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HomeMy WebLinkAbout2026-01-22 Retail Committee Agenda PacketRETAIL COMMITTEE Special Meeting Thursday, January 22, 2026 Community Meeting Room & Hybrid 9:00 AM Retail Committee meetings will be held as “hybrid” meetings with the option to attend by teleconference/video conference or in person. Information on how the public may observe and participate in the meeting is located at the end of the agenda. The meeting will be broadcast on Cable TV Channel 26, live on YouTube https://www.youtube.com/c/cityofpaloalto, and streamed to Midpen Media Center https://midpenmedia.org. VIRTUAL PARTICIPATION CLICK HERE TO JOIN (https://cityofpaloalto.zoom.us/j/85845544145) Meeting ID: 858 4554 4145 Phone: 1(669)900-6833 PUBLIC COMMENTS General Public Comment for items not on the agenda will be accepted in person for up to three minutes or an amount of time determined by the Chair. General public comment will be heard for 30 minutes. Additional public comments, if any, will be heard at the end of the agenda. public comments for agendized items will be accepted both in person and via Zoom for up to three minutes or an amount of time determined by the Chair. Requests to speak will be taken until 5 minutes after the staff’s presentation or as determined by the Chair. Written public comments can be submitted in advance to city.council@PaloAlto.gov and will be provided to the Council and available for inspection on the City’s website. Please clearly indicate which agenda item you are referencing in your subject line. Multiple individuals who wish to speak on the same item may designate a spokesperson. Spokespersons must be representing five or more verified individuals who are present either in person or via zoom. Spokespeople will be allowed up to 10 minutes, at the discretion of the presiding officer. Speaking time may be reduced if the presiding officer reduces the speaking time for individual speakers. PowerPoints, videos, or other media to be presented during public comment are accepted only by email to city.clerk@PaloAlto.gov at least 24 hours prior to the meeting. Once received, the  Clerk   will   have   them   shared   at   public   comment   for   the   specified   item.   To   uphold   strong cybersecurity management practices, USB’s or other physical electronic storage devices are not accepted. Signs and symbolic materials less than 2 feet by 3 feet are permitted provided that: (1) sticks, posts, poles or similar/other types of handle objects are strictly prohibited; (2) the items do not create a facility, fire, or safety hazard; and (3) persons with such items remain seated when displaying them and must not raise the items above shoulder level, obstruct the view or passage of other attendees, or otherwise disturb the business of the meeting. 1 Special Meeting January 22, 2026 CALL TO ORDER PUBLIC COMMENT  Members of the public may speak in-person ONLY to any item NOT on the agenda. 1-3 minutes depending on number of speakers. Public Comment is limited to 30 minutes. Additional public comments, if any, will be heard at the end of the agenda. ACTION ITEMS 1.Consider and Provide Feedback on Retail Revitalization Measures and Initiatives Related to the City Council's Economic Development and Retail Vibrancy Priority. CEQA Status: Not a Project 2. Recommendation to the City Council on a Resolution Amending the El Camino Real Retail Node Map for Purposes of Palo Alto Municipal Code Section 18.40.180: Retail Preservation. CEQA Status: Addendum to the Comprehensive Plan Environmental Impact Report (EIR), adopted November 17, 2023 (SCH #2014052101) 3. Development Services Permitting Operations Update 4. Economic Development Activity Report January 2026 FUTURE MEETINGS AND AGENDAS Members of the public may not speak to the item(s) ADJOURNMENT 2 Materials related to an item on this agenda submitted to the Board after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. Special Meeting January 22, 2026 PUBLIC COMMENT INSTRUCTIONS Members of the Public may provide public comments to teleconference meetings via email, teleconference, or by phone. 1.Written public comments may be submitted by email to city.council@paloalto.gov. 2.For in person public comments please complete a speaker request card located on the table   at   the   entrance   to   the   Council   Chambers   and   deliver   it   to   the   Clerk   prior   to discussion of the item. 3.Spoken public comments for agendized items using a computer or smart phone  will be accepted through the teleconference meeting. To address the Council, click on the link below to access a Zoom-based meeting. Please read the following instructions carefully. ◦You may download the Zoom client or connect to the meeting in- browser. If using your browser, make sure you are using a current, up-to-date browser: Chrome 30 , Firefox 27 , Microsoft Edge 12 , Safari 7 . Certain functionality may be disabled in older browsers including Internet Explorer. Or download the Zoom application onto your smart phone from the Apple App Store or Google Play Store and enter in the Meeting ID below. ◦You may be asked to enter an email address and name. We request that you identify yourself by name as this will be visible online and will be used to notify you that it is your turn to speak. ◦When you wish to speak on an Agenda Item, click on “raise hand.” The Clerk will activate and unmute speakers in turn. Speakers will be notified shortly before they are called to speak. ◦When called, please limit your remarks to the time limit allotted. A timer will be shown on the computer to help keep track of your comments. 4.Spoken public comments for agendized items using a phone  use the telephone number listed below. When you wish to speak on an agenda item hit *9 on your phone so we know that you wish to speak. You will be asked to provide your first and last name before addressing the Council. You will be advised how long you have to speak. When called please limit your remarks to the agenda item and time limit allotted. CLICK HERE TO JOIN Meeting ID: 858-4554-4145 Phone: 1-669-900-6833 Americans with Disability Act (ADA) It is the policy of the City of Palo Alto to offer its public programs, services and meetings in a manner that is readily accessible to all. Persons with disabilities who require materials in an appropriate alternative format or who require auxiliary aids to access City meetings, programs, or services may contact the City’s ADA Coordinator at (650)   329-2550   (voice)   or   by   emailing  ada@paloalto.gov.   Requests   for   assistance   or accommodations must be submitted at least 24 hours in advance of the meeting, program, or service. 3 Materials related to an item on this agenda submitted to the Board after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. Special Meeting January 22, 2026 California Government Code §84308, commonly referred to as the "Levine Act," prohibits an elected official of a local government agency from participating in a proceeding involving a license, permit, or other entitlement for use if the official received a campaign contribution exceeding $500 from a party or participant, including their agents, to the proceeding within the last 12 months. A “license, permit, or other entitlement for use” includes most land use and planning approvals and the approval of contracts that are not subject to lowest responsible bid procedures and have a value over $50,000. A “party” is a person who files an application for, or is the subject of, a proceeding involving a license, permit, or other entitlement for use. A “participant” is a person who actively supports or opposes a particular decision in a proceeding involving a license, permit, or other entitlement for use, and has a financial interest in the decision. The Levine Act incorporates the definition of “financial interest” in the Political Reform Act, which encompasses interests in business entities, real property, sources of income, sources of gifts, and personal finances that may be affected by the Council’s actions. If you qualify as a “party” or “participant” to a proceeding, and you have made a campaign contribution to a Council   Member  exceeding   $500   made   within   the   last   12   months,   you   must   disclose   the campaign contribution before making your comments. 4 Materials related to an item on this agenda submitted to the Board after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas. Special Meeting January 22, 2026 Retail Committee Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: Planning and Development Services Meeting Date: January 22, 2026 Report #:2511-5570 TITLE Consider and Provide Feedback on Retail Revitalization Measures and Initiatives Related to the City Council's Economic Development and Retail Vibrancy Priority. CEQA Status: Not a Project RECOMMENDATION Consider options and recommendations for a retail revitalization strategy and provide feedback to staff on preparation of an ordinance. BACKGROUND This item is being presented to the Retail Committee to provide an update on this effort, report on the Planning and Transportation Commission’s (PTC) recent discussion. The Committee may offer additional feedback for staff and for the Commission’s consideration. On October 29, 2025, the PTC held a Study Session to review options and recommendations for a retail revitalization strategy and to provide feedback to staff on preparing a permanent ordinance to replace the interim ordinance adopted by the City Council in late 2024. This work supports the 2025 Council Priority on Economic Development and Retail Vibrancy, specifically Objective 4: “Council consideration of an ordinance that expands retail opportunities and promotes retail resiliency. Consider further refinement to the retail and retail-like definition and explore changes to the retail preservation ordinance.” Additional background is provided in the PTC Staff Report included as Attachment A. The October 29, 2025 PTC staff report outlines options and recommendations for replacing the interim regulations with a permanent ordinance and requests feedback on key topics. Attachments to that report include: A. Issues and Options for Zoning Amendments Workbook B. Overlapping Use Regulations Applicable to Charleston and Midtown Shopping Centers C. Retail Maps Item 1 Item 1 Staff Report        Item 1: Staff Report Pg. 1  Packet Pg. 5 of 86  A summary of the feedback from the PTC study session is included in Attachment B. ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: Item 1 Item 1 Staff Report        Item 1: Staff Report Pg. 2  Packet Pg. 6 of 86  CITY OF PALO ALTO Planning & Transportation Commission Regular Meeting Wednesday, October 29, 2025 6:00 PM     Agenda Item     3.STUDY SESSION: Consider Retail Revitalization Measures and Initiatives Related to the City Council's Economic Development and Retail Vibrancy Priority. CEQA Status: Not a Project Staff Presentation Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 3  Packet Pg. 7 of 86  Item No. 3. Page 1 of 7 Planning & Transportation Commission Staff Report From: Planning and Development Services Director Lead Department: Planning and Development Services Meeting Date: October 29, 2025 Report #: 2509-5202 TITLE STUDY SESSION: Consider Retail Revitalization Measures and Initiatives Related to the City Council's Economic Development and Retail Vibrancy Priority. CEQA Status: Not a Project RECOMMENDATION Consider options and recommendations for a retail revitalization strategy and provide feedback to staff on preparation of an ordinance. EXECUTIVE SUMMARY This report identifies zoning regulatory barriers that may restrict retailers from locating in certain commercial districts and suggests options for how to address these issues. These options build on consultant reports prepared in 2023 and 2024 to support the City Council’s priority to develop a retail zoning strategy. The City Council adopted an interim ordinance to implement this strategy in December 2024. That ordinance will remain effective until December 31, 2026, or upon adoption of a replacement ordinance. This work effort aims to refine the retail strategy and adopt a permanent ordinance. Attachment A to this report presents existing code language and suggests options for how to modify code language to address these issues. It is intended to be used as a workbook for Planning and Transportation Commission (PTC) members to make notes, come up with ideas, and make recommendations. City staff will return with an ordinance based on the PTC feedback. BACKGROUND In 2023 and 2024, one of the City Council’s priorities was Economic Development and Transition, including development of a retail zoning strategy. To implement this priority, Streetsense prepared a comprehensive economic development strategy report in June 2023. Subsequently, Michael Baker International conducted local outreach, review of peer city initiatives and other policies to identify land use regulations that would support a more robust Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 4  Packet Pg. 8 of 86  Item No. 3. Page 2 of 7 retail environment. This work effort culminated in a retail revitalization study in May 2024 and series of zoning amendment options in August 2024. 1 the City Council Retail Committee reviewed the final retail revitalization study and provided direction to staff on several zoning amendments that should be implemented immediately to support retail and retail-like uses in the City. Recommendations included ways to streamline retail zoning regulations, increase flexibility in permitted land uses, and update parking policies to meet current needs. Although the PTC had held six hearings on the Retail Study (in addition to four meetings of the PTC retail ad hoc committee), the PTC had not yet considered or recommended specific zoning amendments. In the interest of time, the City Council therefore adopted an interim ordinance to adopt the following amendments identified by the City Council Retail Committee: Modifying the formula retail definition to allow for larger enterprises; Increasing flexibility for “retail-like” uses and expanding permissible uses for ground floor spaces, including personal services, allowances for pet grooming, financial institutions, and automobile showrooms; and Replacing the high threshold required for waivers and adjustments to meeting use regulations. 2 and will remain effective until December 31, 2026, or upon adoption of a replacement ordinance. refinement to retail and retail-like definition and explore changes to retail preservation ordinance. (12)" 1 City Council Retail Committee September 18, 2024 agenda: https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=14946; staff report and attachments: https://cityofpaloalto.primegov.com/meetings/ItemWithTemplateType?id=5833&meetingTemplateType=2&comp iledMeetingDocumentId=11747 2 City Council December 16, 2024 agenda: https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=14537; staff report and attachments: https://cityofpaloalto.primegov.com/meetings/ItemWithTemplateType?id=6659&meetingTemplateType=2&comp iledMeetingDocumentId=12596 Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 5  Packet Pg. 9 of 86  Item No. 3. Page 3 of 7 ANALYSIS This staff report provides options and recommendations to replace the interim regulations with a permanent ordinance and requests the PTC’s feedback key topics. This report’s recommendations were prepared by City staff and land use consultants in coordination with a retail broker with over 30 years' experience. The recommendations are informed by conversations with Palo Alto's retail community. Palo Alto continues to experience persistent vacancies in retail storefronts throughout the City and at higher rates than some comparable cities on the peninsula. Reducing regulatory barriers can help attract businesses by making it easier for tenants to apply and gain approval for zoning permits. These shorter permitting timelines reduce the amount of time and money retailers spend on their monthly leases before they are allowed to occupy and build out their tenant spaces. Below are key issues for the PTC to consider. Attachment A provides a workbook that details existing regulations, and options for the PTC’s consideration to address these issues. 1. Refine and Make Permanent Interim Regulations: Since the interim ordinance will sunset in December 2026, the new retail revitalization ordinance will need to make these changes permanent. There is also an opportunity to revisit these changes and refine them, as needed. 2. Address Other Topics Identified by City Council in its November 2024 Motion and Subsequent Discussions: During consideration of the interim ordinance, the City Council discussed several topics that require consideration for the permanent ordinance. Additionally, City staff have identified issues that have come up in discussions with potential tenants and as part of permit applications: Pedestrian-Orientation: Continue to refine the definition of retail-like land uses to establish a performance-based criteria that promotes pedestrian activity in commercial areas (e.g., for medical office uses such as ophthalmologists that have a glasses sales’ component). Change retail-like use definition to substitute “high level” with a word(s) comparable to “substantive”. Expanded Uses: Expand the range of permitted uses allowable in the Ground Floor (GF) and Retail (R) combining districts, and include standards to allow non-retail like uses in certain circumstances; Retail Preservation Ordinance: Review and recommend whether to amend retail preservation ordinance and evaluate changes to the geographic extent or applicability; Allowed Office Uses in Rear: Consider allowing office or other uses in the rear portion of deep commercial suites, or locations that are accessed off of side streets or alleys; Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 6  Packet Pg. 10 of 86  Item No. 3. Page 4 of 7 Planned Communities: Allow Director authority to interpret list of allowed uses in commercial Planned Community zones that allow "retail" to allow some of these "retail-like" uses; and Pet-Related Uses: Consider where pet grooming, cat cafes, and pet stores should be allowed, and whether any of these uses are considered overnight "boarding" and therefore only allowed in a few zones. Retail Preservation Ordinance Applicability. The Retail Preservation Ordinance applies to all zoning districts that allow retail as a permitted or conditional use, as shown in Attachment C. Only Housing Element opportunity sites are exempted. Therefore, to the extent that any retail is located in a RM-30 or RM-40 zoning district, it would need to be replaced following redevelopment of a site. Especially given concerns about vacancy rates and retail viability, the City should consider strengthening retail where it can be most successful, regulating ground-floor retail in those locations (e.g., -GF and -R combining district locations), and allow more flexibility outside those areas. Attachment C also illustrates zones where ground- floor retail is required, separate from Retail Preservation requirements. 3. Consider Other Amendments that Align with Streetsense and Michael Baker International Recommendations: There are several other ways that the City can revise regulations to reduce regulatory barriers and send signals to retail brokers and potential tenants to encourage them to locate in Palo Alto: Parking Requirements Limit Change of Use Applications: Outside of transit-rich locations that are subject to Assembly Bill (AB) 2097 parking exceptions, retailers must provide additional parking if their use category contains a higher parking ratio that exceeds the existing parking supply. This may be infeasible due to site constraints and limiting when minimum parking ratios exceed parking demand. For example, if an existing tenant space on El Camino Real converts from an “extensive” retail use like a bookstore to an “intensive” retail use like a hair salon, the parking requirement increases from 1 per 350 sq. ft. to 1 per 200 sq. ft. For a 2,100 square foot space, this would increase the parking requirement from 6 to 11 spaces. If this is not physically feasible on the site, the intensive retail use is not considered code compliant and will not be approved under the current regulations. Complicated Zoning Map: When choosing where to locate, brokers and retailers will look at the zoning ordinance and zoning map to understand where they are permitted to locate. Palo Alto’s 18-page zoning map makes it challenging to identify individual zoning districts where specific uses are permitted. Complex Layers of Regulations: Commercial use regulations are located in many sections of the code, which can create confusion for brokers and retailers to understand the rules. For example, in the Charleston and Midtown Shopping Centers, potential tenants must review four separate code sections (CN district use Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 7  Packet Pg. 11 of 86  Item No. 3. Page 5 of 7 regulations, CN district tenant size regulations, Charleston and Midtown use regulations, and Ground Floor (GF) use regulations) to identify which uses are permitted and at what sizes, only to find out that the -GF use regulations supersede the other regulations. This issue is analyzed in Attachment B which reveals several issues: There are inconsistencies across the use regulations and an exceptional number of regulations which create confusion and a burden for applicants, staff, community members and decision-makers to determine which uses are allowed and at what permit levels. The GF combining district regulations states that “Where the ground floor combining district is combined with a commercial district, the regulations ... apply in lieu of the uses normally allowed in the underlying district.” That means that the CN use regulations and size limitations, and Charleston Shopping Center, and Midtown Shopping Center in Palo Alto Municipal Code Chapter 18.16 are moot for the purposes of these two neighborhood centers. In several instances, the GF combining district is more permissive than the base zoning use regulations, suggesting that the CN district regulations might be too restrictive. Conditional Use Permits (CUPs) are Perceived as Burdensome: In many communities, CUPs are typically reviewed at a public hearing by a decision-body such as a planning commission. Administrative Use Permits (AUPs) are the term of art for permits that are reviewed and approved by the City staff. In Palo Alto, however, CUPs are a Director decision that may only be heard by the PTC (and subsequently the City Council) upon request. In practice, most CUPs in Palo Alto do not rise to the level of public hearing by the PTC. This CUP term may be unnecessarily warding off potential tenants who are not familiar with the City’s processes. See Attachment A for a workbook of interim/existing regulations and options for modifications and for making them permanent. FISCAL/RESOURCE IMPACT This study session has negligible fiscal or resource impacts. Ultimately, adoption of an ordinance that increases permitted uses and reduces regulatory hurdles may reduce permitting timelines, staff and decision-maker time, and commercial vacancy rates, and in turn increase sales tax revenues. POLICY IMPLICATIONS This initiative will support implementation of the following Comprehensive Plan policies: Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 8  Packet Pg. 12 of 86  Item No. 3. Page 6 of 7 B4.2.1: Revise zoning and other regulations as needed to encourage the preservation of space to accommodate small businesses, start-ups and other services. B4.2.2: Consider planning, regulatory, or other incentives to encourage property owners to include smaller office spaces in their buildings to serve small businesses, non-profit organizations, and independent professionals. B5.1.14: Revise zoning and other regulations as needed to encourage the revitalization of aging retail structures and areas. Encourage the preservation of space to accommodate small, independent retail businesses and professional services. L1.6.1: Review regulatory tools available to the City and identify actions to enhance and preserve the livability of residential neighborhoods and the vitality of commercial and employment districts, including improved code enforcement practices. L4.2.1: Study the overall viability of ground-floor retail requirements in preserving retail space and creating an active street environment, including the types of locations where such requirements are most effective. L4.2.2: Evaluate the effectiveness of formula retail limits adopted for California Avenue. Develop incentives for local small businesses where warranted. L4.2.3: Explore and potentially support new, creative and innovative retail in Palo Alto. L4.5.1: Revise zoning and other regulations as needed to encourage the preservation of space to accommodate small businesses, start-ups and other services. L4.5.2: Consider planning, regulatory, or other incentives to encourage property owners to include smaller office spaces in their buildings to serve small businesses, non-profit organizations, and independent professionals. L4.16.1: Maintain distinct neighborhood shopping areas that are attractive, accessible and convenient to nearby residents. L4.10.2: Create regulations for the California Avenue area that encourage the retention or rehabilitation of smaller buildings to provide spaces for existing retail, particularly local, small businesses. T5.1.2 Consider reducing parking requirements for retail and restaurant uses as a way to encourage new businesses and the use of alternative modes. As part of the implementation of Housing Element Program 3.2 (Monitor Constraints to Housing), the City is required to analyze how potential new regulations may impact housing production, if at all, and recommend solutions to address any adverse impacts. This retail revitalization initiative is anticipated to reduce retail vacancies, primarily at the ground-level. It is not expected to impact the rate of housing production, but may have the effect of making ground-floor retail uses within residential mixed-use buildings more flexible and viable. STAKEHOLDER ENGAGEMENT As part of the larger economic development initiative, the project team conducted stakeholder interviews with landowners, businesses, the Chamber of Commerce, and interviewed peer cities in 2022 and 2023. The PTC and PTC ad hoc held over a dozen study sessions and hearings Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 9  Packet Pg. 13 of 86  Item No. 3. Page 7 of 7 to discuss these initiatives leading up to a recommendation on the interim ordinance in 2024. These meetings have informed this current work effort. As part of this specific task in 2025, the project team interviewed local retailers and brokers to confirm key issues and seek feedback on recommended changes. ENVIRONMENTAL REVIEW ATTACHMENTS AUTHOR/TITLE: Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 10  Packet Pg. 14 of 86  9 3 2 4 Attachment A: Issues and Options for Zoning Amendments Workbook This document is intended as a workbook to review existing regulations and consider options for amendments. These zoning changes would expand allowed uses and visual interest, and reduce regulatory barriers and vacancies. PAMC Topic Existing Regulation Potential Modification 18.04.030 Definitions "Animal care"Existing definition: (12) "Animal care" means a use providing grooming, housing, medical care, or other services to animals, including veterinary services, animal hospitals, overnight or short-term boarding ancillary to veterinary care, indoor or outdoor kennels, and similar services. Potential definitions: "Animal care, daytime" means a use providing care and services during the daytime only, including grooming, socializing, housing, and veterinary services. “Animal care, overnight” means a use providing care and services that includes overnight or short-term boarding, such as kennels, animal hospitals, and pet hotels. Split existing definition to distinguish between pet- related uses that operate during the day (e.g., pet grooming), which may be allowed in more locations, vs. pet-related uses that have boarding and operate overnight, and may be more regulated. AND/OR As new uses like cat cafes arise, staff will still need to determine whether these uses will have boarding, what types of animals are accommodated (and in turn what levels of noise or waste may be generated), and if the primary use is a café or animal care. Consider whether to make this more explicit in the zoning code. AND/OR Add performance standards for noise and waste. “Retail financial service” Interim ordinance added new definition: (A) “Retail finance service” means financial service use operating in a retail-oriented manner, offering face-to-face interactions, and convenient in-person transactions in locations designed for public access. These services includes retail banks, savings and loan institutions, loan and lending offices, credit unions, and similar services that prioritize walk-in customers with access to immediate financial solutions or combined with a publicly accessible retail component. Fix typo (see strikeout) Make definition from interim ordinance permanent Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 11  Packet Pg. 15 of 86  9 3 2 4 PAMC Topic Existing Regulation Potential Modification “Automobile showroom” Interim ordinance added new definition: (12.6) “Automobile showroom” means a use primarily engaged in the sale of new and used automobiles and trucks, or the display and demonstration of automobiles and trucks for the purpose of facilitating sales, but which does not involve on-site storage of inventory, except as incidental to the showroom use. Automobile showroom serves primarily pedestrian clientele and is distinct from automobile dealership. Make definition from interim ordinance permanent Fast Casual Restaurants Potential modification, as shown in strikeout/underline: (47) “Eating and drinking service” means a use providing preparation and retail sale of food and beverages with a full menu and providing indoor seating area. Eating and drinking service include presence of a full commercial kitchen and commercial dishwasher. For establishments with incidental sale alcoholic beverages, a minimum of 50% of revenues from an “eating and drinking service” must be derived from the sale of food. Related definitions are provided in subsections (45) (Drive-in/drive- through service, (125)(B) (Intensive retail service) and (136) (Take-out service). Existing definition: (136) “Take-out service” means a characteristic of an eating or drinking service which encourages, on a regular basis, consumption of food or beverages, such as prepared or prepackaged items, outside of a building, in outdoor seating areas where regular table service is not provided, in vehicles parked on the premises, or off-site. Take-out service does not include intensive retail service uses, as defined in subsection (125)(B). Acknowledge that many existing restaurants and most new restaurant concepts are fast casual/quick serve with limited kitchens and take-out service. (see suggested strikeout) AND Consider removing “take-out service” definition or allowing it in additional zoning districts (see district regulations below) Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 12  Packet Pg. 16 of 86  9 3 2 4 PAMC Topic Existing Regulation Potential Modification “Retail-like use” Interim ordinance refined definition, as shown in strikeout/underline: (125.1) “Retail-like use” means a use generally open to the public during typical business hours and predominantly engaged in providing services closely related to retail services, including but not limited to: (A) Eating and drinking services, as defined in subsection (47); (B) Hotels, as defined in subsection (73); (C) Personal services, as defined in subsection (114); (D) Theaters; (E) Travel agencies; (F) Commercial recreation, as defined in subsection (33); (G) Commercial nurseries; (H) Automobile showrooms dealerships, as defined in subsection (12.5 12.6); and (I) Day care centers, as defined in subsection (42); (J) Retail financial services, as defined in subsection (56)(A); (K) Other commercial uses, services, or activities determined by the Director of Planning and Development Services to be accessible to the general public, generate walk-in pedestrian clientele, and contribute to a high level of pedestrian activity. Potential definitions: (K) Other commercial uses, services, or activities determined by the Director of Planning and Development Services to be accessible to the general public, generate walk-in pedestrian clientele, and contribute to a high level of pedestrian activity. Make definition from interim ordinance permanent. AND/OR Refine subsection (K) from “high-level” per Council motion to “substantive” or similar; or consider removing the subjective qualifier altogether (see strikeout at left). OR Revise bullet (K) to be objective (e.g., storefront windows, displays, lack of window coverings, public- facing, open for drop-in service, support pedestrian activity) to clarify whether an unlisted use meets this definition. OR Expand the (125) “retail service” definition to include retail-like uses and remove distinction between “retail” and “retail-like”. This could streamline the code and broaden the range of permitted commercial uses. This would require modifying several sections of code to remove the terminology “retail-like”. Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 13  Packet Pg. 17 of 86  9 3 2 4 PAMC Topic Existing Regulation Potential Modification “Formula retail business” Interim ordinance refined definition, as shown in strikeout/underline: (57.6) “Formula retail business” means an retail, personal, or eating and drinking service that is one of ten (10) fifty (50) or more business locations in the State of California United States required by contractual or other arrangement to maintain any of the following standardized characteristics: merchandise, menu, services, decor, uniforms, architecture, facade, color scheme, signs, trademark, or servicemark. For purposes of this definition: A. “Standardized merchandise, menu and/or services” means 50% or more of in- stock merchandise from a single distributor bearing the same or similar markings; 50% or more of menu items identical in name and presentation with other locations; or 50% or more of services offered identical in name or presentation with other locations. B. “Decor” means the style of interior furnishings, which may include but is not limited to, style of furniture, wall coverings or permanent fixtures. C. “Color Scheme” means the selection of colors used throughout, such as on the furnishings, permanent fixtures, and wall coverings, or as used on the facade. D. “Uniforms” means standardized items of clothing including but not limited to standardized aprons, pants, shirts, smocks or dresses, hats, and pins (other than name tags) as well as standardized colors of clothing. E. “Facade” means the face or front of a building, including awnings, looking onto a street or an open space. F. “Trademark” means a word, phrase, symbol or design, or a combination of words, phrases, symbols or designs that identifies and distinguishes the source of the goods from one party from those of others. G. “Servicemark” means a word, phrase, symbol or design, or a combination of words, phrases, symbols or designs that Consider removing definition and use from the conditionally permitted list in the (R) Combining District on California Avenue. This action would expand viable uses, potentially reduce vacancy rate, and increase tax revenues. Many formula retail food businesses are franchises and owned by local business persons. OR Make definition from interim ordinance permanent Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 14  Packet Pg. 18 of 86  9 3 2 4 PAMC Topic Existing Regulation Potential Modification identifies and distinguishes the source of a service from one party from those of others. 18.30(A) Retail Shopping (R) Combining District Regulations (Applicable on California Avenue) Permitted and Conditional Uses on California Avenue Interim ordinance added/modified permitted uses, as shown in strikeout/underline: (b) Personal services, except the following on California Avenue: beauty shops; nail salons; barbershops; laundry and cleaning services as defined in Section 18.04.030(114)(B); fitness or exercise studios exceeding 1,800 square feet in gross floor area; and learning centers intended for individual or small group settings. … (d) Retail financial services; (e) Pet grooming services; (f) Automobile showroom; Interim ordinance added/modified conditional uses, as shown in strikeout/underline: (a) Financial services, except drive-in services, on a ground floor. (b)(a) All other conditional uses allowed in the underlying commercial district provided they are not located on a ground floor. (c)(b) Formula retail businesses on California Avenue. (d)(c) Beauty shops, nail salons, barbershops, fFitness or exercise studios exceeding 1,800square feet in gross floor area on California Avenue; and learning centers intended for individual or small group settings. Expand permitted retail uses in addition to interim ordinance additions to reduce vacancies and increase customers on California Avenue, such as: o Allow fitness and exercise studios at any size (or capped at 5,000 sq. ft. which is the threshold at which fitness is reclassified from personal service to commercial recreation). Fitness/training/exercise is one of the most active tenants today in both small and large spaces. o Allow take-out eating and drinking services. Most new food concepts are quick service, but could continue to restrict drive-throughs. o Allow animal care uses, daytime, as permitted uses and animal care uses, overnight, as conditional uses. AND/OR o Allow office uses that face side and rear yards (i.e., not California Ave.). This would accommodate more tenants and foot traffic without detracting from California Ave. active storefronts. AND/OR o Allow medical offices that contain at least 35 sq. ft. of retail sales facing on the street (e.g., ophthalmologists, medical spas, acupuncturists). Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 15  Packet Pg. 19 of 86  9 3 2 4 PAMC Topic Existing Regulation Potential Modification Waivers and Adjustments Interim ordinance revised provisions to modify economic hardship threshold and add alternative viable use, as shown in strikeout/underline: (a)The following shall be grounds for a request for waiver or adjustment of this Ordinance Chapter: (a)(1) Economic Hardship. An applicant may request that the requirements of this Ordinance Chapter be adjusted or waived only upon a showing that strict application would result in an unreasonable financial burden on the property. applying the requirements of this Ordinance would effectuate an unconstitutional taking of property or otherwise have an unconstitutional application to the property. (2) Alternative Viable Use. An applicant may request that the requirements of this Chapter18.30(A) be adjusted or waived based on a showing that: the permitted retail or retail-like use is not viable; the proposed alternative use will support the purposes of the combining district and Comprehensive Plan land use designation; and the proposed use will encourage active pedestrian-oriented activity and connections. (b)Documentation. The applicant shall bear the burden of presenting substantial evidence to support a waiver or modification request under this section and shall set forth in detail the factual and/or legal basis for the claim, including all supporting technical documentation. Any request under this section shall be submitted to the Planning and Development Services Community Environmental Director together with the fee specified in the municipal fee schedule and an economic analysis or other supporting documentation. A request under this section shall be acted upon by the City Council. Expand permitted uses and remove these provisions entirely to broaden the types of commercial uses and clarify the rules, without exceptions. The documentation requirements are too onerous to be used by retailers, especially owners/tenants new to Palo Alto, and they don’t provide the certainty most business are seeking. OR Make interim regulation permanent Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 16  Packet Pg. 20 of 86  9 3 2 4 PAMC Topic Existing Regulation Potential Modification 18.30(C) Ground Floor (GF) Combining District Regulations (Applicable in Downtown core, Midtown, and Charleston Shopping Centers) Permitted and Conditional Uses in -GF Overlay Interim ordinance added/modified permitted uses, as shown in strikeout/underline: (3) Personal services, except for the following on parcels with frontage on University Avenue: fitness and exercise studios exceeding 3,000 square feet in gross floor area, where uses defined in Section 18.04.030(114)(B), (G),(H), and (I) are not permitted; … (8) Retail financial services, except drive-in services; (9) Pet grooming services; (10) Automobile showroom; Interim ordinance added/modified conditional uses, as shown in strikeout/underline: (4)Financial services, except drive in services; … (6)Learning centers intended for individual or small group settings; Add more permitted uses in the GF overlay, based on allowed CD(C) uses: o Allow office uses that face side and rear yards (i.e., not University Ave.) o Allow fitness/exercise studios and commercial recreation up to 5,000 sq. ft. on University Ave. o Allow daytime pet-related uses, beyond grooming (see options for “animal care” definition above) OR Make interim regulation permanent Waivers and Adjustments Interim ordinance added provisions to accommodate cases of economic hardship and alternative viable uses, and specify required documentation. (see previous page) Expand permitted uses and remove these provisions entirely to broaden the types of commercial uses and clarify the rules, without exceptions. The documentation requirements are too onerous to be used by retailers, especially owners/tenants new to Palo Alto, and they don’t provide the certainty most business are seeking. OR Make interim regulation permanent Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 17  Packet Pg. 21 of 86  9 3 2 4 PAMC Topic Existing Regulation Potential Modification Commercial District Use Regulations Expand Permitted and Conditional Uses Existing regulations, see: 18.18.050 Downtown CD-C, CD-S, CD-N Land Uses 18.16.040 Neighborhood, Community, And Service Commercial (CN, CC and CS) Districts Make selective changes to base zoning district land use regulations since area plans are underway for Downtown and San Antonio Road, such as allowing: o Take-out eating and drinking services. o Animal care uses, daytime, as permitted uses and animal care uses, overnight, as conditional uses. o Medical office o Other uses that are permitted in the -GF and -R districts (e.g., automobile showrooms, retail financial services, theaters) Midtown & Charleston Shopping Centers Consistent Use Regulations Existing regulations, see: Midtown & Charleston Shopping Centers allowed uses are regulated in four separate sections, but GF combining regulations supersede other use regulations (see Attachment B for details) 18.16.040 Table 1: CN zoning use regulations 18.16.060 Table 5: CN size of establishments 18.16.040 Table 2: Midtown & Charleston use regulations 18.30(C): GF Combining District use regulations Remove Midtown and Charleston Shopping Center specific use regulations. This retains status quo. OR Remove GF combining district zoning designation; this could increase ground-floor office, though office uses are limited by zoning regulations. AND/OR Maintain P combining district to retain pedestrian- oriented design standards. Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 18  Packet Pg. 22 of 86  9 3 2 4 PAMC Topic Existing Regulation Potential Modification 18.52.030 Basic Parking Regulations Change of Use Parking Requirements Potential modification, as shown in strikeout/underline: 18.52.030: Basic Parking Regulations (d) Additions or Changes of Use For additions or enlargements of any existing building or use, or any change of occupancy or manner of operation that would increase the number of parking, loading or bicycle spaces required, the additional parking shall be required only for such addition, enlargement, or change and not for the entire building or use. Exempt changes in use from parking requirements (see example strikeout) to provide more flexibility on existing sites/buildings that cannot physically accommodate additional parking. AND/OR In the longer term (i.e., as part of comprehensive zoning update), refine parking standards (18.52.040, Table 1) to better align parking supply and demand for specific uses. Mixed-Use and Shared Parking Requirements Existing regulation: 18.52.040 Off-Street Parking, Loading and Bicycle Facility Requirements (c) …For mixed-use projects, the requirements for each land use shall be applied and required for the overall project. 18.52.050 Adjustments by the Director (a) Combining Parking Adjustments Parking reductions may be granted for any combination of circumstances, prescribed by this chapter, so long as in total no more than a 30% reduction of the total parking demand otherwise required occurs, or no less than a 40% reduction for affordable housing projects (including Single Room Occupancy (SRO) units). Remove or increase shared parking threshold since most commercial uses need parking during the day, while residential parking peaks after commercial uses are closed. This would support AB 894/Gov. Code 65863.1 which aimed to increase efficiency of underutilized parking. AND/OR Cross-reference AB 2097/Gov. Code 65863.2 more overtly to clarify where parking exemptions apply. Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 19  Packet Pg. 23 of 86  9 3 2 4 PAMC Topic Existing Regulation Potential Modification 18.76.010 & 18.77.060 Process and Administration Conditional Use Permit Process Existing regulation: 18.76.010 Conditions Use Permit (CUP) (e) Application Review and Action Applications for conditional use permits shall be reviewed and acted upon as set forth in Section 18.77.060 (Standard Staff Review Process). Also see 18.77.060 Standard Staff Review Process for a discussion of Director decisions, review by the PTC (upon request) with final action by the City Council. Prepare and post to the City’s website information about typical permit processes and timelines for potential retailers. Clarify that the CUP is reviewed and approved administratively by staff. OR Rename “Conditional Use Permits (CUP)” to “Administrative Use Permits (AUP)” to clarify that these permits are reviewed and approved by the Director. However, anyone may request that Director decisions are reviewed by the PTC for a recommendation, with final action by the City Council. Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 20  Packet Pg. 24 of 86  9 3 2 4 PAMC Topic Existing Regulation Potential Modification 18.40.180 Retail Preservation Retail Preservation Ordinance Applicability See 18.40.180 for Retail Preservation Ordinance requirements See Attachment C for maps of where ground-floor retail is required and where the Retail Preservation Ordinance applies Consider reducing geographic applicability so that the ordinance applies more narrowly and to focus retail requirements in areas where retail is most likely to be successful. Possible exclusions include: o Residential zones (e.g., RM-30, RM-40, NV-R3, NV- R4) o Office/manufacturing zones (e.g., ROLM ROLM(E), RP RP(5), GM) o Geographic locations, such as San Antonio Road and El Camino Real AND/OR Consider reduced replacement requirement of less than 1:1 square feet to increase site flexibility for redevelopment projects. AND/OR Remove waiver request requirement to provide 10- year history of the site's occupancy and reasons for respective tenants vacating the site; this may not be possible for a new buyer. Also see options for “retail-like uses” in Definitions section above. AND/OR Eliminate Retail Preservation Ordinance and require ground-floor retail in specific locations (e.g., -GF, -R, - NV, in nodes on El Camino Real) Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 21  Packet Pg. 25 of 86  9 3 2 4 PAMC Topic Existing Regulation Potential Modification 18.38 Planned Communities (PC) Districts Permitted Uses in Planned Communities (PC) 18.38.030 Permitted uses. Any use may be permitted in any specific PC district; provided such use shall be specifically listed as a permitted use and shall be located and conducted in accord with the approved development plan and other applicable regulations adopted pursuant to this chapter to govern each specific PC district. 18.38.040 Conditional uses. Any use may be established as a conditional use in any specific PC district, provided such use shall be specifically listed as a conditional use subject to the provisions of Chapter 18.76 (Permits and Approvals), and shall be located and conducted in accord with the approved development plan and other applicable regulations adopted pursuant to this chapter to govern each specific PC district. To allow more flexibility in PC zones over time, authorize the Director to allow “similar” uses as permitted uses, AND/OR If the applicable PC is silent on a use allowed in another commercial district, allow the use to be conditionally permitted. Zoning Map Zoning Map Commercial zoning districts are illustrated in an 18-page zoning map. Prepare and post to the City’s website a one-page map depicting commercial zoning districts, as guide for where retailers can locate. AND/OR In the longer term (i.e., as part of comprehensive zoning update), simplify zoning districts and overlays to clarify regulations for retailers, staff, and decision- makers. Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 22  Packet Pg. 26 of 86  9 3 2 5 Attachment B: Overlapping Use Regulations Applicable to Charleston and Midtown Shopping Centers This document analyzes four sets of use regulations and size limitations that apply to the Charleston and Midtown Shopping Centers. The -GF combining district use regulations stipulate that they supersede all other use regulations, so columns two through four become moot. Ground-Floor Use Regulations 18.16.040 Table 2 Land Uses CN Use Regulations 18.16.040 Table 1 and CN Maximum Size 18.16.060 Table 5 Charleston Shopping Center Midtown Shopping Center GF Combining District (18.30(C)) (Ground-Floor Use Regulations)Comments EDUCATIONAL, RELIGIOUS, AND ASSEMBLY USES Business and Trade Schools X X X CUP Private Educational Facilities CUP CUP CUP X Private Clubs, Lodges, or Fraternal Organizations CUP CUP CUP X Inconsistent with same use category under “Recreation Uses” below OFFICE USES Medical Offices P (<5,000 sq. ft.) - Charleston CUP – Midtown X (except see below) CUP (<2,500 sq. ft. only) X Professional and General Business Offices P (<5,000 sq. ft.) CUP (>5,000 sq. ft.)X X (except see below)X Neighborhood-serving offices (including medical offices, professional offices, travel agencies, and insurance agencies) P P (<2,500 sq. ft.) CUP (>2,500 sq. ft.) not to exceed 7,850 sq. ft X X Professional offices, travel agencies, and insurance agencies only P X CUP not to exceed 7,850 sq. ft X Confusing and inconsistent across subsections Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 23  Packet Pg. 27 of 86  9 3 2 5 Ground-Floor Use Regulations 18.16.040 Table 2 Land Uses CN Use Regulations 18.16.040 Table 1 and CN Maximum Size 18.16.060 Table 5 Charleston Shopping Center Midtown Shopping Center GF Combining District (18.30(C)) (Ground-Floor Use Regulations)Comments RECREATION USES Commercial Recreation P (<5,000 sq. ft.) CUP (>5,000 sq. ft.) CUP CUP P (<5,000 sq. ft.) CUP (>5,000 sq. ft.) Inconsistent permit thresholds Outdoor Recreation Services CUP CUP CUP X Private Clubs, Lodges, or Fraternal Organizations X CUP CUP X Inconsistent across regulations and with same use category under “Education, Religious, and Assembly Uses” above RETAIL USES Eating and Drinking Services, excl. drive-in and take- out services P (<5,000 sq. ft.) CUP (>5,000 sq. ft.)P P P (allows drive-ins and take-out) Inconsistent permit thresholds Retail Services, excl. liquor stores P (<15,000 sq. ft.) CUP (>15,000 sq. ft.) CUP (>20,000 sq. ft.) for grocery stores P P P Inconsistent permit thresholds Liquor stores CUP CUP CUP X SERVICE USES X Ambulance Services CUP CUP CUP X Animal Care, excl. boarding and kennels P P P X Automobile Service Stations CUP CUP CUP X Automobile showroom X X X P GF is most permissive Convalescent Facilities CUP CUP CUP X Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 24  Packet Pg. 28 of 86  9 3 2 5 Ground-Floor Use Regulations 18.16.040 Table 2 Land Uses CN Use Regulations 18.16.040 Table 1 and CN Maximum Size 18.16.060 Table 5 Charleston Shopping Center Midtown Shopping Center GF Combining District (18.30(C)) (Ground-Floor Use Regulations)Comments Day Care Centers P P P CUP Banks and Financial Services CUP CUP CUP X Retail financial services, except drive-in services; P P P P Not explicitly listed in CN, Charleston or Midtown, but interpreted by staff as retail/personal service General Business Services X X X CUP GF is most permissive Also see “Neighborhood Business Services” below Hotels X X X P GF is most permissive Mortuaries CUP CUP CUP X Neighborhood Business Services P (<3,000 sq. ft.) CUP (>3,000 sq. ft.)P P X Inconsistent permit thresholds (18.04 Definition limits use to 2,500 sq. ft.) Personal Services P (<3,000 sq. ft.) CUP (>3,000 sq. ft.)P P P Inconsistent permit thresholds Pet Grooming Services X X X P GF is most permissive Reverse Vending Machines P P P X Theaters P P P P Not explicitly listed in CN, Charleston or Midtown, but interpreted as by staff as retail/personal service Travel agencies P P P P Not explicitly listed in CN, Charleston or Midtown, but interpreted as by staff as retail/personal service Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 25  Packet Pg. 29 of 86  Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 26  Packet Pg. 30 of 86  Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 27  Packet Pg. 31 of 86  October 29, 2025 www.paloalto.gov RETAIL REVITALIZATION Planning & Transportation Commission Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 28  Packet Pg. 32 of 86  2 RETAIL REVITALIZATION BACKGROUND ●City Council Priorities: ○Economic Development and Retail Vibrancy Priority, including retail zoning strategy. ●Comprehensive Plan: ○Recommend zoning revisions to support small businesses, parking reductions, active street environments, distinctive shopping areas, and innovative retail. Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 29  Packet Pg. 33 of 86  3 RETAIL REVITALIZATION BACKGROUND 2023 - 2024: PTC Retail Ad Hoc Committee (4 Meetings) 2023 - 2024: PTC Hearings (6 Meetings) Sept 2024: Council Retail Ad Hoc Recommends Amendments Nov-Dec 2024: City Council Adopts Interim Ordinance Streetsense and Michael Baker International Reports Provide Background Data and Analysis Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 30  Packet Pg. 34 of 86  4 INTERIM ORDINANCE ●Expands permissible uses for ground floor spaces, including: ○Personal services, pet grooming, financial institutions, automobile showrooms, and other “retail-like” uses. ●Reduces threshold for waivers/adjustments to use regulations. ●Modifies formula retail definition to allow larger enterprises on California Avenue. ●Sunsets December 31, 2026. Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 31  Packet Pg. 35 of 86  5 MEETING PURPOSE 1.Consider options and recommendations for a retail revitalization zoning strategy. 2.Provide feedback to staff on preparation of an ordinance to replace interim ordinance: a.Refine and make permanent interim regulations. b.Address other topics identified by City Council, staff, PTC. c.Consider other amendments based on Streetsense and Michael Baker International recommendations. Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 32  Packet Pg. 36 of 86  6 KEY ISSUES - RETAIL ZONING REGULATIONS ●Complicated ●Lengthy ●Text-heavy ●Restrictive Tenants/brokers will choose to locate in Menlo Park and Mountain View, all else being equal. Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 33  Packet Pg. 37 of 86  7 ISSUE: USE REGULATIONS Restrictions on uses that could support active streetscapes, reduce vacancies, and increase revenues, such as: ●Fitness centers ●Medical spas ●Take out/quick serve restaurant ●Pet services ●Auto showrooms ●Formula retail Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 34  Packet Pg. 38 of 86  8 OPTIONS: USE REGULATIONS ●Take out/quick serve restaurant: ○Distinguish from drive-ins and allow in all zones. ●Revise “animal care” definition to distinguish between: ○Daytime uses: grooming, veterinary care, cat cafe ○Overnight uses: boarding, kennels, animal hospitals (noise impacts) ●Automobile Showrooms: ○Allow in zones that don’t allow dealerships. Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 35  Packet Pg. 39 of 86  9 OPTIONS: USE REGULATIONS ●Fitness centers: ○Eliminate size limitation or increase up to 5,000 sq. ft. (personal service vs. commercial recreation threshold). ●Medical office and spas: ○Expand medical office definition to include medical spa since they are also licensed practitioners. ○Allow in retail districts with requirement retail sales at storefront (e.g., acupuncturists, med spas, wellness). Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 36  Packet Pg. 40 of 86  10 OPTIONS: USE REGULATIONS ●Offices: ○Allow office uses that face side and rear yards (i.e., not on California Avenue or University Avenue). ●Retail-Like: ○Expand existing “retail service” definition to include “retail-like” uses to streamline the code and broaden the range of permitted commercial uses. Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 37  Packet Pg. 41 of 86  11 PERCEPTION OF CONDITIONAL USE PERMIT Issue: ●In Palo Alto, CUPs are a Director decision vs. other cities, where CUPs are reviewed by a Planning Commission. ●“CUP” threshold may deter potential tenants. Options: ●Clarify typical CUP process and timelines for potential retailers on the City’s website. ●Change Conditional Use Permit (CUP) to Administrative Use Permit (AUP) to better reflect threshold of review. Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 38  Packet Pg. 42 of 86  12 ISSUE: LAYERS OF USE REGULATIONS Midtown & Charleston Shopping Centers Three subsections regulate uses in these neighborhood shopping centers! Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 39  Packet Pg. 43 of 86  13 PARKING RESTRICTIONS Issue: ●Parking regulations may restrict changes in use within existing retail spaces. Options: ●Modify commercial parking ratios. ●Exempt change of use applications from parking requirements. ●Increase shared parking reductions. ●Cross-reference AB 2097/Gov. Code 65863.2 to clarify where parking exemptions apply. Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 40  Packet Pg. 44 of 86  14 RETAIL PRESERVATION ORDINANCE Issue: ●Applies in all locations where retail is a permitted use (even if retail is unlikely to be successful in that location). Options: ●Limit applicability (e.g., Downtown only) ●Reduce replacement threshold ●Modify waiver thresholds ●Eliminate Retail Preservation Ordinance and require ground-floor retail in specific locations Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 41  Packet Pg. 45 of 86  15 * RPO applies if there are existing retail/retail-like uses * Housing Element opportunity sites are exempted from RPO Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 42  Packet Pg. 46 of 86  16 ZONING MAP Issue: ●18-page zoning map makes it difficult to identify where retailers can locate Options: ●Publish 1-page commercial district map on the City’s website ●Streamline commercial districts and overlays Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 43  Packet Pg. 47 of 86  Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 44  Packet Pg. 48 of 86  18 STAKEHOLDER OUTREACH ●Conversations with Palo Alto retailers, potential retailers, a South Bay broker representing tenants interested in Palo Alto, and a local Palo Alto developer. Previous Work Effort: ●2022 - 2023: Interviews with landowners, businesses, the Chamber of Commerce, and peer cities ●2023 - 2024: PTC and PTC retail ad hoc held over a dozen study sessions and hearings Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 45  Packet Pg. 49 of 86  19 STAFF RECOMMENDATION & NEXT STEPS Recommendation: ●Consider options and recommendations for a retail revitalization strategy and provide feedback to staff on preparation of an ordinance. Next Steps: ●Bring PTC an ordinance to consider a recommendation to the City Council. Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 46  Packet Pg. 50 of 86  Extra Slides 20 Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 47  Packet Pg. 51 of 86  21 DISCUSSION TOPICS 1.18.04.030 Definitions 2.18.30(A) Retail Shopping (R) District (California Avenue) 3. 18.30(C) Ground Floor (GF) District (Downtown, Midtown, and Charleston Shopping Centers) 4.Commercial District Use Regulations 5.Midtown & Charleston Shopping Centers 6.18.52.030 Basic Parking Regulations 7. 18.76.010 & 18.77.060 Process and Administration 8.18.40.180 Retail Preservation 9.18.38 Planned Communities (PC) Districts 10.Zoning Map Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 48  Packet Pg. 52 of 86  22 RETAIL SIZES ARE SHRINKING Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 49  Packet Pg. 53 of 86  23 RESTRICTIVE SIZE THRESHOLDS Issue: ●Palo Alto has many vacancies in the 4,000 - 8,000 sq. ft. range. Options: ●Not regulating “size of establishment” or at least increasing thresholds. ●Personal services especially limiting since most tenants exceed 3,000 sq. ft. Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 50  Packet Pg. 54 of 86  24 AVAILABILITY: PALO ALTO 37 spaces available Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 51  Packet Pg. 55 of 86  25 AVAILABILITY: UNIVERSITY AVE Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 52  Packet Pg. 56 of 86  26 AVAILABILITY: MENLO PARK 13 spaces available Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 53  Packet Pg. 57 of 86  27 AVAILABILITY: MOUNTAIN VIEW 30 spaces available Item 1 Attachment A - Planning & Transportation Commission Staff Report - October 29, 2025        Item 1: Staff Report Pg. 54  Packet Pg. 58 of 86  Planning & Transportation Commission - October 29, 2025 Commissioners generally supported making permanent the interim ordinance definitions for Retail Financial Service and Automobile Showroom. For Formula Retail Business uses, Commissioners expressed some concerns about effects on California Avenue small boutique character, but generally supported making permanent the interim ordinance definition. For Animal Care uses, Commissioners requested additional consideration of potential odor, waste, and noise impacts, but were supportive of distinguishing between use types to allow less impactful Animal Care uses in more locations. For Eating and Drinking Service uses, Commissioners acknowledged that restaurant “take out services” are standard practice and should be permitted, but requested additional review of any unintended consequences of removing take- out restrictions and the potential removal of the “commercial kitchen and commercial dishwasher” threshold in the current definition. For Retail-Like Uses, Commissioners provide a range of feedback including a desire to streamline and simplify retail and retail-like uses, interest in acknowledging the differences between the uses (e.g. hotels and services vs. retail sales) and expressed interest in different proposals for how these uses could be treated in the code. Commissioners generally supported adding more permitted uses, including office uses (especially community-serving uses) as long as they do not front on primary streets; fitness studios up to 5,000 sq. ft.; and daytime animal care uses. Commissioners generally did not support retail sales requirements at the front window for service uses. Commissioners generally supported either removing Waiver and Adjustment economic hardship allowances or at least making consistent across applicable zones. Commissioners supported removing inconsistencies and confusion between base and overlay district use regulations. Item 1 Attachment B - Planning & Transportation Commission Feedback Summary - October 29, 2025        Item 1: Staff Report Pg. 55  Packet Pg. 59 of 86  Commissioners generally supported adding more permitted uses in commercial zones, including take-out eating and drinking services, medical office, daytime animal care, and automobile showrooms. Parking Regulations Commissioners generally did not support exempting change of use applications from triggering additional parking requirements, nor being more explicit in the code about the applicability of AB 2097/Gov. Code 65863.2 parking exemptions. Rather, Commissioners supported updating parking standards and shared parking allowances, asked about restaurant parking requirements in particular, and expressed support for alternative modes of travel. Process and Administration Commissioners generally supported renaming the Conditional Use Permit (CUP) to Administrative Use Permit (AUP) to acknowledge that this is typically a staff- level permit. Retail Preservation Ordinance (RPO) Applicability Commissioners expressed some support for excluding residential and office/manufacturing zones from the RPO, but wanted to understand how many retail businesses would potentially be affected. Permitted Uses in Planned Communities (PC) Commissioners expressed support for more flexibility in the PC zones, but recommended a more specific criteria for what could be interpreted as “similar uses” (e.g. neighborhood-serving, indoor vs. outdoor uses). Zoning Map Commissioners supported simplified zoning districts and overlays in the longer term and a simple one-page commercial zoning map to post to the City’s website in the shorter term. Item 1 Attachment B - Planning & Transportation Commission Feedback Summary - October 29, 2025        Item 1: Staff Report Pg. 56  Packet Pg. 60 of 86  Retail Committee Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: Planning and Development Services Meeting Date: January 22, 2026 Report #:2510-5390 TITLE Recommendation to the City Council on a Resolution Amending the El Camino Real Retail Node Map for Purposes of Palo Alto Municipal Code Section 18.40.180: Retail Preservation. CEQA Status: Addendum to the Comprehensive Plan Environmental Impact Report (EIR), adopted November 17, 2023 (SCH #2014052101) RECOMMENDATION Recommend to City Council adoption a Resolution (Attachment A) amending the El Camino Real Retail Node Map for the purposes of Palo Alto Municipal Code Section 18.40.180: Retail Preservation unanimously recommended for adoption by the Planning and Transportation Commission. EXECUTIVE SUMMARY As directed by City Council on March 3, 2025, the Planning and Transportation Commission (PTC) discussed the El Camino Real Retail Node Map, including the temporary “interim node” adopted by City Council with the modifications to the Retail Preservation Ordinance. A revised map, as unanimously recommended by the PTC, is provided as Exhibit 1 to the Draft Resolution in Attachment A. BACKGROUND The 2023-2031 Housing Element identified the retail preservation ordinance as a potential constraint to housing development. Housing Element Program 3.4B calls for waivers from and modifications to these regulations to accommodate more housing density and affordability while focusing retail development in the most desirable locations in Palo Alto, including retail node locations along the southern portion of El Camino Real. December 2024 Planning and Transportation Commission Hearing On December 17, 2024, the PTC held a public hearing and recommended that the City Council adopt an ordinance to modify the Housing Incentive Program, Affordable Housing Incentive Program, and Retail Preservation Ordinance. As part of the motion, the PTC asked for the map Item 2 Item 2 Staff Report        Item 2: Staff Report Pg. 1  Packet Pg. 61 of 86  of retail nodes on El Camino Real to return to the PTC in the first quarter of 2025 to consider additional retail node locations. March 2025 City Council Hearing On March 3, 2025, the City Council adopted, on first reading, an ordinance amending the zoning code to implement programs in the City’s adopted Housing Element that modify the Housing Incentive Program (HIP), Affordable Housing Incentive Program (AHIP), and Retail Preservation Ordinance. The City Council motion was as follows: Reduce complexity of overlapping rules, especially for: o Parcels with little/no existing retail; o Housing Element sites eligible for 100% housing, though some Housing Element sites were included for contiguity of the nodes; o Parcels zoned Planned Community (PC), where the RPO does not apply; and o Areas covered by other regulations (Retail Overlay) or recent plans (El Camino Real Focus Area, North Ventura CAP). Assess impacts of retail-preservation requirements on future housing feasibility, particularly on narrow/shallow lots. Address small-site parking constraints, especially along long segments of El Camino Real where on-street parking has been replaced by bike lanes. Consider including student-serving retail areas along the West Charleston/Arastradero corridor. Item 2 Item 2 Staff Report        Item 2: Staff Report Pg. 2  Packet Pg. 62 of 86  1. Central Node: This node is located halfway between California Avenue and the City’s southern boundary, including properties on both sides of El Camino Real from Matadero Creek to Los Robles Avenue. 2. Triangle Node: This node includes the properties on the “triangle” between El Camino Real and El Camino Way, as well as the commercial properties on the other side of El Camino Way. 3. Bike to School Node: This node incorporates the “Auto Dealerships Node” with additional adjacent commercial properties, and those on two of the other three corners of the Charleston Road/Arastradero Road/El Camino Real intersection. This process and ordinance change is separate and distinct from other retail ordinance work underway. Specifically, the City Council adopted a 2025 Council priority objective “consideration of an ordinance that expends retail opportunities and promotes retail resiliency.” PTC reviewed potential retail approaches on October 31, 2025. Work is underway to prepare an ordinance for PTC consideration in early 2026 followed by Council review. ANALYSIS The El Camino Real Retail Node Map adopted by City Council on March 2, 2025, included an “interim node” to temporarily preserve retail preservation protections for existing retail on properties on El Camino Real and El Camino Way between Page Mill Road and the southern City boundary, plus a small node at the intersection of El Camino Real and California Avenue. As provided in the Background Section above, the motion on March 2, 2025, to adopt the map also referred the map to the Planning and Transportation Commission for further discussion and recommendation to City Council. Housing Element Program 3.4 specified changes to be made to the City’s Housing Incentive Program (HIP) and specified that this work should include modifications to the retail preservation ordinance to reduce the amount of retail replacement except in certain combining districts and “strategic locations generally depicted in the draft South El Camino Real Design Guidelines.” Figure 1: Draft South El Camino Real Design Guidelines Node Map The PTC recommendation aligns closely to this map, with more detail and specificity, along with an understanding that California Avenue retail is already protected by the existing Retail (R) and Item 2 Item 2 Staff Report        Item 2: Staff Report Pg. 3  Packet Pg. 63 of 86  Pedestrian (P) overlays and therefore does not need a specific node. As recommended by the Streetsense Economic Development Strategies Report, shared with City Council on August 14, 2023, the goal is to concentrate ground-floor retail in a few strategic areas (“nodes”) where foot traffic, transit, and anchor destinations already cluster, so that each storefront reinforces the next and creates a true “stroll” experience. Reducing and focusing the areas of stronger retail preservation requirements, allows those properties outside these nodes, more flexible uses (e.g., services, offices, housing) to right-size supply, reduce vacancies, and channel investment to the places with the best chance of thriving. The revised map recommended by the PTC is based on a detailed discussion, as described above. PTC’s efforts focused on simplifying overlapping retail regulations, aligning retail- preservation requirements with housing feasibility (especially on narrow/shallow lots), addressing small-site parking constraints, including along El Camino Real where on-street spaces were replaced by bike lanes, and evaluating inclusion of student-serving retail corridors along West Charleston/Arastradero. POLICY IMPLICATIONS As part of the implementation of Program 3.2 (Monitor Constraints to Housing) of the Housing Element, the City committed to prepare an analysis in staff reports for initiatives proposing new regulations. This analysis details how the regulations may impact housing production, if at all, and recommend solutions to address any adverse impacts. The recommended map is the final step in the HIP, AHIP, Retail Preservation update efforts to implement the following Housing Element programs: Housing Element Program 3.3A, B, and D to streamline, incentivize, and improve project feasibility of 100% affordable housing projects. Housing Element Program 3.4A-D to expand development incentives in the Housing Incentive Program (HIP) and extend the program to additional zoning districts to facilitate housing production. Based on quantified objectives in the Housing Element, this modification is anticipated to generate 550 housing units. Housing Element Program 6.2A to incentivize larger units and create family-friendly housing. FISCAL/RESOURCE IMPACT Item 2 Item 2 Staff Report        Item 2: Staff Report Pg. 4  Packet Pg. 64 of 86  described above. Direct fiscal impacts are not anticipated from this action. However, the actions recommended in this report more effectively concentrate retail into three nodes along El Camino Real, thereby creating clusters of retail that can provide goods and services to the surrounding neighborhood. The previous ’interim’ retail node that extended from Page Mill south along El Camino Real to the City limits would have applied retail preservation requirements to that entire corridor, which was not consistent with Housing Element Program 3.4C and included areas that were less viable retail locations. This refined map confers greater flexibility and better balances the potential for residential development with the continued need for neighborhood-serving retail opportunities. This is anticipated to create a greater synergy between commercial and potential residential in this corridor, which may positively impact revenues in Sales Tax and Property Tax categories. STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: Item 2 Item 2 Staff Report        Item 2: Staff Report Pg. 5  Packet Pg. 65 of 86  *NOT YET APPROVED* 1 0160176_20250820_ay16 Resolution No. ____ Resolution of the Council of the City of Palo Alto Updating the El Camino Real Retail Node Map R E C I T A L S WHEREAS, on April 7, 2025, the City Council adopted Ordinance No. 5650, amending Title 18 of the Palo Alto Municipal Code to implement Programs 3.3 and 3.4 of the 2023-2031 Housing Element. WHEREAS, Ordinance No. 5650 revised the City’s retail preservation regulations for housing projects, and adopted an El Camino Real Retail Node map to define areas where more specific retail preservation requirements may apply. WHEREAS, the El Camino Real Retail Node map approved by the City Council on April 7, 2025 included an “interim” node encompassing most of El Camino Real, allowing the Planning and Transportation Commission to further review and recommend refinements for a final retail node map; and WHEREAS, the Planning and Transportation Commission considered map revisions on March 26, 2025, April 30, 2025, and May 28, 2025 before arriving at a recommendation to the City Council; and WHEREAS, the City Council now wishes to update the El Camino Real Retail Node map; NOW, THEREFORE, the Council of the City of Palo Alto does RESOLVE as follows: SECTION 1. The El Camino Real Retail Node map shall be updated to reflect the boundaries shown in Exhibit 1, attached hereto and incorporated herein. SECTION 2. Upon adoption of this resolution, the City Clerk shall direct that Figure 5 in Section 18.40.140 of the Palo Alto Municipal Code shall be updated to reflect the new El Camino Real Retail Node map. // // // // // Item 2 Attachment A - Draft Resolution        Item 2: Staff Report Pg. 6  Packet Pg. 66 of 86  *NOT YET APPROVED* 2 0160176_20250820_ay16 SECTION 3. In accordance with the California Environmental Quality Act (CEQA), the City prepared an Addendum to the 2017 Comprehensive Plan Environmental Impact Report (EIR), analyzing the potential environmental impacts of the 2023-2031 Housing Element. On May 8, 2023, the City Council adopted Resolution No. 10107, and on December 18, 2023, the City Council approved a Revised Addendum, finding that the Addendum, as revised, and the 2017 EIR adequately analyzed the environmental impacts of the Housing Element, including the Programs implemented by this resolution. INTRODUCED: PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ____________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ____________________________ ____________________________ Assistant City Attorney City Manager ____________________________ Director of Planning and Development Services Item 2 Attachment A - Draft Resolution        Item 2: Staff Report Pg. 7  Packet Pg. 67 of 86  X X X X Triangle Node Bike to School Node StanfordUniversity Mountain View Los Altos Page Mill Road Charleston Road Yale Street Jacaranda Lane MackayDrive Ash Street El Camino Real Orme Street Ramos Way(Private) Hanover Street Nevada Avenue Columbia Street Deodar Street Redwood Circle Margarita Avenue Hansen Way Portage Avenue Lambert Avenue Paradise Way Fernando Avenue Olive Avenue Cambridge Avenue Ventura Avenue Grant Avenue Matadero Avenue Maybell Avenue Curtner Avenue Wilton Avenue Barron Avenue SecondStreet High Street Oregon Avenue RickeysWay(Private) Oregon Expressway Whitclem Drive Alger Drive Marion Avenue Military Way Cowper Street VillaVera(Private) Loma Verde Avenue Bowdoin Street La Donna Street Whitsell Street Glenbrook Drive FerneCourt McGregorWay Lane 66 Laguna Avenue Stanford Avenue La Jennifer Way Amaranta Avenue JulieCourt Saint Claire Drive Terman Drive Gary Court Arastradero Road WrightPlace PeralLane Ramona Street Miller Avenue El CentroStreet La Calle Creekside Drive Suzanne Drive Monroe Drive PenaCourt El CerritoRoad Duluth Circle South Court Irven Court El Capitan Place Silva Avenue Rincon Circle Waverley Street Nelson Court Encina Grande Drive Timlott Lane YnigoWay Laguna Oaks Place Florales Drive Anton Court Ely Place DartmouthStreet Los Palos Place Adobe Place ScrippsAvenue WellesleyStreet Amherst Way Park Boulevard Cesano Court Nelson Drive Josina Avenue Cypress Lane(Private) McKellarLane CarlsonCourt Ferne Avenue Campana Drive ArbolDrive MumfordPlace SolanaDrive Santa Rita Avenue Washington Avenue North California Avenue DakeAvenue Bryant StreetEl Dorado Avenue MackallWay Alma Street Wilkie Way Jacobs Court (Private) Georgia Avenue Carolina Lane Acacia Avenue Keats Court CassWay Colorado Avenue Lundy Lane El Verano Avenue Campesino Avenue College Avenue Drake Way Los Robles Avenue West Charleston Road California Avenue East Meadow Drive MagnoliaDrive OberlinStreet La SelvaDrive DixonPlace Thain Way Cornell Street Princeton Street Harvard Street Williams Street Kipling Street Verdosa Drive El Carmelo Avenue Scripps Court Pomona Avenue OrindaStreet Shauna Lane Emerson Street Los PalosAvenue Birch Street MaybellWay La MataWay StauntonCourt Tennessee Lane Ashton Avenue Maclane Duncan Place CherryOaksPlace Sheridan Avenue Amherst Street Chestnut Avenue El CaminoWay Tioga Court Lindero Drive Shasta Drive Diablo Court Cerrito Way Greenmeadow Way CarlsonCircle Maureen Avenue Starr King Circle West Meadow Drive Dinah's Court Magnolia Drive South Ilima Court Cowper Court Juniper Lane(Private) KingArthur'sCourt BakerAvenue Silva Court Oxford Avenue AbelAvenue San Jude Avenue Edlee Avenue Miller Court Rinconada Avenue Pepper Avenue Clemo Avenue James Road CoulombeDrive Manzana Lane Rambow Drive Parkside Drive Fairmede Avenue Ilima Way Kendall Avenue SaintMichaelDrive Chimalus Drive Laguna Way Hubbartt Drive Donald Drive Paul Avenue Cereza Drive Roosevelt Circle La Para Avenue Roble Ridge (Private) Willmar Drive Ben Lomond Drive PC-4637 PF RM-30 CS CS R-1 R-1 (10000) CS (H) RM-40 PF RE PC-2930 RM-15 PC-3023 CS RM-30 CC(2)(R) R-2 RM-30 RM-30RM-15 R-2 NV-R4 RM-30 GM R-2 PF RM-15 NV-MXH NV-R3 RE PF (AS3) CN RP (L) CN CS (AS1) RP (L) R-2 CS RP (AS2) RMD CC (2)(R)(P) R-2 R-2 R-2 RM-30RM-30 RM-30 CC (2)(R) CC (2)(R) CC (2)(R) PF (R) PF (R) PF(R) PC-4127 RM-30 R-1 PF RM-15 R-2 RM-15RM-15 RM-30 PF PF R-1 (10000) R-2 RM-15 PF PC-4268 PC-2224 PC-3028 PC-4354 PC-2293 CC RM-15 NV-MXLNV-R2 CSPC-4463 PF RM-40 R-1 RM-15 RM-30 CN R-1(S) R-2 R-1 PF RM-15 RM-30 PF PF PC-2666 PC-2666 RM-30 R-1 (10000) R-1 R-2 R-1 CNRM-15 CC(2)CC(2) PF PF PF PFPF PF RMD (NP) R-1 RP PF PF PF RM-15 CS (H) RM-30 PC-4190PC-3041 PF RM-30 R-1 RM-30 PC-2218 PC-2656 RM-15 PC-5116 RM-30 RM-15 PC-3133 PC-4511 RM-15 RM-30 R-1 (7000) PF RM-30RM-40 R-1 (S) CS(L) PC-4448 CS CS (L) RM-40 RM-15PC-2744 R-1 (8000) RM-30PC-5034 R-1 CC (2)(P) NV-MXM CS CSCS(AD) PC-4831 CN PC-4956 RM-30RM-30 PC-2236 R-1 (7000) R-2 R-1 (8000) R-1(8000) CN (GF/P) PFPF (D) R-2 R-1 (10000) R-1 (8000) R-1 (7000)(S) R-1 R-1 (8000)(S) R-1 (8000)RM-15 RM-15 PC-3036 CS CS CS CS (H) RM-15 PF RM-15 CN RM-30 R-2 PF CN PC-5069 RM-15CS (L)(D) PTODRM-40 RM-40CC(2)(R) CC (2)(R) CC (2)CC (2) CC (2) PF R-1 R-1 PC-4753 NV-R1 NV-MXM CS NV-MXH GM NV-MXL NV-PF Central Node This map is a product of City of Palo Alto GIS [ 0 480 960240Feet South El Camino Real Retail Nodes and Zoning South El Camino Real Retail Nodes Housing Element Sites City Limit Zone Districts X Transportation Stations Item 2 Attachment B - Exhibit 1 - El Camino Real Retail Nodes Map        Item 2: Staff Report Pg. 8  Packet Pg. 68 of 86  Retail Committee Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: Planning and Development Services Meeting Date: January 22, 2026 Report #:2509-5213 TITLE Development Services Permitting Operations Update RECOMMENDATION Staff recommends that Retail Committee receive this report providing an update to the building permit operations as previously referred to staff. EXECUTIVE SUMMARY The Planning and Development Services (PDS) Department has implemented significant changes and improvements to its building permit operations over the last five years. Key changes include transitioning to a fully digital permitting system, restructuring staffing models, streamlining application and review processes, and modernizing technology. These improvements have reduced initial permit response and approval times by over 30% from 2022 to 2024. The latest survey data shows 85% of respondents rated customer satisfaction as “good” or “excellent.” Over the next year, PDS will continue to explore software options, implement technology upgrades, expand instant permitting, monitor advancements in AI tools, and continue to refine processes to enhance the user experience. BACKGROUND At its April 16th, 2025 meeting, the Retail Committee requested that Planning and Development Services provide a status update on the building permit operations and upcoming planned efforts to further improve and streamline the permitting process. Since the onset of the pandemic in 2020, the Planning and Development Services department has undertaken significant changes across staffing, processes, and technologies to strengthen and improve permitting services. The department adapted again, establishing hybrid and in- person service offerings while retaining key digital efficiencies. These transitions have required ongoing evaluation and modifications to programs, systems, and service delivery models. This report summarizes notable actions to date, results of those actions, and previews upcoming initiatives for further improvements at the Development Center. Item 3 Item 3 Staff Report        Item 3: Staff Report Pg. 1  Packet Pg. 69 of 86  DISCUSSION Beginning with the 2019 departmental merger that formed Planning and Development Services, efforts have been underway to improve and streamline application processes. The Department has diligently worked to transform its relationship with customers from a transactional exchange to one of partnership. To guide this initiative, the Department is working through three key organizational goals that: Focus on building deep expertise across all permitting functions to support the development community that align growth with city priorities to deliver consistent and informed services. Reflect the Department's commitment to professionalism, respect, and high-quality service by earnestly working to help others achieve their goals; providing accurate information, ensuring efficient communication and application processing, and facilitating resolution with effective problem solving. Emphasize support of the workforce by encouraging staff to exercise judgment, identify opportunities for ongoing improvements, support professional growth, and foster a positive, engaged and resilient work environment. The core of these efforts is to continue aligning workplace culture with the service delivery goals to exceed the service delivery expectations of our customers and help shift public perception of this City operation. While there are always opportunities for improvement in a customer service environment, some of the perceptions about the permitting process represents a legacy narrative of interactions from long ago or with staff that are no longer present, or experiences with outmoded processes or oversight systems. To effectuate this goal, the Department continues to closely examine customer touchpoints with staff to identify opportunities for improvement and implement change. This series of efforts include simplifying processes, enhancing communication, teaching and encouraging proactive problem solving, improving standard operating procedures, engaging all staff on training, investing in management coaching and team building, and capitalizing on meaningful technological enhancements. Whether in person or in the field, the Department is committed to meeting customers where they are and delivering a consistent standard of service. In addition to internally driven improvements, the Department has also undergone three external audits by Baker Tilley to enhance processes in the areas of building permitting operations (2022), Americans with Disabilities Act compliance (2024), and building permit fees (2025). These independent assessments provide an objective perspective to help identify areas of risk and reinforce the Department’s commitment to accountability in its processes. A challenging labor market required the Department to strategically shift staffing models to ensure continuity of services. High vacancy levels, up to 30% at its peak, and lack of a Item 3 Item 3 Staff Report        Item 3: Staff Report Pg. 2  Packet Pg. 70 of 86  consultant pool disrupted permitting operation and delayed application processing. Over the last few years, the Department has prioritized workforce development to support operational resilience. This strategy included assessing and adjusting staffing models to mitigate impacts from the shift in the labor market and strengthening internal capacity through developing and retaining experienced employees. Staffing Models Since 2021, PDS focused on three significant staff transitions: building an in-house inspection program; developing a hybrid staffing plan review program; and enhancing positions and opportunities to improve customer service. 1 1When the Development Center Blueprint was established, the project coordinator series was envisioned to provide individual project management by serving as a central point of contact and in-house advocate. While projects are assigned based on complexity and the corresponding level of coordinator, workload demands, and staff limitations have made it difficult to meet those expectations. Currently, the Department will be working on evaluating the classification and structure of the series to explore potential adjustments to better support consistent project management throughout the permitting process. Item 3 Item 3 Staff Report        Item 3: Staff Report Pg. 3  Packet Pg. 71 of 86  In conjunction with developing new staffing models, PDS also focused on developing internal talent and reinforcing a culture of excellent customer service. In addition, the Department hosted and required all staff to attend in person customer services trainings: ‘Staying Courteous Under Pressure’ by Public Sector Excellence (2023) and ‘Customer Service Excellence’ by Skillpath (2024). These efforts provide valuable training for staff and support long-term retention while improving both internal and external customer service delivery. Processes and Technology Since 2022, PDS has continued to assess internal processes and apply technology solutions to improve efficiency, accessibility, and clarity of the permitting experience from the applicant’s perspective. These efforts are aligned with the Department’s commitment to streamline approvals while improving service levels and maintaining code compliance. Process improvements include simplifying application requirements, optimizing assignments, and piloting new approaches to inform application intake and customer interactions. In parallel, the Department has explored new and leveraged existing technologies to enhance system functionality with a focus on simplifying the application process for customers. Some highlights are noted below and Attachment A provides a detailed list of changes to support these efforts in chronological order. Item 3 Item 3 Staff Report        Item 3: Staff Report Pg. 4  Packet Pg. 72 of 86  concluded that required appointments for these application types could be beneficial and this information is currently be used to inform the next iteration of updates in the application process. At this time, appointments are not required but in person and virtual appointments are available at the Development Center with availability as soon as next day when the project coordination team is fully staffed. Feedback and Metrics Recognizing the importance of customer feedback to better understand and improve the permitting experience, PDS released customer surveys in Q4’2022. This initial effort mainly consisted of staff reminding customers to participate as they interacted with each of the various functions at the Development Center. As part of the outreach plan, staff also coordinated an automated email to the permit applicant requesting feedback following a completed inspection. However, this approach generated a significant number of complaints Item 3 Item 3 Staff Report        Item 3: Staff Report Pg. 5  Packet Pg. 73 of 86  from property owners, as the permit applicant is not always the contract who scheduled or attended the inspection. Due to the volume of complaints, this practice was discontinued. Adding the survey link to all staff email signatures Promoting the survey throughout the Development Center, including posting QR codes to the survey at each customer station Sending automated survey emails to applicants when a building permit is processed to collect feedback from the appropriate contact; initially, the survey was focused on inspection services Printed survey (business) cards to collect feedback directly from the field Table 1: Planning and Development Services Consolidated Survey [1] – Overall Satisfaction Rating Overall Satisfaction 2022 [2]2023 2024 2025[3] Total Survey Responses 154 40 322 447 Excellent 92%77%73%78% Good 4%3%12%7% Fair 1%5%4%4% Poor 3%15%11%11% Excellent + Good 96%80%85%85% [1] Categories assessed include professionalism, technical knowledge, timeliness, efficiency, and overall satisfaction. [2] Of the 154 survey responses received in Q4’2022, 88% was generated for the building inspection program automated email in a one-month period. [3] Data included up to December 19, 2025 Item 3 Item 3 Staff Report        Item 3: Staff Report Pg. 6  Packet Pg. 74 of 86  Table 2: Development Center – Permitting Performance Metrics[1] Performance Metric 2021 2022 2023 2024 2025[4]Improvement (2024 vs 2022[3]) % of Permits Issued[2]96%94%95%93%77%N/A Average Permit Approval Time (Days)68 80 68 60 35 -25% Median Permit Approval Time (Days)25 30 22 21 15 -30% Average Cycles of Review (Cycles)2.0 2.0 1.9 2.0 1.7 0% Median Cycles of Review (Cycles)2 2 2 2 1 0% Average First Response (Days)16.2 15.6 12.2 10.8 10.0 -31% Median First Response (Days)13 14 8 7 5 -50% [1] Since these are backward looking metrics, 2025 performance data will continue to rise as only 72% of permits are issued. Therefore, 2024 is used as the most recent point of comparison. [2] 100% of applications are not issued due to void, abandon, and in progress application statuses (lagging indicator). [3] 2022 was used as the base comparison because it was the year of peak vacancy rates before PDS was able to implement planned improvements informed by 2021. [4] Data included up to 12/19/2025 The Department has also prioritized expanding instant permits offerings to enhance the customer experience. These permits allow customers to receive immediate approvals, significantly reducing administrative requirements while maintaining consistent code compliance. Currently, 13 types3 of instant permits are available. Staff are actively working to develop more, but this type of permit development requires complex internal collaboration to ensure all standards and code requirements are met. The most notable recent releases were SolarAPP+ photovoltaic permits (2022), heat pump water heaters (2023), SolarAPP+ photovoltaic and battery storage permits (2023), simple kitchen and bath remodels (2024), heat pump space conditioning systems for single-family/duplex/ADUs (2025), and heat pump space conditioning systems for individual multi-family units (expected Q1’2026). With the release of these permits, instant permit volume has increased by 122% from 2022 to 2025 (Table 3). Table 3: Instant Permit Volume Performance Metric 2021 2022 2023 2024 2025*Improvement (2025 vs 2022) Types of Instant Permits Available 8 10 11 11 13 +3 Number of Instant Permits Issued 515 494 847 865 1,099 122% *Estimated figures based on data up to 12/19/2025 3 Current instant permit offerings include backflow, boiler replacement, furnace replacement, heat pump water heater, heat pump space conditioning system, kitchen/bath remodels, gas leak repair, water piping system repair, reroofing, SolarAPP+, SolarAPP+ revision, water heater (no tankless), and window replacement. Item 3 Item 3 Staff Report        Item 3: Staff Report Pg. 7  Packet Pg. 75 of 86  Upcoming Improvements As the building permitting services continue to evolve, the Department continues to focus on delivering an efficient and user-friendly permitting experience. Most recently in Q4’25, PDS: Developed and released HVAC/heat pump space conditioning systems instant permits for single-family/duplex/ADUs enabling licensed contractors to apply for and receive permits instantaneously for qualifying projects. Built and released PermitView, an in-house permit activity program to replace BuildingEye and eliminate ongoing third-party subscription costs. Published a Housing Tracker Dashboard to provide transparency on housing production in the Palo Alto Monitor AI technology and continued exploration in the plan review and permitting space (ongoing).  Expand HVAC/heat pump space conditioning systems instant permits to individual multi-family units (Q1’2026) Upgrade the online permitting portal, Accela Citizen Access, with Accela’s new Public Portal release that provides a more user-friendly and modern interface for the public (2026) Complete integration between GIS/Accela to facilitate automatic updates of owner information and other spatial details when GIS database is updated (Q2’2026). Complete a Request for Proposal for online permitting software, currently Accela (Q4’2025 & Q1’2026). o Develop a building permit wizard to guide applicants on what type of permit they need – contingent on results of permitting software RFP (2026). o Enhance the permitting public portal – contingent on result of permitting software RFP (2026). Assess the Project Coordination program and recommend adjustments to improve staffing model (2026) Implement new impact and in lieu fee model as a result of ongoing update to Impact Fee Nexus Study to ensure long term sustainable city development and development feasibility (2026) Enhance older instant permit processes and expand instant permits to owner/builder, currently only available to licensed contractors (2026) Item 3 Item 3 Staff Report        Item 3: Staff Report Pg. 8  Packet Pg. 76 of 86  Department Challenges and Areas of Focus Planning and Development services has made substantial progress in improving the building permit operations and improving customer service. Despite progress, staffing challenges continue to remain due to ongoing attrition and retirements. In the fall, the building inspection program was operating with a 33% vacancy rate, resulting in an average wait time of seven days to schedule an inspection. All three vacant positions have been filled as of December, restoring next day inspection availability. Being short staffed for the inspection program impacts employees who generally take on more assignments during a shift, increasing the risk of workplace injury and limits opportunities for regular training and professional growth opportunities. As of January, the vacancy rate at the Development center is 9%. In addition to the upcoming efforts, the Department is also reallocating capacity for the Development Center Manager and Assistant Chief Building Official to take on a customer support liaison function. In this role, they will assist applicants with complex projects to navigate the permitting process, resolve roadblocks, and provide proactive problem solving. PDS also anticipates working with the established internal Development Review committee to refine submittal requirements and reduce the numbers of projects requiring interdepartmental review. Together, these initiatives reflect the department’s commitment to a more efficient and customer-oriented permitting experience. Development Services Building Permit Process Audit Update In 2022, Baker Tilly assessed the building permit process to identify highest impact areas for improvement, document corresponding processes and evaluate their efficiency and effectiveness, and benchmark operational performance against industry practices and established standards. As a result of this assessment, Baker Tilly issued 17 actionable recommendations. In November 20235, Planning and Development Services provided an update to the Policy and Services Committee on the status of those recommendations, reporting that nine of the 17 had been completed. Of the remaining eight recommendations, four have since been completed or are part of ongoing efforts with no defined end date related to technology and customer accessibility of information. Three recommendations related to the development of internal procedures, training, and quality control remain ongoing works in progress. One recommendation has not yet been initiated, as the Department is prioritizing organizational updates to service delivery before engaging an external consultant to develop a strategic plan. FISCAL/RESOURCE IMPACT This report is informational only and does not have a fiscal impact. The work associated with these initiatives has been incorporated into the FY2021 to FY2026 Operating Budgets. If 5 https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=52546 Item 3 Item 3 Staff Report Item 3: Staff Report Pg. 9 Packet Pg. 77 of 86  additional funding is needed, requests will be proposed and evaluated as part of the annual budget development process and reflected in the FY2027 Proposed Operating Budget. STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW ATTACHMENTS Attachment A: Development Center Improvements APPROVED BY: Item 3 Item 3 Staff Report        Item 3: Staff Report Pg. 10  Packet Pg. 78 of 86  1 0 2 2 2 Attachment A – Development Center Improvements (Q4’2022 to Current) Area Improvement Impact Technology Completed a request for proposal for an electronic document review program (DigEPlan). Supported digital plan reviews and live plan mark ups with customers. Process Assessed inspection assignment process and updated to include assignments by geography. Increased efficiency and maintained inspection availability within 48 hours of request. Technology Redesigned PDS and online permitting website and developed a user navigation guide for Accela Citizen Access (permitting software). Provided clarity on the permitting process and additional resource to applicants. Technology Implemented an appointment system and integrated calendar. Supported the ability to facilitate virtual and in person meetings with interdepartmental staff and customers. Process Developed monitoring reports for late reviews.Improved interdepartmental coordination to reduce late plan reviews. Process Complete a pilot program for intake appointments to understand if required intake meetings would reduce processing time. Informed process improvements on application intakes. Process Published residential and non-residential submittal checklist. Provided applicants with clarity on all submittal items needed to begin the review process. Process Eliminated pre-application routing process and reduced submittal checklists from 2-15 pages to 1-2 simplified pages Reduced requirements for applicants to submit their application. Technology Released SolarAPP+ to all licensed contractors to install qualified roof-mounted solar panels and energy storage systems (up to 38.4 kW) Provided applicants another option for expedited permit issuance. Technology Developed and launched instant permits for residential heat pump water heaters and simple kitchen and bath remodels. Expanded self-service options and reduce application requirements for expedited permit issuance. Process Transitioned project coordinated assignments to be based on permit types. Deepened staff expertise, strengthened relationships with repeat customers, improved communication and processing efficiency. Process Implemented a requirement for staff to contact applicants and offer to schedule an appointment after the second review cycle. Facilitated problem solving, improved communication, and reduce review cycles. Technology Participated in a pilot with BuildCheckAI (automated submittal completeness checks). Learned about new technology and maintained readiness to explore and implement new technology tools as they become available. Process Residential MEP pilot Reduced processing time for pilot participants. Technology Integrated the building permit application into the online pre-application process. Reduced documents required from applicant and duplication of processes. Process Complete a department-wide cost of services study and implemented updated fees. Ensured fiscal sustainability and improved accuracy of fees charged to customers. Process Established a hybrid and square footage-based fee model and reprogrammed Accela to support the fee structure. Improved cost accuracy by project type. Item 3 Attachment A - Development Center Improvements        Item 3: Staff Report Pg. 11  Packet Pg. 79 of 86  1 0 2 2 2 Area Improvement Impact Process Granted over the counter planning approvals for minor changes to existing building (s) or site for qualified projects through an administrative determination. Reduced processing time and eliminated the need for a 14-day appeal period. Technology Developed and launched an instant permit for HVAC/heat pump space conditioning systems for single family, duplex, and ADUs. Expanded self-service options and reduce application requirements for expedited permit issuance. Technology Internally developed and released PermitView, an in-house permit activity program to replace BuildingEye Eliminated third-party subscription costs and provided a program to the public to view all permitting activity throughout the City. Technology Built and published a Housing Tracker dashboard Provided transparency on housing production in Palo Alto. Item 3 Attachment A - Development Center Improvements        Item 3: Staff Report Pg. 12  Packet Pg. 80 of 86  Retail Committee Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: City Manager Meeting Date: January 22, 2026 Report #:2509-5228 TITLE Economic Development Activity Report January 2026 RECOMMENDATION Staff recommends that the Retail Committee receive this Economic Activity Report for the month of January 2026. EXECUTIVE SUMMARY This January 2026 Economic Development Activity report presents information on the City’s retail landscape, notable events and activations, business openings/closings, and business district updates. BACKGROUND The Palo Alto City Council approved Palo Alto’s Comprehensive Economic Development Strategy in August 2023. The full strategy is available on the City’s Economic Development website1. As part of its 2025 priority setting process, the City Council once again selected Economic Development as a priority, refining the focus by replacing “Transition” with “Retail Vibrancy”. In March 2025, the City Council discussed the workplan for this priority which consisted of twelve Objectives2. These objectives were informed by the Economic Development Strategy and other community needs. The workplan was approved in May 2025 and provides the focus of the City’s Economic Development work for 2025. To help advance the City’s Economic Development Strategy and objectives, the City Council created the Ad Hoc Retail Committee, which first convened at the end of 2023. The committee evolved into a Brown Act Ad Hoc and began convening its meetings in public subject to the 1 Economic Development Strategy: https://www.cityofpaloalto.org/Business/Comprehensive-Economic- Development-Strategy 2 2025 City Council Priorities and Objectives: https://cityofpaloalto.primegov.com/Portal/viewer?id=0&type=7&uid=c975a9ba-6051-49f1-8c02-cf12a9afc87b Item 4 Item 4 Staff Report Item 4: Staff Report Pg. 1 Packet Pg. 81 of 86  Brown Act beginning in March 2024. During the 2025 Council Retreat, the City Council proposed to continue the Ad Hoc Retail Committee on a bi-monthly basis. ANALYSIS CoStar Information University Avenue Business District Item 4 Item 4 Staff Report        Item 4: Staff Report Pg. 2  Packet Pg. 82 of 86  but higher than the low of the last ten years ($51.72 (~$4.31/mo) in Q4 of 2016). California Avenue Business District Item 4 Item 4 Staff Report        Item 4: Staff Report Pg. 3  Packet Pg. 83 of 86  Approximately 32,026 square feet of retail space was available in the California Avenue Business District per the Q3 2025 report from CoStar, a decrease of 16,736 square feet from 48,762 square feet in Q1 of 2022 as the high in the previous ten years. Notable Event & Activations Business Openings/Closing Item 4 Item 4 Staff Report        Item 4: Staff Report Pg. 4  Packet Pg. 84 of 86  (3877 El Camino Real). Staff has also monitored notable closures that occurred towards the end of 2025, including Sushirrito (448 University Avenue), which is now being replaced by Urban Momo, and Tacolicious (632 Emerson Street), which is being replaced by Meze Kebab. Ramona Street California Avenue 3rdThursday Transition Efforts Outdoor Activation and Parklets Item 4 Item 4 Staff Report        Item 4: Staff Report Pg. 5  Packet Pg. 85 of 86  feasibility. Merchant feedback has focused on need for flexibility with investment options, interest in permanent solutions once a program is approved by Council, high-quality customer experience, parklet size, and pedestrian safety concerns regarding bicycle speeds. Staff will complete ARB ad hoc work, continue merchant engagement, refine parklet design and return to Council with recommended outdoor activation and parklet requirements informed by stakeholder engagement. Bicycle Lanes, Street Design and Near-Term Improvements including developing a concept for slow-two-way bicycle lanes, bicycle speed calming measures and signage, and diverting through bicycle movements to Cambridge Avenue. FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW APPROVED BY: Item 4 Item 4 Staff Report        Item 4: Staff Report Pg. 6  Packet Pg. 86 of 86