Palo Alto set to pass 'urgency' law to protect retail

City Council plans to ban conversion of ground-floor retail to office use

Retail in Palo Alto is easy to support but hard to define.

Every member of the City Council believes retail space should be protected, whether from being turned into offices in the downtown area or chain stores around California Avenue. To that effect, the council is set to consider on Monday night an urgency ordinance that would ban conversions of ground-floor retail (or "retail-like") use to offices or any other non-retail business anywhere in the city.

For the council, a new ordinance is both an immediate step toward protecting retail and a chance to reflect on what exactly is being protected. While the word "retail" often connotes book stores, restaurants and neighborhood-serving florists, cobblers and dry cleaners, the city's zoning code takes a broader look. The city's requirement that buildings in the heart of downtown all include "ground-floor retail" extends the definition to also include hotels, nail salons, art studios and day spas, and other personal services.

Existing rules also allow downtown property owners to apply for permits that would allow them to use ground floors for business schools, financial services or general business services -- uses that stray even further from the popular conception of "retail" as treasured mom-and-pop shops.

The Wells Fargo building on University Avenue is allowed to operate through such a permit, much to the chagrin of Councilman Greg Scharff and others who favor the popular notion of retail.

"How can we force that building to actually provide retail use?" Scharff asked at the council's April 6 discussion of the topic, before suggesting amortization of Wells Fargo as a possibility.

The new ordinance, which will require eight votes of support from the nine-member council to pass, would expressly ban such permits. Councilmen Pat Burt and Scharff proposed this change in April, with Burt citing the numerous locations where a permit was granted for financial-service institutions in places where offices normally would not be allowed. These types of establishments can afford to pay higher rents than traditional retail operations, which struggle to keep up in the hot real-estate market. A great deal of the city's problem, Burt said, is that "we're seeing locations that have supported retail for a long while in the community that are being driven out" by rent increases.

Recent trends illustrate this trend. According to Planning Department data, downtown rents for retail have climbed from $4.64 per square foot in 2013 to $6.48 in 2015. For downtown offices, the rate has climbed from $6.47 to $7.33 during the same period.

Furthermore, as the staff report points out, the city has lost about 70,000 square feet of retail-type uses between 2008 and today. The report cites "increases in office rents that have effectively created an incentive for conversion of ground floor retail to office use where this is permitted by the City's zoning ordinance." It lists numerous sites where retail space has recently been lost, including the former Zibibbo restaurant on Kipling Street, Inhabiture at 240 Hamilton Ave. and Palo Alto Bowl in south Palo Alto.

The new law would also address a separate peeve that pertains to retail: the tendency of some buildings to include token retail operations just to qualify for the requirement.

Though they meet the letter of the law, buildings such as the Institute for the Future and the Christian Science Reading Room scarcely qualify in the public imagination as "retail" operations. Under a proposal made by Mayor Karen Holman and accepted by her colleagues on April 6, the local law will specify that ground-floor establishments be "predominantly" retail rather than just have a retail component. This means they would have to provide "retail sale, rental, service, processing or repair of items primarily intended for consumer or household use." The city's ordinance includes a long list of examples, including groceries, books, cookie shops and mopeds.

Despite the high threshold for adopting an emergency ordinance, the council has thus far been unanimous in its desire to institute new retail requirements. Not everyone, however, shares the council's appetite for instituting new retail requirements. Judy Kleinberg, CEO of the Chamber of Commerce, urged the council on April 6 for caution regarding any expansion of a commercial zone. Such changes, she said, should be done with "incredible care."

"The more you dilute retail, the harder it is to create a pedestrian-friendly commercial zone," Kleinberg said. "You can't just say it will be retail and be supported well just by zoning it that way."

Scharff disagreed and pointed to two recent examples of ground-floor retail spaces that are thriving despite their peripheral locations. He pointed to 101 Lytton Ave., a former Shell station site that now houses a four-story building occupied by SurveyMonkey. Scharff made a push at that time to make sure the "retail" on the ground floor isn't a bank but something more akin to a food establishment or a coffee shop. Gelataio, a gelato shop, moved into the spot last summer. Scharff said he recently walked by Gelataio and "there was a line out the door." Philz Coffee, which is located in the Palantir building on Forest Avenue at Alma Street, is also routinely crowded, a sign that the location "works."

"This notion that retail should be compact? No," Scharff said. "Retail can be spread out so you get more pedestrian traffic."

If the council passes the new ordinance, it would stay in effect for 45 days, with an option to extend it for an additional 10 months and 15 days. In the meantime, city staff is working on a permanent ordinance that would take effect once the interim one expires.

Related content:

Palo Alto eyes emergency law to protect retail

Palo Alto moves ahead with 'urgency' law to protect retail

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3 people like this
Posted by Midtown
a resident of Midtown
on May 8, 2015 at 8:03 am

"Retail" in Midtown contains Dentists, Tutoring Services, Gyms, Martial Arts and Yoga Studios, kids builders studio. One busy grocery store, a couple of busy coffee shops (more if you consider Philz midtown), two burrito places, two drugstores, several nail and hair salons, and some useful retail. Parking can be difficult.

We could do with some speedy parking spots - some with 30 minute limits. In fact why don't we have 30 minute parking spots at busy retail areas? This would definitely help those of us who want to visit the ATM on our way out or pick something up on the way home. Walgreens has a 30 minute limit and it's very useful.

1 person likes this
Posted by Crescent Park Dad
a resident of Crescent Park
on May 8, 2015 at 8:53 am

Short-term parking (30 mins): The shopping center management should be able to do this without any intervention from the city. Good idea.

8 people like this
Posted by Online Name
a resident of Embarcadero Oaks/Leland
on May 8, 2015 at 12:38 pm

Fake hand-wringing. Oh, woe is me. How could we have known!

Anyone with a brain knew Institute For The Future was not a retail organization. It's not a new organization.

When was the last time the council members (past & present) and/or our highly paid city staff bought a pound of multi-client studies from the Institute.

Remember our former mayor bragging about the Institute's "selection" of downtown Palo Alto? I do. And just this week at the Cal Ave dedication, she called Cal Ave our "main street" while downtown was our "global business center" which is simply a nice phrase for Office Park.

8 people like this
Posted by Downtown resident
a resident of Downtown North
on May 8, 2015 at 2:59 pm


Attn City Council: this had better be more than just words.

We need to preserve ground-floor retail downtown, and roll back the frosted-glass, "storefront" cubicles already choking the town. Once retail space is converted to cubes, and the precedent set for desks and offices, landlords are able to subsequently raise rent so no retailer can survive in that location. Landlords then complain to city that they needs a zoning exception since "retailers can't make it" at that location.

Beware this pattern and any further loss for downtown. Ground-floor retail zoning should be protected and enforced; landlords should be compelled to charge reasonable retail-friendly pricing on the ground floor.

RIP the following downtown retail and restaurant space already converted to OFFICE CUBICLES (or under construction):

It happened gradually, so sometimes you don't notice until you stop and reflect. Here's a partial list of the retail space converted to cubicles over the past 5 years while we have been sleeping...

-Darshana Yoga
-Jungle Copy (two locations)
-University Art (two locations)
-Mango Cafe and adjacent Stanford Florist
-Shell Gas Station (we no longer have a convenient service station downtown).
-California Yoga Center (oldest yoga studio in California -- circa 1970’s - RIP)
-Plan Toys & adjacent modern furniture store & rug store
-House of Bagels!
-Fraiche Yogurt's original Emerson St location
-Vacuum repair shop at Florence & Lytton
-Habiture home design
-Vintage clothing store on Waverley
-Rudy's !
-Borders FKA Varsity Theater
-Kurt and Dorn’s Garage
-Oly’s Garage
-Shokolaat Restaurant next to Plan Toys
-Blue Chalk Bar and Restaurant
-Laundromat next to 7-11

...and I know I am missing some here...

Are we going to wait until another cultural thread is ripped out?
-Palo Alto Toy?
-The Blueprint (?) shop?
-Bell’s Books?
-Prolific Oven?

Any city councilmembers who are not serious about protecting further loss of retail, rolling back frosted-glass "storefront cubicles," getting tough on landlords and zoning enforcement, will be singled out to be VOTED OUT in the next cycle!

5 people like this
Posted by Jane
a resident of Evergreen Park
on May 8, 2015 at 3:11 pm

I'd like to see all the places that have been converted from first floor retail to offices during the last twenty years be amortized back to being retail again. On Alma this was done to all the repair garages that used to be line the street between Addison and Forest. If building owners know that the previous practice of being allowed to quietly turn retail into offices will no longer apply, then the retail rents will reflect that. And next time there is a downturn in the economy building owners will be motivated to lower the rents to keep the shops leased. If the rent is right Palo Alto is a very desirable place to have a shop. In past recessions empty store fronts have been an excuse for building owners to lobby the planning department to allow these spaces to be "temporarily" converted from retail to offices for three or four years ( don't remember which), with a stipulation that when the economy recovered they were to be converted back to retail. But of course after the original term was up, the economy recovered, city hall either had forgotten or didn't care to force the issue.

2 people like this
Posted by Ronna Devincenzi
a resident of Another Palo Alto neighborhood
on May 11, 2015 at 4:45 pm

Christian Science Reading Room on California Avenue sells numerous helpful books for Bible study, such as maps of the holy land.

They have two full walls of items for sale, and things that are not available elsewhere.

I am not involved with Christian Science but I bought two of their books over the years.

They have been in the same Cal Ave location for over 20 years. When the Streetscape was first being planned from 2005-2009, their former manager was among the few merchants in the district to come to meetings, weighing in and lending support to neighbors in the district, even helping with Emergency Preparedness efforts, when the Golden Guardian and the Silver Sentinel exercises were happening.

City council needs to be extremely careful about what new rules they make, taking into consideration that IF downtown, the ground floor retail legislation has been disregarded, to the detriment of that district, loyal businesses are not adversely affected.

I like that the "retail" legislation includes banks and other services. An office that does not engage the public and that is clearly not retail, ought not to be on the ground floor of any business district, like downtown or Cal Ave.

Like this comment
Posted by Robert
a resident of another community
on May 11, 2015 at 7:11 pm

Ronna Devincenzi, at that point why not just let the Council dictate and choose who is allowed to stay and who gets evicted? Whats the difference between that (morally if not legally) and through a completely targeted zoning code?

4 people like this
Posted by Ahem
a resident of Another Palo Alto neighborhood
on May 11, 2015 at 11:58 pm

All retail was not created equal. Will the city council protect REAL retail, from the onslaught of overpriced chain restaurants and coffee shops?

6 people like this
Posted by Inadverent humor
a resident of Old Palo Alto
on May 12, 2015 at 2:03 am

It was fun watching Scharff and Berman whispering extensively through part of the deliberations. Then Berman voted with Scharff in several 7 to 2 votes, to block auto repair places on Park Blvd. from being protected.(Eight votes were needed to pass)

Poor Councilman Berman, he is so unprepared for this job, it's sad/funny. Then he blusters to cover up the fact that he doesn't exactly know what is going on. And votes with one of his mentors. He could save himself public embarrassment by resigning.

2 people like this
Posted by Inadvertent humor
a resident of Old Palo Alto
on May 12, 2015 at 10:59 pm

Mr. Scharff held the council hostage in order to get his way, with the support of his fellow real estate lawyer, Marc Berman.

What everyone was too polite to mention in discussing the automotive repair shops on Park Blvd. is the fact that Scharff's office is a couple of blocks away on Park Blvd. It seems he was not legally required to recuse himself, but he was not ethical enough to let it go. He likes office space on Park Blvd. it increases the value of his own office property.

Sorry, but further commenting on this topic has been closed.

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