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Home My WebLink About2015-06-15 Ordinance 5330DocuSign Envelope ID: D49C6B91-8428-4594-8DCD-3FD97FOAE507 Ordinance No. 5330 Ordinance of the Council of the City of Palo Alto Extending Urgency Interim Ordinance 5325 Adopting a Temporary Moratorium on the Conversion of Ground Floor Retail and "Retail Like" Uses to Other Uses Citywide FINDINGS A. The City of Palo Alto has long been considered the birth place of Silicon Valley. With its proximity to Stanford University, its international reputation, its deep ties to technology firms, its highly rated public school system and its ample public parks, open space and community centers, Palo Alto continues to serve as a hub for technology based business. B. Palo Alto is considered one of Silicon Valley's most desirable office markets. According to one study Class A office rates have climbed 49 percent since the start of 2010. The same study reported Class B office space increasing by 114.4 % since 2010. C. In particular, average commercial rental rates have gone up significantly from 2013 to 2015. In 2013 the average monthly rental rate citywide for office was $4.57 per square foot. That rate increased to $5.12 in 2015. While retail rents have also increased during this period, retail rents are considerably lower than office rents. The average monthly rental rate for retail in 2013 was $4.21 and in 2015 was $4.88. D. Price increases have been even more significant in the downtown area. In 2013 the average downtown monthly office rent was $6.37. In 2015 the rate increased to $7.33. E,. At the end of 2014, Palo Alto's downtown vacancy rate was a low 2.83 percent, according to a report prepared by Newmark Cornish & Carey. F. These record high monthly rental rates for office and low vacancy rates have created financial incentives to replace current retail use with office use where such conversions are permitted by the City's zoning ordinance. These economic pressures are more severe in the downtown and California Avenue commercial areas but exist throughout the City. G. The data submitted by the City to support the Valley Transportation Authority's Congestion Management Plan (CMP) each fiscal year suggests that there has been a loss of approximately 70,000 square feet of retail-type uses in the period from 2008 to the present. The CMP data is broad in the sense that it includes uses like automotive services in the "retail" category even though they are considered separate uses in the City's zoning ordinance. However any overstatement of the trend towards less retail is likely to be offset by the data's reliance on a list of discretionary applications processed by the City, since there have also been recent conversions of retail space to office space that did not require discretionary approvals and are not included in the 70,000 square foot number. H. City residents have seen this occurring in the City's commercial districts as the City's Architectural Review Board has considered projects like those affecting Spagos restaurant at 265 Lytton, lnhabiture at 240 Hamilton Ave, Palo Alto Bowl at 4301 El Camino Real, and Club Illusions Restaurant at 260 California Avenue. In addition, familiar retail businesses like the 150521 cs 0131444 1 June 15, 2015 DocuSign Envelope ID: D49C6B91-8428-4594-8DCD-3FD97FOAE507 Zibibbo restaurant have closed and their spaces have been acquired and occupied by non- retailers. Likewise the old location for Fraiche Yogurt, which moved from Emerson Street to Hamilton Avenue, was immediately re-purposed_ as office space. I. Based on these trends, on March 2, 2015, the Palo Alto City Council asked staff to consider whether zoning-based protections for ground floor retail uses need to be strengthened where they currently exist and expanded to areas of the City where they do not. J. On April 6, 2015, the City Council discussed these issues in detail and directed staff to prepare an urgency ordinance that would preserve existing ground floor retail and retail-like uses until permanent zoning revisions can be prepared. K. This direction is consistent with the City's existing Comprehensive Plan, which identifies the desirability of neighborhood serving retail (Policy L-16) and envisions inviting, pedestrian-scale "centers" with a mix of uses as focal points for neighborhoods (Goal L-4). Policy L-20 suggests that the City "encourage street frontages that contribute to retail vitality ... " and Policy B-5 calls on the City to "maintain distinct business districts within Palo Alto as a means of retaining local services and diversifying the City's economic base." L. Palo Alto is in the process of updating its Comprehensive Plan, and it is expected that the updated Comprehensive Plan will contain additional policies and programs designed to preserve existing retail uses in the City. M. The public's health, safety and welfare are currently and immediately detrimentally affected as neighborhood-serving retail service and related uses are priced-out by rising rents and replaced by uses that do not provide similar services or activate the street frontage by creating pedestrian activity and visual interest (i.e. shop windows and doors). These changes affect neighborhood quality of life, and mean that local residents have to drive to similar retail destinations in other locations, diminishing the public health benefit when residents can walk to needed services and increasing traffic congestion, vehicle miles traveled and greenhouse gas emissions. N. Unless abated, the City's actions to approve conversion of ground floor spaces from retail to other uses will exacerbate the reduction of retail and changes described above, resulting in the need for the proposed interim ordinance. 0. The City Council desires on an interim basis to temporarily suspend conversions of retail and retail like uses to office throughout the City as such conversions may be in conflict with the City's Comprehensive Plan and zoning proposal that the legislative body, planning commission or the planning department is considering or studying or intends to study within a reasonable time. P. The possible extension of this interim ordinance beyond 45 days would not have a material effect on the development of projects with a significant component of multifamily housing because a specific exemption has been included to address this requirement of State law. 150618 cs 0131444 2 June 15, 2015 \ DocuSign Envelope ID: D49C6B91-8428-4594-8DCD-3FD97FOAE507 Q. This urgency interim ordinance is adopted in accordance with the requirements of Government Code Section 65858 and Palo Alto Municipal Code Section 2.04.270 and is based on the need to protect the public safety, health and welfare as set forth in the above findings. A 4/5 vote is required for adoption. R. The City Council adopted Interim Ordinance No. 5325 on May 11, 2015, by a four- fifths vote after a public hearing pursuant to Government Code Section 65858 and Ordinance 5325 will expire on June 25, 2015. S. The Council desires to extend Interim Ordinance 5325 in accordance with the requirements of Government Code Section 65858 and Palo Alto Municipal Code Section 2.04.270 for an additional period of 22 months and 15 days. This extension is based on the need to protect the public safety, health and welfare as set forth in the above findings and a 4/5 vote is required for passage. The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1. Findings. The findings listed above are hereby incorporated. SECTION 2. Written Report. Government Code Section 65858(d) states that "ten days prior to the expiration of an interim ordinance or any extension, the legislative body [the City Council] shall issue a written report describing the measures taken to alleviate the conditions which led to the adoption of the ordinance. Pursuant to this provision, the City Council hereby reports that much of the factors which gave rise to Urgency Interim Ordinance No. 5325 still apply, namely increasing commercial rental rates; low office vacancy rates; retail service uses being priced out of market and being replaced by office and other uses; and increased traffic congestion, vehicle miles traveled and greenhouse gas emissions resulting from these changing land use patterns. The City Council has undertaken a number of actions since the adoption of Ordinance Number 5325, including directing staff to bring to the Planning and Transportation Commission a "backstop" ordinance to retain retail and retail like uses as well as directing staff to more closely study retail protection initiatives together with a formula retail ban in the California Avenue commercial district. Staff has also begun detailed reviews of regulatory schemes from other jurisdictions. In order to have adequate time to fashion and propose appropriate regulations, and to ensure that the current and immediate threat to the public safety, health and welfare continues to be forestalled, adoption of this ordinance is necessary. SECTION 3. Moratorium. The City Council hereby extends Interim Urgency Ordinance No. 5325 establishing a moratorium on the conversion of any ground floor Retail use permitted or operating as of March 2, 2015 or thereafter to any other non-Retail use anywhere in the City. SECTION 4. Severability. If any provision, clause, sentence or paragraph of this ordinance, or the application to any person or circumstances, shall be held invalid, such invalidity shall not affect the other provisions of this.Ordinance which can be given effect without the invalid provision or application and, to this end, the provisions of this Ordinance are hereby declared to be severable. 150618 cs 0131444 3 June 15, 2015 DocuSign Envelope ID: D49C6B91-8428-4594-8DCD-3FD97FOAE507 SECTION 5. Effective Period. This extension ordinance shall take full force and effect ' immediately upon expiration of Interim Ordinance No.5325. In accordance with Government Code Section 65856, this ordinance shall be in full force and effect for an additional period of 22 months and 15 days following expiration of Interim Ordinance No. 5325. Thus the moratorium shall expire on April 30, 2017, unless this period is extended by the City Council as provided in Government Code Section 65858. SECTION 6. Supersedes Earlier Ordinances. During the time period that this Ordinance is effective, this Ordinance supersedes any provision of the Palo Alto Municipal Code inconsistent with the provisions of this Ordinance. SECTION 7. g,QA. The City Council finds that this ordinance falls under the California Environmental Quality Act (CEQA) exemption found in Title 14 California Code of Regulations Section 15061(b)(3) because it is designed to preserve the status quo and therefore does not have the potential to significantly impact the environment. This ordinance is also categorically exempt under CEQA Section 15308 as a regulatory action taken by the City pursuant to its police power and in accordance with Government Code Section 65858 to assure maintenance and protection of the environment pending the evaluation and adoption of potential local legislation, regulation, and policies. Adoption of the proposed interim ordinance is categorically exempt from review under Section 15301 (Class One -Existing Facilities) of the California Environmental Quality Act (CEQA) Guidelines since it will temporarily perpetuate existing environmental conditions. INTRODUCED AND PASSED: June 15, 2015 AYES: BERMAN, BURT, DUBOIS, FILSETH, HOLMAN, KNISS, SCHARFF, SCHMID, WOLBACH NOES: ABSTENTIONS: ABSENT: ATIEST: /. ~~ City Clerk APPROVED AS TO FORM: re,;:s~ii:r LC2CEDQ84ABC3429 Senior Assistant City Attorney 150618 cs 0131444 APPROVED: ~tlL Mayor GDocuSlgned by: ~4~, 39E7298FB2064DB ... City Manager CaS:~ Director of Planning and Community Environment 4 June 15, 2015 ~ l11cuu1> Envelope Number: D49C6891842845948DCD3FD97FOAE507 Status: Completed Subject: Please DocuSign this document: ORD 5330 Extending Retail Preservation Urgency Moratorium May 21 2015 Source Envelope: Document Pages: 4 Certificate Pages: 5 AutoNav: Enabled Envelopeld Stamping: Enabled Status: Original 6/18/2015 8:00:56 AM PT Cara Silver cara.silver@cityofpaloalto.org Senior Assistant City Attorney Security Level: Email, Account Authentication (None) Electronic Record and Signature Disclosure: Accepted: 6/181201510:31:10 AM PT ID: bbf2e621-14d9-4135-95c4-3ceecc9e812b Hillary Gitelman Hillary.Gitelman@CityofPaloAlto.org Security Level: Email, Account Authentication (None) Electronic Record and Signature Disclosure: Accepted: 6/18/201512:47:49 PM PT ID: Ob8914ec-1 d58-4995-81 eb-ddef2daa3a48 James Keene james.keene@cityofpaloalto.org City Manager City of Palo Alto Security Level: Email, Account Authentication (None) Electronic Record and Signature Disclosure: Accepted: 4114/2015 5:40:07 PM PT ID: 44fe333a-6a81-4cb7-b7d4-925473ac82e3 Signatures: 3 lnitials:O Holder: Kim Lunt kimbei"ly.lunt@cityofpaloalto.org (F~$7t:r C."ICEOD84ABC3429 ... Using IP Address: 199.33.32.254 ~u;;Md~~ F07E6601 F21E441 ... Using IP Address: 199.33.32.254 Using IP Address: 199.33.32.254 Envelope Originator: Kim Lunt 250 Hamilton Ave Palo Alto , CA 94301 kimberly.lunt@cityofpaloalto.org IP Address: 199.33.32.254 Location: DocuSign Sent: 6/18/2015 8:03:17 AM PT Viewed: 6/18/201510:31:10 AM PT Signed: 6/18/2015 10:31 :42 AM PT Sent: 6/18/2015 10:31 :44 AM PT Viewed: 6/18/201512:47:49 PM PT Signed: 6/18/2015 12:48:02 PM PT Sent: 6/18/201512:48:04 PM PT Viewed: 6/2S/20151:11:34 PM PT Signed: 8/12/2015 5:42:16 PM PT