of SOFA II that these properties would be locked into
retail permanently. On the other hand, I don't want to see them be
office/R&D, which almost 20 years ago when we did the SOFA that wasn't really happening. Now, that's the threat. It's a big part of why we've lost a
great deal of medical office. They've been squeezed out from us allowing
big office/R&D firms to be in the Downtown area in a way that, I think, an
objective reading of the current zoning does not allow it. I encourage
everyone to read carefully the zoning and the permissible uses for Stanford
Research Park where it specifically says that hardware and software R&D are
not only permitted uses, they're essentially key designated uses, for biotech
and all those different things. The Downtown deliberately does not include
that. It has general office, and it has definitions of that. I think we've had,
for whatever reason, a complete slide from what the verbiage says in our
Zoning Code versus how we're implementing it. That's got to be part of this
whole discussion about what goes where. That's not specifically retail, but if
we're talking about allowing properties to be exempt from a retail Ordinance,
I don't want them to go into that bucket. I think those hit my main points
on each of the areas. We're at a quarter to 11:00 P.M. I'm going to return
to Council Member Holman, but I think it would be much better for us to
attempt to agendize a meeting where we pick up on the discussions that
we've had here and then attempt to give real guidance to Staff on the
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permanent Ordinance direction that we'd like. Once we wrap this up, we
need to go back to the waiver application before us tonight. Council Member
Holman.
Council Member Holman: I guess I have a very small number of additional
comments about ...
Mayor Burt: I'm returning—if we go back to a whole other go-around of
comments, then everybody's got to get a turn.
Council Member Holman: I'm not sure what you're returning to me for. You
don't want to ...
Mayor Burt: Because I had committed to you—just a second.
Council Member Holman: You don't want a Motion on this.
Mayor Burt: That's right.
Council Member Holman: You said we want to do separately the 100
Addison appeal. You're returning to me, which I appreciate, but it's not
clear to me what you're returning to me to do.
Mayor Burt: I can offer up my recommendation that we don't go into trying
to prescribe the permanent Ordinance, but you're still free to do what you
want. I'm offering my recommendation, and I committed to you that I'd
return to you, so that's what I'm doing. A bunch more comments,
everybody else needs a crack at that if we do it.
Council Member Holman: Can I just respond to a couple of things that have
been said then? About SOFA II, I agree about Homer Avenue between
Ramona and Emerson. Actually it's a strong retail area, and we have now
two clothing stores on that block. I wish they were all retail. Parking or not,
I think it's a strong parking area. Just a reminder. We do have retail
required because—Vice Mayor Scharff was helpful in this too. We do have retail extended from Downtown down Emerson to Homer. I do wonder,
when we're including this in the retail Ordinance going forward, we look at
south of Homer as well.
Male: (inaudible)
Council Member Holman: Maybe that's right. Maybe it is to Forest because
the block between Forest and Homer were already protected as retail in the
SOFA II plan I think. I think we were just connecting those. At any rate,
that's my memory. Just a response to another couple of questions. I look
at this as it's both the loss of retail sales tax dollars and the loss of local
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businesses that we were trying to address in this ordinance. Just in
response to Council Member Wolbach, what I was saying about dead spaces
and schools, it's because of how the schools are built and designed. They're
private schools, and they aren't street facing. That's what I meant by dead
space. Just to clarify that. Just one quick addition to the bullets on Slide
10. This is an issue that we have in a variety of locations around town.
Retail should be generally open to the public and have a minimum number of hours that they are open and not by appointment. Council Member
Scharff referenced the bank. I don't disagree with you. There's also a bank
on University Avenue that you have to buzz to be let in. It's hardly a retail
use the way it's established now. Those are my responses to questions. Is
that where we end up on this discussion? When would this come back, if
Staff can give us a date on that?
Mayor Burt: Council Member DuBois. I'm sorry.
Ms. Gitelman: I was just going to make a suggestion. If you're not going to
get into further detail this evening on this, we could arrange to come back
sometime—it'll probably be October at this point given your agendas—with
just a really brief work plan of what we would include in the permanent
ordinances for you to take a look at. We'd invite input from those who
spoke this evening. If they could get it to us in the next four weeks or so,
we could try and incorporate that into—it'll be really brief given the time we
have and the amount of work we have to do. It would be something for you
to react to on this issue.
Mayor Burt: Good. I think at that time we'd probably want to schedule a
really thorough discussion around that. Council Member DuBois.
Council Member DuBois: I was going to try a Motion. I was actually going to go a little further which would be to have Staff come back at that time
with a draft Motion for us to react to, based on our input tonight.
Mayor Burt: I think I'd prefer that the Council attempt to do that. That's a
bunch of open policy debates that we will have. To ask Staff to come
forward with a Motion, I wouldn't support it. You're welcome to do so.
Council Member DuBois: Here's my Motion: Direct Staff to come back with
a framework for an Ordinance for Downtown including the SOFA area and a
more flexible framework for an Ordinance for the rest of the City.
Vice Mayor Scharff: I will second that.
MOTION: Council Member DuBois moved, seconded by Vice Mayor Scharff
to direct Staff to return to Council with a framework for an Ordinance for the
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Downtown Area, including South of Forest Area Coordinated Area Plan Phase
2 (SOFA II) and a more flexible framework for the City as a whole.
Council Member DuBois: I think you've heard maybe slightly different
views, but not all that different. The one area for me that I'd like to
comment on is I think weakening the bar is a slippery slope. Introducing
flexibility sounds good, but if we really intend for retail, retail-like uses,
personal services, on the ground floor to be required, I think they have to be required in nearly all cases. I'm open to some flexibility, but I think it needs
to be a reasonably high bar. I think requiring documentation, as you've
asked for, is a good thing. If somebody asks for an exemption without
documentation, it's a good thing to hold that requirement. You've heard
ideas for understanding the different kinds of retail on perhaps El Camino.
Again, I'm concerned about our neighborhood centers. I think they are at
risk as well. Based on what you've heard, you could come back with a
framework, maybe give us some options. It may not be the final Ordinance,
and we'd have to come back again with that.
Vice Mayor Scharff: I agree that it would be helpful to have you come back.
People have talked in general about these two things: let's focus on the
Downtown, let's focus on SOFA, and let's have a more flexible ordinance
that's legally supportable frankly for the rest of the City, that protects some
of the areas that Tom's talked about outside of that and that I've mentioned.
I also would like, when we talk about the analysis of Downtown as part of
that ordinance, to look at those four things they have on Page 10 and
include that in the Motion, if that's all right with you.
Council Member DuBois: (inaudible) four things.
Vice Mayor Scharff: They're consider adjustments to the existing boundary of retail. I obviously think we want to do that. Consider protections outside
the GF and for basements, update the definition of basements. We talked
about that. Require display windows for nonconforming uses. I would add a
fifth one which is look at how we would amortize out nonconforming uses so
we start the process on those.
Mayor Burt: Would you say "and which"? Not that all of them (crosstalk).
Vice Mayor Scharff: No, no. Certain nonconforming uses on University
Avenue. Really I'm just thinking about University Avenue. I'm thinking
about the Wells Fargo Bank. People have mentioned there may be other
ones on that.
Council Member DuBois: This is really just to consider it or evaluate it.
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Vice Mayor Scharff: Right, just to evaluate it.
Council Member DuBois: Okay.
INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE
MAKER AND SECONDER to add to the Motion, “including:
A. Requiring display windows on properties with nonconforming uses; and
B. Considering adjustments to the Ground Floor (GF) boundary; and
C. Considering protections outside the GF and for basements; updating definitions as needed; and
D. Options to amortize out certain nonconforming uses along University
Avenue.”
Mayor Burt: Council Member Holman.
Council Member Holman: I'm wondering if—one, just a little clarification. I
think this is clear, but just to be sure. Including South of Forest, it's really
SOFA II.
Vice Mayor Scharff: Okay, let's go with that.
Council Member Holman: That's SOFA II. To address actually what Council
Member DuBois was saying, a more flexible framework for the City as a
whole, did you mean—maybe to clarify or maybe support what you're
saying—a somewhat more flexible framework?
Council Member DuBois: Yeah.
Council Member Holman: You'll accept that as a friendly amendment?
Vice Mayor Scharff: I think I'd just rather say "more flexible." Let Staff
come back, and we can—this is going to come back to us, and then we can
argue about how flexible we want it to be. I don't want to really give
direction to Staff to say some or not. I want them to come back, and we
can fight about it then.
Council Member Holman: I just heard Staff mention earlier a one year
vacancy. That's not going to cut it.
Vice Mayor Scharff: Not with me either, but let's ...
Council Member Holman: As long as Staff's hearing that.
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AMENDMENT: Council Member Holman moved, seconded by Council
Member XX to add to the Motion, “somewhat” after “(SOFA II) and a.”
AMENDMENT FAILED DUE TO THE LACK OF A SECOND
Council Member Berman: (inaudible)
Male: That doesn't mean we (inaudible).
Council Member Holman: It's not like the one year we have had in the past.
That's where we end up in trouble. One other addition to what you have on Page 10 that you've added here as "A, B, C, D" is retail would be generally
open to the public and with a minimum number of operating hours. If that's
acceptable to the maker and seconder.
Council Member DuBois: Could we extend that to be a more general
definition of retail? Along what Council Member Schmid suggested.
Vice Mayor Scharff: What did he suggest?
Council Member DuBois: He had an economic definition for retail rather than
listing music stores.
Council Member Holman: That's okay if it gets added into the definition of
retail. Right now we don't have that, and that's how we have the bank
situation on University Avenue that you have to be buzz to even be let in.
Vice Mayor Scharff: I'm good with it
Council Member DuBois: I'm okay with it too.
Council Member Holman: You want to add this to the definition of retail?
Mayor Burt: I don't know if I'd call it a definition, but it's maybe a
requirement. Whereas, Council Member Schmid was really talking about a
definition that would precede our laundry list of examples.
Vice Mayor Scharff: Why don't we just say a requirement then? Does that
work for you?
Council Member Holman: Requirement works for me, absolutely.
INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to add to the Motion, “add to the requirement of
Retail; ‘generally open to the public with a minimum number of hours.’”
(New Part E)
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Council Member Holman: Also to address the Staff question that the items
on Slide 5 that are also in the Staff Report, the three bullets at the bottom,
for Staff to come back with clarifications on those three bullets. Probably
don't need that in the Motion. I think you're going to do that anyway. The
interpretation of permitted and operating, and then the last bullet was retail
uses that are not permitted. You're going to come back with that cleanup
anyway, right? You don't need that in the Motion, do you?
Ms. Gitelman: I think you'll see in the framework that we're going to try and
dispense with the regulation of legal and nonconforming uses and clarify
those provisions.
Council Member Holman: Say that again about legal and nonconforming.
Ms. Gitelman: Currently the interim use protects legal and nonconforming
retail uses from converting, which is highly unusual. You want your Zoning
Ordinance to start transitioning things to a more conforming environment.
Now that we're transitioning to a permanent Ordinance, we'll have to clean
that up and also address this language that's been so difficult to work with
about permitted or operating. We'll be doing that for sure.
Council Member Holman: I'm not so sure I would want to eliminate legal
and nonconforming uses.
Ms. Gitelman: Let us put it in the work plan and try and explain what I
didn't so good a job of explaining right now. If you don't want to proceed
with that, we can come up with an alternative.
Council Member Holman: I think I'm okay here.
MOTION RESTATED: Council Member DuBois moved, seconded by Vice
Mayor Scharff to direct Staff to return to Council with a framework for an
Ordinance for the Downtown Area, including South of Forest Area Coordinated Area Plan Phase 2 (SOFA II) and a more flexible framework for
the City as a whole, including:
A. Requiring display windows on properties nonconforming uses; and
B. Considering adjustments to the Ground Floor (GF) boundary; and
C. Considering protections outside the GF and for basements; updating
definitions as needed; and
D. Options to amortize out certain nonconforming uses along University
Avenue; and
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E. Add to the requirement of Retail; “generally open to the public with a
minimum number of hours.”
Mayor Burt: I see no more lights. We can go ahead and vote on this and
then return to the waiver issue. That passes 8-0 with Council Member
Filseth absent. That was good work.
MOTION AS AMENDED PASSED: 8-0 Filseth absent
Mayor Burt: Let's go on to the issue of the waiver request for 100 Addison. Just to frame it—maybe people disagree with the three choices. Keep things
as they are; completely waive them; or do something in between. Council
Member Holman.
Council Member Holman: On this one, I'm going to move that we deny the
request for a waiver at the property at 100 Addison and support the
Director's decision. If I can get a second, I'll certainly explain why.
Council Member DuBois: I'll second that.
MOTION: Council Member Holman moved, seconded by Council Member
DuBois to deny the request for a waiver at 100 Addison Avenue from the
Retail Protection Ordinance and uphold the Director’s decision.
Council Member Holman: Thank you for that. There are a number of
reasons why I don't support the conversion of this. I think there are
numerous opportunities here. Because it's not in the core, it's not going to
rent for the same amount of money that it would if it was in, let's say, the
500 block of Bryant or something. It's not, and that's a given. I think the
property owner understands that. What's troubling me is a few things. One
is—somebody else mentioned this. The owner has created their own
hardship by trying to raise the rent on Addison Antiques, which left because
of the raised rent. I know ...
Male: That's not true.
Council Member Holman: Sir. I know that from two owners, that I know
personally, who own Addison Antiques and two other dealers that were at
the property. No mention was ever made of Anthropologie leaving. It was
always about raised rents. What's troubling me and sort of supports that is
the rent was $1.35, I think, or whatever it was that the owner indicated.
Addison Antiques closed on June 15. On June 22, there was a letter of
intention that was signed where the rent was indicated as $5—I forgot to
look it up. It was over $5. That's a very large hike. That's June 22nd. In
August, August, the first request for an exemption was filed. There was
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hardly any attempt in that short period of time to—there's not time for that
big of an outreach to try to re-rent the space as retail. I said earlier that I
think there are all kinds of purposes that this space could accommodate.
Industrial space, I look at this building as being industrial space with the
roll-up doors and the concrete block construction. It's highly sought out in
other communities. We haven't done that. We haven't been creative
enough to try to use that kind of space for really creative uses. I started mentioning earlier Big Daddy, Architectural Salvage, Turner and Martin,
those kinds of design firms that could be design and gift sales. Turner and
Martin was priced out of Downtown. It could be a plant nursery and a
garden store combined. It could be an art gallery. There are all kinds of
things that those spaces could be used for. If I were owning that property,
I'd be working closely with the owners of the Anthropologie building to
create an environment there, to absolutely create an environment there that
would be a destination place and something that the community could
support and embrace. I'm not persuaded that a real attempt has been made
to reach out, to try to get the kinds of uses there that would actually be
attracted to that kind of space. Again, I went online and all I saw was just
it's posted. There's no creative attempt to attract a maker kind of retail
space or anything else like I've tried to mention. That's why I'm supporting
the Director's determination.
Mayor Burt: Council Member DuBois. I do want to caution us against
asserting privileged claims of fact that we as a body don't have and that
we're not giving the applicant an opportunity to respond to in that regard.
We should be cautious about something like that.
Council Member Holman: Actually I'm responding to the applicant.
Council Member DuBois: For 100 Addison and for retail in general, part of
the key question is what's a taking versus diminution in value based on retail
rents instead of office rents. If we allow office rents to be considered as the
basis for a taking, then the Ordinance is entirely meaningless. We know
office rents are higher than retail rents. Anyone can make this argument for
an exemption. The economic hardship analysis that was provided showed a
lost opportunity cost based on office rent. Again, while I think it was a
creative approach, it kind of flies in the face of the ordinance. I don't think
there should be an expectation of the same rents as an office or even the
same rents as Downtown. I think the reason we put the temporary
ordinance in place is still there. It's a detriment to the neighborhood. The
ordinance itself says it impacts the public welfare, and I think that's still
true. This is an Interim Ordinance, and it expires in six months. Based on
the Staff Report, it looks like more of a desire not to comply. I didn't see a
lot of evidence in the report of marketing for retail. Saying its unsuitable for
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retail when it has been retail was hard to understand. You argued about a
lack of windows. I would believe windows would be nice for an office as
well, so it's kind of the same. I do think we need equal treatment. Like I
said earlier, that means a high bar for an exemption. I think we already
committed to promptly review this temporary Ordinance and come back with
a permanent ordinance. At that time, we can potentially consider a more
flexible definition of exemptions. For now, Staff has followed the intent of the emergency Ordinance. I support upholding their decision.
Mayor Burt: I want to pause for a moment and allow the City Attorney to
wade in on the issue of whether we—even though this is not a quasi-judicial
matter—need to address any disclosure of any ex parte communications.
Why don't we go ahead and—Molly, you want to give some guidance?
Molly Stump, City Attorney: On closer review, it's not a typical item that we
have. We didn't mark it as a quasi-judicial item, but it really is in the nature
of a quasi-judicial item. We should take a little break and do our
disclosures. What you're wanting to do here under your rules, which make
sure that there's a fair process for everyone, is identify any conversations or
information that you've gathered about the item outside of the material
that's been presented by Staff. If you do have those items, you want to be
specific, especially if they've influenced your thinking in any way. We need
to provide an opportunity for effected parties to respond to that. The Chair
will do that tonight. Thanks.
Mayor Burt: Let me just clear the board. Council Member Holman.
Council Member Holman: Way back before the antique store was closing but
when they were about to close—I'm going back a ways—I went into Addison
Antiques fairly regularly. In conversation with two of the owners, Deborah Kohler and Ken Allsman, both indicated to me that the reason for their
departure was a rent increase. There was no reference of anything other
than a rent increase. More recently but it's still been—there was no
discussion then about any kind of waiver or anything. It was just like they
were going to be leaving. Fairly more recently—I do not recall when; it's in
an email somewhere. There was a communication from—I believe it was
from Ken Allsman indicating that the rent that they were paying was in line
with what the owner has said.
Mayor Burt: Anyone else? I'll say that a few months ago I was contacted by
Mr. Kaboli, who essentially presented the issues and the concerns of the
applicant and provided no additional information. Council Member Kniss.
Council Member Kniss: I know Julie Keaty [phonetic] and have known her
for 20 or 30 years. Most of you probably know she worked in Palo Alto
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during that length of time. I don't know Mr. Morris in the same way, but I
certainly have known her for a long period of time.
Mayor Burt: We just talk about communications specifically related to this
item and in particular any information that we ...
Council Member Kniss: There's nothing in here you're not reading about.
Mayor Burt: ... in particular any information that we receive that is not in
the public record.
Council Member Kniss: I don't have anything to share that's not in the
public ...
Mayor Burt: Then you don't have to speak on it. Council Member Berman.
Council Member Berman: I've received communications from the applicant.
Nothing that's not in the public record. I don't think I even had a chance to
reply to the communication that I received. Sorry about that. I didn't learn
anything that others don't know.
Mayor Burt: Council Member Wolbach.
Council Member Wolbach: I received a voice mail and also an email from
Judy Ellis, sharing the concerns that we've heard tonight from the applicant.
Mayor Burt: I see no more lights. I think we're back to Vice Mayor Scharff.
Ms. Stump: Excuse me, Mr. Mayor.
Mayor Burt: I'm sorry.
Ms. Stump: It would be important to invite the effected parties to respond if
they wish to do so.
Mayor Burt: I want to give the applicant for the waiver an opportunity to
respond to any additional—yes, you're welcome to come forward—
information that was put forward by Council Members.
Mr. Morris: Thank you. It's late. In response to the comments that Council Member Holman made, I had many conversations with Ken and Debbie and
everyone there. I remember the phone call I got at home. Did you know
that Anthropologie is going to be moving to Stanford? I said, "No." It was
in today's paper. What are we going to do? The majority of our business is
from Anthropologie. As time went on, we extended leases every two years.
When it came to the end of this lease, yes, I did tell them there would be an
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increase in rent because they only wanted one year and not two years to try
and stay in business before Anthropologie left. Yes, but it wasn't $5 a foot.
It wasn't $4 a foot. It wasn't even $3 a foot. Knowing what the retail rate
was in that part of town at that time, it was either $2.50 or $2 a foot. I'd
have to go back and check my notes to be honest with you. One of the four
members of Addison Antiques LLC had already left. Debbie Kohler had
already told me that some of the people that were renting space from the antique collective had already left, that their business was slow. With
Anthropologie leaving, they didn't see where they could sign a two year
lease. They only wanted one year. I said, "It's been a great relationship.
This is what I want." They said, "Mike, with Anthropologie leaving, with
business slow, we're not going to renew or opt." That's the facts as I
remember it. (crosstalk)
Mayor Burt: Thank you. Now, Vice Mayor Scharff.
Vice Mayor Scharff: Thank you. Thank you to the applicant for that. To be
honest, I'm going to completely accept your version of the events as the
way I think about it up here. I'm very hesitant frankly on an Ordinance
that's expiring in March to have Staff make many changes to it. I'm really
curious if we could allow, as part of this waiver as the Mayor said, something
in between. What I'd like to see us allow in between is some sort of
educational use there. I think that would open up possibilities for them. I
think it would be interesting to see how that goes. I guess I will just move,
as long as no one from the City Attorney's Office or anyone, that we deny
the waiver but we allow them to put in an educational use at the same time.
Council Member DuBois: Is that an amendment?
Vice Mayor Scharff: That would be an amendment.
Council Member Kniss: Is that a Motion?
Vice Mayor Scharff: First, I'm offering it as an amendment.
Mayor Burt: The maker and the seconder would have to accept it first. If
not, he can propose it as a ...
Council Member DuBois: I'd accept it.
Vice Mayor Scharff: You would?
Council Member Holman: I won't accept it, and here’s why.
Mayor Burt: All you have to do is just say yes or no.
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Council Member Holman: I won't accept it. I made comments earlier about
there's toxics probably onsite.
Mayor Burt: We got it.
Vice Mayor Scharff: I need a second.
Council Member DuBois: I'll second it.
AMENDMENT: Vice Mayor Scharff moved, seconded by Council Member
DuBois to add to the Motion, “and allow education uses in the interim ordinance.”
Mayor Burt: Now, you can speak to your amendment.
Vice Mayor Scharff: We heard from some of the educational institutions
earlier, talking about how difficult it is to find that kind of space and how
they're being squeezed out both from the retail side because the interim
retail Ordinance doesn't allow it and other spaces don't allow office. There
seems to be a clear market for something like this. I think that would help
the person requesting the waiver while at the same time providing a useful
service in Palo Alto of which we have a shortage of space. I think this is a
good compromise on the interim Ordinance that would allow the person who
is seeking the waiver to take advantage of that.
Council Member DuBois: (inaudible)
Vice Mayor Scharff: Yes. That's correct.
Mayor Burt: Council Member DuBois, you want to speak to your ...
Ms. Silver: Excuse me. By clarification, I'm assuming that what you're
proposing is essentially a granting of the waiver, but then also a direction
that Staff comes back with an amendment to the interim Ordinance. This is
essentially a zone change, so we have to reach out to the neighbors of the
existing property.
Vice Mayor Scharff: My preference would be, if I can't do it that way, simply
to change it for them tonight on that, not grant the waiver, but just expand
the definition for just them tonight. You're saying I can't do that?
Ms. Silver: Yes. That's problematic.
Vice Mayor Scharff: If I can't do that—that's why I asked when I started
this, if Staff jumps in, what would be the way to achieve that given the
shortage of—how would I achieve that in a quick period of time?
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Ms. Silver: We could do an amendment ...
Vice Mayor Scharff: To the Interim Ordinance.
Ms. Silver: ... to the Interim Ordinance.
Vice Mayor Scharff: Which I would be fine with.
Council Member DuBois: I don't want to do that (inaudible) had six months
left. (inaudible)
Mayor Burt: You're withdrawing your second? Is that what you're saying?
Council Member DuBois: Yeah. I really didn't want to update the interim
Ordinance with only six months left.
AMENDMENT WITHDRAWN BY THE SECONDER
Mayor Burt: Does anyone else want to ...
Council Member Kniss: I'll second it.
AMENDMENT: Vice Mayor Scharff moved, seconded by Council Member
Kniss to add to the Motion, “and allow education uses in the Interim
Ordinance.”
Mayor Burt: Council Member Kniss, you want to speak to your second?
Council Member Kniss: I would. I also need a quick definition of what
education is. Looking down at legal or at Staff.
Ms. Gitelman: Council Member Kniss (crosstalk) ...
Council Member Kniss: Is it a tutoring service? Could it be a ...
Ms. Gitelman: We could look at the fine points of the definition when we
come back with the Ordinance. I should mention it's going to take time
away from the work we just agreed to do on the permanent ordinances. If
you're directing us to come back with changes to the interim Ordinance, we
would come back with a definition the Council could react to. I'll have to
consult with City Attorney about whether it has to go to the Planning nad Transportation Commission (PTC) or ...
Council Member Kniss: The Motion says education uses. If we were to add
that in and vote for it tonight, who makes the decision about what an
education use is?
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Ms. Gitelman: You would make that decision when the Interim Ordinance
comes back.
Mayor Burt: Don't we have existing definitions that we use in our zoning?
Ms. Gitelman: We do. Would you like us to look in the Zoning Ordinance
now?
Vice Mayor Scharff: Yes.
Mayor Burt: First, that would be helpful. Second, I don't see why it's going to be much of a workload to just take that and plug it in. I don't get it.
Council Member Kniss: If I can continue?
Mayor Burt: Sure.
Council Member Kniss: It would seem as though education uses is one of
the most desirable in the community. Marc and I happened to be at a film
yesterday, hearing about the dearth of any kind of childcare, education use,
whatever in this community. Somebody else spoke about that tonight. I
can't imagine it would be extremely complicated, but I imagine what the
applicant may decide to do is just not pursue this either, but at least the
option is there. As a governing body, putting forth something that involves
education in our community is a good goal.
Mayor Burt: If it's okay, while Director Gitelman is looking that up, I'll go
ahead and offer a couple of comments. Once again this site was part of a
careful SOFA II consideration. It was not intended to be limited to retail nor
even retail and educational. It was a variety of uses that the RT-35 has
there. I said earlier what I don't want to see is it become another software
coding center. That's where I'd be coming from, to assure it would be
limited to the uses that were envisioned in the SOFA II. It was pretty well
thought through that this outside—the real debates we had in SOFA II were around some of those Homer traditionally retail spaces. This wasn't part of
the debate. I would actually be open to expanding this to medical office as
well. I think that's a modest increase. It doesn't allow everything that it's
permitted currently, absent the interim ordinance. It would give two choices
beyond retail. I frankly think that we have been seeing medical offices get
squeezed out of the community. I don't know whether there's support for
that. I will ...
Council Member Holman: Can I ask a question of Staff?
Mayor Burt: Yep.
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Council Member Holman: I don't have my computer with me. I don't
remember all the uses that are allowed in RT-35.
Ms. Gitelman: We can look that up after we respond to your question about
educational uses. At a minimum, if we wanted to capture a range of
educational uses, we'd have to look at 18.104.030(23), business or trade
school, meaning a use except a college or university providing education or
training on business, commerce, language or similar activity, etc. Also, there's a definition of colleges and universities. There's a daycare center
definition that includes facilities licensed by the State for non-medical,
daytime care included but not limited to nursery schools, preschools and
similar facilities. There may be one or two more definitions in here that we'd
have to capture and consider as part of the interim ordinance changes.
Mayor Burt: That's why you'll need to come back when we actually have the
Ordinance with ...
Ms. Gitelman: That's correct.
Mayor Burt: ... a more clear recommendation on how to capture the intent
of educational uses. That's not a complete answer to your question, but is
that good enough for now?
Council Member Kniss: It's a good direction.
Mayor Burt: Council Member Berman. I'm sorry.
Council Member Kniss: Are you adding your medical at this point?
Mayor Burt: I'll go ahead and offer that as an amendment to the
amendment.
Vice Mayor Scharff: No.
Mayor Burt: The maker of the Motion did not accept it. I will offer it as a
separate amendment to the amendment if I have a seconder.
Council Member Berman: I'll second it, but I have some questions.
AMENDMENT: Mayor Burt moved, seconded by Council Member Berman to
add to the Motion, “and allow education and medical office uses in the
interim ordinance.”
Mayor Burt: I've already spoken to it. Council Member Berman.
Vice Mayor Scharff: I'm going to withdraw my original Motion.
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AMENDMENT WITHDRAWN BY THE MAKER
Council Member Berman: Your original amendment?
Vice Mayor Scharff: Yep.
Mayor Burt: Instead it just becomes—I don't know what the point is. We
can vote on it separately or together. It doesn't really change. The next
action is we'd see whether the medical office passes. If it doesn't, then it
falls back to your amendment. Fine, whatever you want. I will offer the amendment. Please keep it up there. I'm going to go ahead and just—if
you replace Vice Mayor Scharff and put my name in there, we'll just retain it.
Council Member Berman.
Council Member Berman: Did you mean to just add medical office or did you
want to restrict uses? I think there's a broader set of uses that could be
under RT-35. (crosstalk)
Mayor Burt: I was intending to just expand it to medical office rather than
all uses under RT-35.
Council Member Berman: I'd be okay with that. Part of it is we are going to
be revisiting the permanent Ordinance. That will be a longer conversation,
and I think you'll see more change. I hope I won't be on the Council at that
point, but I hope you'll see more change to some of the really outlying
regions of the Downtown area that the ground-floor retail ordinance falls
under. My concern was just having education. I'd be the biggest proponent
of encouraging as much preschool and childcare as possible in town, but
there are a lot of complications with that. I don't know enough about the
site to know whether or not it's even viable under existing health and safety
laws for that type of use. I don't think that just restricting it to that type of
addition—I just don't know whether or not that even helps. Adding a secondary use like medical office provides some flexibility to the owners. If
they want to wait six months or seven months until more changes are made
at the time that we pass a permanent Ordinance, that's definitely an option.
Here what we're trying to do is create some flexibility. Without knowing
more about the site, I don't even know if it's a huge help, but at least it's
something before the permanent Ordinance in half a year.
Mayor Burt: Council Member Schmid.
Council Member Schmid: Just a clarification. The sentence as it reads says
in the interim Ordinance. Does that mean that we are allowing education,
medical offices throughout the City in retail sectors? Why just these two
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then? Do we want an overwhelming number of these things appearing all
over the City?
Mayor Burt: Let me ask is there any way to accomplish this in a more
narrow way? That was the whole ...
Ms. Silver: I think you can add an exception. There are two ways to do it.
One is to add it to the definition of retail-like uses and just make them
permitted. The other way is to add another exception that says something like "if the site has no surrounding retail uses, then it can convert to ...
Mayor Burt: Could we do it simply in the SOFA II area or RT-35?
Ms. Silver: Yes.
Mayor Burt: I would like to then narrow the impact of this to properties in
RT-35 zoning. It's in the SOFA area. I'll say that it's one of the few areas of
the City that had gone through and had a very deliberate consideration of
the zoning when the SOFA II plan went through. If you want to chat, I'll go
to a next Council Member, and then you can return with clarifications for us.
Council Member Wolbach.
INCORPORATED INTO THE AMENDMENT WITH THE CONSENT OF THE
MAKER AND SECONDER to add to the Amendment, “for properties in SOFA
II, Residential Transition-35 Zone (RT-35).”
Council Member Wolbach: I just wanted to ask a quick question about
medical offices. Just want to check. Does that include mental health
services, psychologists, psychiatrists, therapists, things like that as well?
We've heard some concern about possible displacement of businesses like
that, small practitioners like that, in the community. Of course, we know
how important they are for the community right now.
Ms. Gitelman: Yes, those type of uses are considered medical offices. I should just remind the Council that medical office uses greater than 5,000
square feet are subject to the annual office limit.
Mayor Burt: This is smaller, right?
Ms. Gitelman: It doesn't say small. If ...
Council Member Berman: (inaudible) smaller than that.
Ms. Gitelman: If someone had proposed a large medical office use in one of
these buildings, it would be subject to that other set of controls.
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Mayor Burt: Got you. Cara, did you have any follow-up yet or did you ...
Ms. Silver: I think the language that you've proposed now is fine.
Mayor Burt: Council Member Holman.
Council Member Holman: Two things. As I understood the amendment, it
was SOFA II RT-35 zone, not just SOFA.
Mayor Burt: I think that's better clarification.
Council Member Holman: SOFA II RT-35 zone. My original question was to Staff. Is medical office an allowed use in RT-35? It is an allowed use?
That's helpful to understand. The other thing is—never mind. I'm done.
Mayor Burt: Council Member DuBois.
Council Member DuBois: I think we're definitely not doing our best work
after 11:00 P.M.. I just want to point out again daycare centers are already
allowed under our retail definitions. We don't need to worry about those.
We're tasking Staff to change an interim Ordinance. It's likely by the time
we have a second reading, it'll probably be in effect for 30 or 60 days. I'd
much rather have Staff working on the permanent Ordinance at this point.
We have two other properties requesting exemptions, so we're creating this
exemption for SOFA II. It just seems like a very uneven playing field. I'm
not going to be supporting this amendment.
Mayor Burt: Vice Mayor Scharff.
Vice Mayor Scharff: Now we've gotten back to what I originally asked for.
We're just adding the medical office. We're only applying this to this
property. That's really where we end up on this.
Council Member DuBois: (inaudible) across the street.
Vice Mayor Scharff: The Anthropologie site, is that also RT-35? We're doing
the Anthropologie site and we're doing this. The Anthropologie site is bigger than 4,000 square feet. How does that affect it if that suddenly becomes
medical office, which is a likely outcome if we pass this?
Ms. Silver: My understanding is that medical office could go up to 5,000
square feet in RT-35. 5,000 square feet of Anthropologie could take
advantage of this.
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Vice Mayor Scharff: They'd be limited to the 5,000. To Council Member
DuBois' point, what is the timing of this? If this passes, it doesn't go into
effect until we have a second reading, right?
Ms. Gitelman: We need to draft an Ordinance and bring it to you for a first
reading.
Vice Mayor Scharff: Why don't you lay out the timeline for me in days, in
months. What is it going to be?
Ms. Gitelman: We're going to have to consult with the City Attorney about
whether it needs to go to the PTC. The original Ordinance was an Urgency
Ordinance that didn't go to the Planning Commission. We're just going to
have to consult and get back to you on that.
Vice Mayor Scharff: It doesn't work for me.
Mayor Burt: Let's see whether—let's take a pause. Does the City Attorney's
Office have an input on what the process route would be?
Ms. Silver: We don't know. My sense is that this amendment is very
discrete. The drafting of the amendment will not take time. There's an
upcoming Planning Commission meeting.
Mayor Burt: Would it even need to go to the Planning Commission?
Ms. Silver: It's an amendment to a Zoning Ordinance, so it typically does.
Vice Mayor Scharff: How long does that typically take? Are we going to be
able to schedule it on the next meeting? The question is if this comes back
to us in January, I'm voting no.
Mayor Burt: Let's just hear what the ...
Vice Mayor Scharff: If it's coming before, I'd probably vote yes.
Ms. Gitelman: If we could get this on the PTC agenda in early September,
then it takes 4-5 weeks for an Agenda Packet to get to Council. You're three or four weeks to a Planning Commission meeting, then add four or five
weeks to get to a Council hearing. That's your first reading. You need a
second reading after two weeks. It's not going to happen instantaneously. I
also wanted to point out the way this is written, it would apply to any
existing retail use in the SOFA II RT-35 district. I don't know how many of
those there are, because we haven't done that analysis yet. There may be
others, other than the two we've been discussing this evening.
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Vice Mayor Scharff: Thank you.
Mayor Burt: Council Member Holman.
Council Member Holman: I apologize for this. I just pulled up the map
that's in our Packet on Page 303 of the RT-35 zone. Understand that this
change would mean that Watercourse Way could be converted to medical
office. It means that Reach could be converted to medical office. It means
the City of Paris and the building next to that could be converted to medical office. It means the Creamery store could be converted to medical office.
That one's not very likely to.
Mayor Burt: I get the list.
Council Member Holman: I just want Council Members to understand the
breadth and potential impact.
Mayor Burt: Let me ask a question of the City Attorney's Office. In the
discussion that we've had, we've really been thinking that properties on
Alma, on the real outskirts is what we are more open to changes on. Could
we further restrict this and say that this would apply to RT-35 properties on
Alma? It's not spot zoning. It would be four or five properties total.
Ms. Silver: Yes, that would be fine.
Mayor Burt: I agree with the point. I'd be concerned if it could apply
throughout SOFA. Our intent really was to look at outlier properties that
have gotten pulled into this. Now, that's the narrower impact of the
amendment. Last one, Council Member Wolbach.
INCORPORATED INTO THE AMENDMENT WITH THE CONSENT OF THE MAKER AND SECONDER to add to the Amendment, “on Alma Street.”
Council Member Wolbach: Just so we can make sure to capture this site.
Where it says "on Alma," could we maybe change that to "on or abutting Alma"? Just to make sure (crosstalk).
Mayor Burt: (crosstalk) addresses.
INCORPORATED INTO THE AMENDMENT WITH THE CONSENT OF THE
MAKER AND SECONDER to add to the Amendment, “or abutting” after
“(RT-35), on.”
AMENDMENT RESTATED: Mayor Burt moved, seconded by Council
Member Berman to add to the Motion, “and allow education and medical
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office uses in the interim ordinance for properties in SOFA II, Residential
Transition-35 Zone (RT-35), on or abutting Alma Street.”
Mayor Burt: Let's go ahead and vote on the amendment. That amendment
fails on a 4-4 vote. Vice Mayor Scharff.
AMENDMENT FAILED: 4-4 DuBois, Holman, Scharff, Schmid no, Filseth
absent
Vice Mayor Scharff: I'd like to make another amendment that is the same without medical office use.
Mayor Burt: Is anybody seconding that?
Council Member Kniss: (inaudible)
Council Member Berman: It's your original ...
Vice Mayor Scharff: It's the exact same amendment.
Mayor Burt: Basically it's taking the amendment before us and deleting
medical office uses.
Council Member Kniss: Let's try it.
Mayor Burt: Does that mean you're seconding?
Council Member Kniss: I'll second.
AMENDMENT: Vice Mayor Scharff moved, seconded by Council Member
Kniss to add to the Motion, “and allow education uses in the Interim
Ordinance for properties in SOFA II, Residential Transition-35 Zone (RT-35),
on or abutting Alma Street.”
Mayor Burt: Do you want to speak further to that?
Vice Mayor Scharff: No.
Mayor Burt: Council Member Kniss, did you want to speak to it?
Council Member Kniss: No.
Mayor Burt: Please vote on the board. That passes on a 5-3 vote. That ends this item. Thank you all for hanging in there with us. Pardon me?
Sorry. We have a clarification.
AMENDMENT PASSED: 5-3 DuBois, Holman, Schmid no, Filseth absent
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MOTION AS AMENDED RESTATED: Council Member Holman moved,
seconded by Council Member DuBois to deny the request for a waiver at 100
Addison Avenue from the Retail Protection Ordinance and uphold the
Director’s decision and allow education uses in the interim ordinance for
properties in SOFA II, Residential Transition-35 Zone (RT-35), on or abutting
Alma Street.
Vice Mayor Scharff: I think we need to vote on the Motion.
Mayor Burt: Now we have to vote on the primary Motion. Let's see. What
are we—that was the amendment.
Ms. Silver: The primary Motion was to deny the waiver.
Mayor Burt: To deny the—the primary Motion is to deny the waiver. The
amendment was to allow this within the existing interim Ordinance. We still
have to vote on the primary Motion, which is to deny the waiver. That
passes on a 6-2 vote with Council Members Berman and Kniss ...
Council Member Berman: Wait a second.
Council Member Kniss: Isn't that the other way around?
Mayor Burt: We're voting to deny the waiver. Isn't that what we're doing?
Vice Mayor Scharff: Yeah.
Mayor Burt: Yes means you're voting to deny the waiver. Did you want to
change your vote? Let's clear the board and revote. Try it one more time.
That passes 8-0 with Council Member Filseth absent. Now we're done.
MOTION AS AMENDED PASSED: 8-0 Filseth absent
13. Policy Discussion on Comprehensive Plan Update Environmental
Impact Report Scenarios 5 & 6 (Staff requests this item be continued
to August 29, 2016).
This Item was continued to August 29, 2016.
Inter-Governmental Legislative Affairs
14. Status Update and Potential City Responses to the Governor's "By
Right" Housing Bill and Pending Bills Addressing Housing Issues.
Mayor Burt: We really don't have a need to ...
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James Keene, City Manager: Item Number 14 was only put on there if you
wanted to take action. We're not requesting any specific action. As I
indicated earlier, we've run out of time here and there.
Mayor Burt: Any Council Member questions or comments or
announcements?
Council Member DuBois: On 14, (inaudible) bill that's going next week?
Council Member Berman: You just want an update?
Mayor Burt: Council Member DuBois is asking about a density bonus bill
that is going next week. Is that more timely?
Council Member DuBois: There were several bills in this item. I thought
several were still alive.
Council Member Berman: AB 2501 is the one you were wondering about.
(inaudible) update on what happened.
Hillary Gitelman, Planning and Community Environment Director: It's
scheduled to be heard tomorrow.
Mayor Burt: Is there any action that we would be potentially taking? I
would think it's—we don't matter.
Mr. Keene: (inaudible)
NO ACTION TAKEN
Council Member Questions, Comments and Announcements
Mayor Burt: Council Member comments or announcements.
Adjournment: The meeting was adjourned at 11:40 P.M.
Mayor Burt: Seeing none, meeting's adjourned.