With Palo Alto's shopping centers thriving, its sales-tax revenues rising and its downtown vacancies virtually nonexistent, a visitor might be startled to learn that the city is going through a retail crisis.
But with several local retail establishments recently shutting down to make way for offices, city leaders agreed on Monday night that the problem of retail loss demands an urgent response. To that end, the council voted 7-0 to pursue an "urgency ordinance" that would immediately prohibit the conversion of ground-floor retail to offices in all commercial districts.
In addition, council members agreed on Monday to pursue a more long-lasting solution in the coming months, including new ground-floor requirements at peripheral downtown blocks, a revised definition of "retail" and a limit on chain stores around California Avenue.
If things go as planned, the council will vote on the urgency ordinance on May 11. If the ordinance gets support from eight of the nine council members, it would go in effect immediately and remain active for 45 days, with an option to extend it for up to 22 months. Unlike normal ordinances, it does not require a hearing in front of the Planning and Transportation Commission, an environmental review or a 30-day waiting period to give opposition a chance to challenge the new law.
The unanimous vote on Monday all but assures that the council will be able to meet the high threshold for passing the urgency measure.
Councilwoman Liz Kniss, who was present for most of the discussion but left before the vote, said she would support the emergency ordinance that was later embraced by her seven colleagues.
Councilman Tom DuBois, who was absent, has often talked about protecting retail and is also expected to support it.
Ironically, the loss of retail is a symptom of downtown's economic success. Rising rents have pushed several restaurants and shops out of downtown and California Avenue, with the roster of the recently departed retail operations now including Shady Lane, University Art, Jungle Copy, Bargain Box and Avenue Florist.
Councilman Greg Scharff, a leading proponent of requiring more sections of the city to have ground-floor retail, cited the example of Zibibbo, a Mediterranean restaurant on Kipling Street that shuttered exactly a year ago and was replaced by offices. The block, he said, used to be much more lively when the restaurant operated. Scharff argued that the city should've had laws in place to require retail to replace the large space Zibibbo formerly occupied.
"That whole corner lost vibrancy because of loss of Zibibbo," Scharff said. "We have the wrong ordinances about where retail should go."
According to data from the Planning Department, the city lost about 70,514 square feet of retail between 2008 and 2014, even as it added 537,144 square feet of office and research-and-development space.
The retail-protection ordinance is the second "urgency" measure that the city is now pursuing in response to this trend. Last month, the council voted to move ahead with an interim law that sets an annual cap of 50,000 square feet for offices around University Avenue, California Avenue and El Camino Real.
Like the office cap, the retail-preservation officer moved ahead with no dissent. Staff will draft the ordinance and bring it back to the council for adoption on May 11. The law would apply to all commercial zones in the city and to all establishments that operated as retail as of March 2.
The proposal has its skeptics. Susan Graf, who owns a clothing boutique on Hamilton Avenue and High Street, urged the council to tread carefully in deciding which locations are suitable for retail and which are not.
"You cannot simply design a location and call it retail," Graf said. "It does not make it so."
Former Mayor Judy Kleinberg, who now serves as CEO of the Palo Alto Chamber of Commerce, also urged caution. She recalled a similar effort the city undertook in 2001, when she was on the council. The trend often comes in cycles, she said.
"If you're thinking about expanding commercial zones, do it with incredible care," Kleinberg said. "The more you dilute retail, the harder it is to create a pedestrian-friendly commercial zone."
Others argued that the action is long overdue. The group Palo Alto Neighborhoods has come out in favor of the retail-preservation ordinance and land-use watchdog Bob Moss advocated for it on Monday night.
"If you just say the economy will do what the economy wants, you'll hurt retail vitality and you'll hurt walkability and the ability of people who live in Palo Alto to shop in Palo Alto," Moss said.
Most council members agreed with Moss. Councilman Pat Burt said the city's problem is that locations that have supported retail for a long while are being driven out by offices, which can command higher rent. If left to market forces, downtown's peripheral blocks would be "hollowed out," with retail leaving and offices coming in.
Currently, the city has zoning laws in place that require University Avenue establishments to have retail on the ground floor. That rule, however, only applies to downtown's commercial core. Many of downtown's peripheral blocks, including areas around Hamilton and Forest avenues, don't have such ground-floor-retail protections and are vulnerable to office conversions.
The urgency ordinance would fix that in the short term. In the longer term, the city plans to move ahead with a regular "permanent" ordinance. In addition to having all the requirements that the urgency measure has, the permanent law would consider a host of other issues relating to retail preservation. This includes revisions to the definition of "retail" and possibly new ground-floor-retail requirements in the California Avenue Business District, including possibly on Cambridge Avenue.
Vice Mayor Greg Schmid was one of several members to lobby in favor of revising the definition of "retail" so that it includes functions that promote walking and socializing while excluding businesses like banks, which are currently classified as retail but that are not seen as particularly condusive to downtown vibrancy.
"We're trying to create a downtown or center that attracts people, that attracts walkability, that has people stop, socialize, gather ideas," Schmid said. "It doesn't even have to be a place where they're selling goods or selling services, just areas that attract and hold people, where you can go walk and experience that."
Despite the 7-0 vote, there were some disagreements. Scharff and Councilman Eric Filseth argued that the new rules should apply to proposed developments that are currently going through the city's application process.
Councilman Marc Berman disagreed and said it would be inappropriate to change the rules at the "last minute." And while Liz Kniss said she would support the short-term ordinance, she was more measured in her enthusiasm than her colleagues.
Kniss called the decision to move ahead with the urgency measure a "real test case" and said she was concerned about where the city will end up with these various changes. It's extremely rare, she said, for an urgency ordinance to apply to the entire city.
'We're covering A to Z in our city by doing this," Kniss said.