News

Plan to limit Cal Ave chain stores gains momentum

Concerned about changing character of commercial strip, Palo Alto's planning commission signals support for new restrictions

Palo Alto's push to preserve the California Avenue shopping area's funky, arty charm gained steam Wednesday night, when the city's planning commissioners added their support to limiting chain stores in the city's eclectic "second downtown."

In its first discussion of the proposed law, the Planning and Transportation Commission offered many words of praise – as well as a few of caution – about the city's latest attempt to protect mom-and-pop retailers.

The City Council launched the effort earlier this year, when it approved the rough framework for the new law and proposed an expansion of the retail area around California Avenue to adjacent streets. The council then forwarded the proposed change to the planning commission for further vetting.

The new law is part of a broader package of initiatives that the council had recently launched to address the recent surge of office growth and rapidly rising rents. California Avenue, which is seeing the bulk of this growth, is at the epicenter of the city's attention.

Earlier this year, the city completed a $6.9-million streetscape project on the prominent strip, which now features wider sidewalks, prominent crosswalks, fewer driving lanes and two new public plazas.

Now, officials are worried that the rising rents on California Avenue will displace small mom-and-pop stores and encourage more offices. The recent departures of long-time establishments Cho's Dim Sum, Avenue Florist and Bargain Box underscored, for many, the negative impacts of California Avenue's newfound prosperity.

To protect retail from being displaced by office, the council on May passed one emergency law prohibiting the conversion of ground-floor retail to other uses and another one limiting new office growth in the major commercial areas to 50,000 square feet. It also cobbled together the framework for a new ordinance that would limit chain stores and promote more ground-floor retail on California and on surrounding streets.

In crafting its chain-store ordinance, Palo Alto is largely following the lead of San Francisco, which has such limitations in place in various neighborhoods. The new ordinance would define "formula retail" as "a retail, personal, or eating and drinking service which, along with 10 or more other business locations in the United States, is 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 service-mark."

The proposed law would extend some if not all of California Avenue's ground-floor retail requirements to Cambridge Avenue, which runs parallel, and to a stretch of Park Boulevard from California to Grant Avenue.

Jessica Roth, whose family has owned the California Avenue business European Cobblery for 75 years, has been at the forefront of the effort to limit new chain stores. Roth told the commission Wednesday that small businesses help "make up the neighborhoods of our city" and warned that, without them, the city will lose its character.

"We are surrounded by other cities that have done similar things (restrict chain stores) with positive outcomes, and I hope we will be able to do the same," Roth said.

The planning commission, which was missing three members (Mark Michael, Kate Downing and Adrian Fine), did not vote on the proposed ordinance and will resume its discussion on Aug. 26. But during its deliberations Wednesday, commissioners largely agreed with the council's direction.

While they acknowledged the limitation could result in lower property values and higher vacancies on California Avenue, as well as potentially higher prices for consumers, commissioners generally agreed that these potential consequences are outweighed by the benefit of preserving the street's character.

Commissioner Michael Alcheck, one of the staunchest supporters of the chain-store limitation, said he was "thrilled" about the new law. He lauded its impact in San Francisco, which has served as a model for other cities throughout the Bay Area.

"People refer to San Francisco retail as the 'rainforest of retail' because of the variety," Alcheck said. The proposed ordinance would not affect the few existing chain stores and franchises that currently make their home on California Avenue, a list that includes Subway, Starbucks, FedEx, the Counter and Benjamin Moore Paints. Nor would it make it completely impossible for new chains to open up shop.

It would, however, require them to acquire a conditional-use permit. The council would have the authority to deny permit applications. New hair and nail salons, which are ubiquitous around California Avenue, would have to go through a similar permit process as well.

Chair Greg Tanaka was more cautious than Alcheck and Commissioner Eric Rosenblum in his support for the ordinance. California Avenue may be thriving during the current period of economic boom, he reasoned, but what will happen if the city's economic fortunes turn? Will the restrictions on retail create retail "dead zones" that would be even worse than chain stores?

"I want the street to thrive, and I'm worried that if the economy turns, will we have bigger problems later on?" Tanaka asked.

Commissioner Przemek Gardias observed that California Avenue has been "unique" even since its origin as the main commercial strip in the former town of Mayfield. The area, he said, is changing because "the structure of Palo Alto retail is changing."

Gardias suggested differentiating between the types of retail that should be encouraged for California Avenue and the types that would be more suitable for Cambridge and Park. Under this "structural distinction," streets peripheral to the main corridor could feature small spaces for mom-and-pop shops and start-up businesses. The main strip, California Avenue, would be left for the larger businesses capable of paying the higher rents.

"Small businesses that we'd like to protect here with some regulations on formulas – they're pretty much being pushed out," Gardias said. "Because we don't have a structure to accommodate that changing character, they have no place to go and they have to ... close down because there is no other alternative for them in Palo Alto."

Comments

12 people like this
Posted by Nayeli
a resident of Midtown
on Jul 9, 2015 at 8:44 am

Nayeli is a registered user.

Now, let's figure out a way to get AFFORDABLE restaurants on California Avenue.


21 people like this
Posted by six of one
a resident of Another Palo Alto neighborhood
on Jul 9, 2015 at 8:56 am

Another poorly though out, feel good measure pushed by the city council--chain stores are evil--we must protect overpriced local stores from comptetion!!!!
First of all Palo Alto is not San Francisco, so any comparisons there are bogus and out of place

Then the article states:
"The proposed ordinance would not affect the few existing chain stores and franchises that currently make their home on California Avenue, a list that includes Subway, Starbucks, Fed Ex, the Counter and Benjamin Moore Paints."

So there are few chain stores on California to begin with? Are chain stores actually knocking on the door to open on California Avenue. I doubt it.

Then who are the "local" people that will open stores on California Avenue. We already had one example of a major failure--the gourmet hotdog place came and went very quickly.

This is once again an example of the city wasting time finding a solution to a problem that does not exist


12 people like this
Posted by Resident
a resident of Another Palo Alto neighborhood
on Jul 9, 2015 at 9:23 am

There is so much drivel in this article and argument.

Chain stores are not well defined and a new chain anchors a shopping area and encourages new shoppers.

By your definition, something like the Winter Lodge, which has a logo, uniforms and color scheme, would not fit.

The best types of solution would be to encourage people to shop the existing retail which draws people who may then discover a unique retail next door. The biggest drawback is finding parking, 30 minute parking outside retail would be the best incentive to get someone to visit the retail they need. The only people who walk or bike are the ones who already live close enough to use it. Those who want to drive and park are not attracted when parking is complicated.

This is for all shopping areas of Palo Alto, including Midtown which now has parking problems too. I usually use Midtown retail on my way out or on my way home, but it becomes a real problem when parking is difficult. 30 minute parking (as Walgreens parking lot displays) means that it is easy to find a spot to park for a quick errand en route to somewhere else.


8 people like this
Posted by musical
a resident of Palo Verde
on Jul 9, 2015 at 10:13 am

The definition in the article included 10 locations, which Winter Lodge doesn't have. I'm wondering about the new Fire Oak & Barley (Le Boulanger) next to Starbuck's. More than 10 locations, but still local family owned as far as I know. Or is it fewer than 10 locations, because Fire Oak, while under the same ownership, is a separate concept? Aside, will a "Wood Fired Bistro" be allowed to operate on spare-the-air days?


9 people like this
Posted by resident 1
a resident of another community
on Jul 9, 2015 at 10:39 am

Folks, read carefully.

The "formula retail" definition includes ten or more stores, so Winter Lodge would not fall under this category. However, local sandwich chain Ike's Place would indeed fall under the "formula retail" definition because they have 16 locations and maintain at least some of the standardized characteristics: "merchandise, menu, services, decor, uniforms, architecture, facade, color scheme, signs, trademark or service-mark."

Whether it's locally owned or not is irrelevant to the definition. Fire Oak & Barley is a separate concept from Le Boulanger, so it would not fall under the "formula retail" definition, although certainly Le Boulanger stores do.

Fires for cooking food are exempt from Spare the Air days, regardless of whether they are commercial or residential.


16 people like this
Posted by E
a resident of Midtown
on Jul 9, 2015 at 10:53 am

This is silly, anti-capitalist crap. Cal Ave is hardly overrun with chain stores. Do people seem horrified by the presence of the Counter or Starbucks? Nope. They're alwys busy. People WANT the services they provide. Seriously, people need something better to worry about.


4 people like this
Posted by Gale Johnson
a resident of Adobe-Meadow
on Jul 9, 2015 at 10:58 am

Thanks 'six of one' and 'Resident 1'

"Mom and pop" stores like we think of them won't be coming to California Avenue with its high rental rates. Sure that could change if 'boom' becomes 'bust' but my crystal ball is a whiteout from all the snowflakes.


9 people like this
Posted by Resident
a resident of Another Palo Alto neighborhood
on Jul 9, 2015 at 11:04 am

On another note, mom and pop stores are not going to be able to afford to pay $15 minimum wage or provide parking for unskilled or semi-skilled staff without pricing themselves out of being viable. I can't see many mom and pop stores wanting to open in Palo Alto. The only ones that can afford to move here are going to be chain stores.


2 people like this
Posted by musical
a resident of Palo Verde
on Jul 9, 2015 at 11:05 am

Thanks, resident 1, for pointing out the food exemption. It's not obvious on the Spare-the-Air fact sheet. I also found that the Bay Area Air Quality Management District has detailed regulations for commercial cooking equipment. I remember the old Kirk's there as being quite smokey.


1 person likes this
Posted by resident 1
a resident of another community
on Jul 9, 2015 at 11:28 am

Note the the Bay Area Air Quality Management District has seasonal Spare The Air alerts.

The summer alert doesn't prohibit anything, but just encourages people to carpool, use public transit, and consider curtailing activities that generate air pollution (like running gas-powered lawn mowers).

The winter alert does prohibit wood burning fireplaces, fire pits, wood stoves, etc.

"Fires for cooking are not prohibited during Winter Spare the Air Alerts, but we ask the public to be mindful of air quality, and recommend the use of gas and propane barbecues rather than wood or charcoal-fired cooking devices on these days."

Source (Bay Area Air Quality Management): Web Link

I don't know how long you have lived here, but restaurants with wood-burning ovens have always operated normally on Winter Spare The Air days.


29 people like this
Posted by Bill
a resident of Evergreen Park
on Jul 9, 2015 at 12:16 pm

"Now, let's figure out a way to get AFFORDABLE restaurants on California Avenue."

To name a few:

Subway, Szechuan Cafe, Palo Alto Sol, Pizza Studio, Palo Alto Pizza Co., Taqueria Azteca (inside Antonio's), Joanie's Cafe, Spice Kit, Palo Alto Baking Company, Peking Duck, Izzy's Bagels.


12 people like this
Posted by musical
a resident of Palo Verde
on Jul 9, 2015 at 12:57 pm

Yes, Bill, I thought about asking Nayeli or anyone else what is considered "affordable." I regularly drop $13-$20 on a sit-down breakfast. An occasional dinner runs closer to $25. (Includes tax & generous tip, no alcohol or frills.) What's affordable once a week is not the same as what's affordable twice a day, or when feeding a whole family. If I'm out and my pocket-change is running low, a Subway or Mollie Stone sandwich fits the situation. The vast majority of my meals are at home, but I enjoy going out, and hope that I am supporting worthy establishments. I also probably spend too much every week at the Cal Ave farmers market.


12 people like this
Posted by Joe
a resident of Another Palo Alto neighborhood
on Jul 9, 2015 at 1:33 pm

With only a couple of blocks of real estate to work with, and most “chain stores” tending to be larger than smaller—what can those advocating that the City Government be involved in determining the retail make up of these couple of blocks be thinking? Does anyone really believe that Safeway is going to put in a mega-market on this block? Or Walmart moving in to push out all the “little guys”?

Given the fact that there have been “chain stores” on this block for a long time—and they haven’t exhibited any clearly predatory behavior that has push any/all competition off the block—why not let the market place work as it is intended?

This tiny little street will never be a “destination” for untold thousands of non-residents to shop, so there will never be much interest in “chain stores” in this location—outside of perhaps some chain restaurants.

It’s amazing how this push to insure that offices are not gobbling up locations that might be used for retail has quickly morphed into an attempt to micromanage Cal Ave’s commercial composition. Can only wonder if once the micromanagers have finished mucking up Cal Ave. if they will turn their attention to University Ave?


11 people like this
Posted by Cheese 'n Rice
a resident of Old Palo Alto
on Jul 9, 2015 at 1:40 pm

Why not just name Cal Ave "Billionaire's Row 2"; University Ave is already "Billionaire's Row 1".
Stanford Shopping Center is "Billionaire's Mall".


9 people like this
Posted by palo alto native
a resident of another community
on Jul 9, 2015 at 1:44 pm

Let's see, we don't want recognized chains on California Ave. We don't want any new office development to support the restaurants in town. We don't look at all the individual property owners needs. Empty spaces for lease on University Ave. Retail Businesses moving out of downtown due to lack of foot traffic and going to Stanford Shopping Center or other places. Traffic concerns and when all the businesses are run out of town, just think of all the traffic the homeowners will cause by having to drive out of town for their needs. It's time for the Council to be logical and QUIT answering to the special interests and take care of all property owners, residential or business. QUIT penalizing the current residential and business property owners for your past mistakes. The Council is doing nothing but quick fixes and that does not work.


4 people like this
Posted by Jane
a resident of Evergreen Park
on Jul 9, 2015 at 2:11 pm

Commissioner Przemek Gardias must not be familiar with Cambridge Avenue and Park as there are very few retail establishments left, and as I recall only a hair salon and restaurant around the corner that are accessed from Park. The rest have already been converted to offices, and if you walk down Cambridge most already have the privacy glass in place that council member Holman referred to as so unwelcoming to pedestrians. So as far as opportunities for owner run retail that ship has already sailed. However, I hope the little row of shops off Cambridge adjacent to the two-story parking lot will be included in the new retail ordinance overlay. Also the dog grooming establishment and sandwich shop just off California on Ash.


7 people like this
Posted by Mayfield Child
a resident of Green Acres
on Jul 9, 2015 at 2:28 pm

I miss Patterson's (then the bookstore that took their place), Monette's, Bishops's creamery and ALL the original Mom and Pop type stores on Calif. Ave...so many others that have come and gone. No way would I like the faceless chain stores on the Ave. Missing that old movie theater also. This southern side of Palo Alto is being torn up at it's roots. YES, the uprooted trees are missed the most....Hang in there California Ave. Merchants Assn.:)


Like this comment
Posted by Jane
a resident of Evergreen Park
on Jul 9, 2015 at 5:32 pm

I miss Cambridge Hardware and the wife of the owner who gave my children little gifts.


5 people like this
Posted by Bad planning
a resident of Another Palo Alto neighborhood
on Jul 9, 2015 at 5:39 pm

Nice comments six of one and joe. Myopic vision by the council but not surprising. They micromanaged the grocery store element in the city to protect JJ&F from competition and ruined any chance of having decent stores in town. Then they wonder why Mikis market and fresh market closed so quickly.
But, it does my heart good to see the empty hole where JJ&F used to be


5 people like this
Posted by SteveU
a resident of Barron Park
on Jul 9, 2015 at 5:44 pm

SteveU is a registered user.

Mollie Stones, a BAY AREA (only) chain is near the limit.
Round Table, Started in this area (Santa Clara and San Mateo counties)
(there are many more, that I am just not familiar with)


There should also be a consideration for Local (say, within 25 Miles) ownership of a Franchise, like the UPS Store. The key is the Owners are Local, not in some office in LA, SF.
Oh, And what if a Local business makes the Big time and grows/is acquired?

Long Term Stability is what we should be looking for. Not some flash in the pan that leaves a trail of debtors when it goes bankrupt.


13 people like this
Posted by Faith Bell
a resident of University South
on Jul 9, 2015 at 7:30 pm

Having seen University Avenue and the downtown shift from owner-run businesses to chain stores has significantly altered our sense of community. Why should anyone come to see yet another of the stores that can be found in any mall? Where once, as a business owner, I was able to meet with the people in our neighborhood to solve any issues that arose locally, now I get to contact corporate headquarters, and wait for the inevitable lack of response. Perhaps those of you who won't even leave your name with your comments should consider whether you, too, avoid being responsible to your neighbors. I am very appreciative of our city council's efforts to preserve small businesses, and applaud them for attempting to save what is left of independent businesses in the California Avenue district. Rents are not picked out of the air… if chain stores can pay higher prices, landlords will grab them.


3 people like this
Posted by resident 1
a resident of another community
on Jul 9, 2015 at 7:33 pm

@SteveU:

The "formula retail" plan doesn't affect existing California Avenue businesses; they are already grandfathered in and won't be kicked out.

The point of the "formula retail" plan is to prevent the annexation of the entire business district to chain stores. It matters less that the franchise owner might be local, but no one who walks through the front door of a Starbucks or McDonald's knows whether the owner is 2 miles away or 2000 miles away. The idea is to create a shopping district with character, not some cookie cutter mall experience like Stanford or Santana Row.

If a local business makes the big time, that's fine. They would still be allowed to continue to operate. The "formula retail" policy only applies to new businesses, not existing ones.

And how do you or anyone else determine "long term stability"? A business needs to open its doors and see if the customers come. You can't predict everything about the future. If you could, you wouldn't be bothering to comment here, you'd be counting your billions that you've earned forecasting the stock market.

What's the difference between Kirk's, Cambridge Hardware, Ramona Pizza, Cho's, Chez Franc? Some were around a long time, some weren't. Some have relocated elsewhere, some are just gone. They all have one thing in common: the owners decided to close their operations in the California Avenue business district. Things change, rents change.

What are you going to do? Ask new business owners if they plan to be around for a really long time? What new business owner would reply "no"?


1 person likes this
Posted by resident 1
a resident of another community
on Jul 9, 2015 at 8:01 pm

@SteveU:

Here's the section of the article that pertains to some of your concerns:

"The proposed ordinance would not affect the few existing chain stores and franchises that currently make their home on California Avenue, a list that includes Subway, Starbucks, FedEx, the Counter and Benjamin Moore Paints. Nor would it make it completely impossible for new chains to open up shop.

It would, however, require them to acquire a conditional-use permit. The council would have the authority to deny permit applications."

Thus, the council could allow a smallish local chain (like Ike's Place, the SF-based sandwich chain that is over the 10 store limit) to operate on California Avenue with a conditional use permit. Or a permit could be awarded to a larger chain, like an Apple Store.

Just remember, the factors that allow a particular business to be successful change, and what's good for a particular business in 1975 may not be present in 2005.


3 people like this
Posted by Joe
a resident of Another Palo Alto neighborhood
on Jul 9, 2015 at 9:20 pm

Underlying this issue of local retail vs “corporate” retail is the matter of exactly what a given business brings to the community, and what it takes from the community. Property taxes are one of the revenue streams that feed into the PAUSD, as well as the CPA. As to the costs of providing services for each business, the CPA has never gotten around to providing even an estimate of those costs, but has traditionally tried to cost out services on a per-head count for each resident—which comes to over $2,500.

Some of the older businesses, such as the one below, have managed to profit handsomely from Prop.13—while newer businesses are seeing property taxes that reflect the sky-high property evaluatons/costs.

Bell’s Books
536 Emerson
Land……………..$43,616
Improvements……$35,921
Total……………..$79,537

With the CPA getting only about 10% of each property tax collection—a business like this one is only contributing about $8,000 to help fund the CPA. Clearly, not paying the same property tax as other businesses on the same block gives these older businesses a big advantage in keeping their costs down—while expecting the same services as those which are new to the city.

We also have the disruptive influence of the Internet to consider, when we are thinking about how a City government can save local retail from the global market place. Given the power of this disruption, it's difficult to see how elected officials with no business experience are going to create safe havens for local retail in the future.


Like this comment
Posted by Joe
a resident of Another Palo Alto neighborhood
on Jul 9, 2015 at 9:44 pm

Woops .. mistake in the above posting.

Prop.13's 1% tax rate says that a property with an $80,000 assessment will pay $800/year in property taxes. CPA will receive about 10% of that $800, or about $80/year from an older business like this one which likely owns its store site.

Clearly, if there were a large number of older busiesses--then the City would not receive very much in taxes to provide the lavish services demanded by residents and businesses alike.

The City does receive a bigger slice of the sales tax--but this information is almost impossible to obtain on a per business basis. Presumably the bigger businesses with the larger customer bases contribute more in sales tax to the City than the older, smaller, businesses.



6 people like this
Posted by Chris
a resident of College Terrace
on Jul 9, 2015 at 9:48 pm

LOL. Does anybody else remember the petition to stop Starbucks going in on Cal Ave because there was already one nearby at Stanford Ave and El Camino? Does anybody remember Plantation Cafe? Between the chains that are already there and the businesses kicked out for office space, will anybody come in? Also, it takes PA an inordinate amount of time to approve permits for small business while the poor suckers pay rent. Why don't they have a mission to save small business on Cal Ave, period.


17 people like this
Posted by Ahem
a resident of Another Palo Alto neighborhood
on Jul 10, 2015 at 1:02 am

Nayeli said:

"Now, let's figure out a way to get AFFORDABLE restaurants on California Avenue"

You don't get it. The whole point of the California Avenue redevelopment project was to make the restaurants LESS affordable and more PROFITABLE, so they could afford to pay the small number of people who own most of the commercial real-estate along California Avenue MORE rent.


4 people like this
Posted by Crescent Park Dad
a resident of Crescent Park
on Jul 10, 2015 at 10:50 am

"Round Table, Started in this area (Santa Clara and San Mateo counties)"

Trivia: The original/first Round Table restaurant is on El Camino in Menlo Park.


3 people like this
Posted by SteveU
a resident of Barron Park
on Jul 11, 2015 at 9:19 am

SteveU is a registered user.

I intended Long term stability as a GOAL.

Big corporate bean counters routinely close 'Under Performing' locations. Under performing can just mean: Profits are not as LARGE as we want.
Local owners tend to 'hang in there' till the bitter end, hoping things will turn around.


Like this comment
Posted by Downtown Worker
a resident of Menlo Park
on Jul 11, 2015 at 9:40 am

Is a chain store ordinance even necessary? For comparison, University Ave with its higher rents is only 26% chain stores (Web Link), according to the 2013 city report. 74% independent is a lot, and there's no ordinance.

Does anyone have data on what fraction of Cal Ave stores are independent vs. chain? Is it higher or lower than University Ave?


9 people like this
Posted by WTF
a resident of Esther Clark Park
on Jul 11, 2015 at 12:41 pm

I get the distinct feeling that the City of Palo Alto, James Keene in particular, want anyone making less than $500,000/year OUT of Palo Alto. That includes the businesses and services that serve the middle/upper idle class and their families.


4 people like this
Posted by Peter
a resident of Southgate
on Jul 11, 2015 at 12:43 pm

To the resident who is proposing a 30-minute time limit on parking, I'd argue that it's not enough time for someone like me who runs multiple errands in a single trip (if for some reason I find myself having to drive). Sure, a few 30 minute slots on California Avenue itself would be fine, but we generally do want people to stay and support the businesses there, right?


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

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