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City Council Staff Report (2017-05-02)______________________________________________________________ TITLE Initiation of a Zoning Code Amendment to modify the provisions of the C-3 (Central Business District) and P-D (Planned Development) Zoning Districts to expand the number of allowable land uses, relax signage standards, expedite the permit process for retailers, and to modify the parking regulations for new uses in existing buildings. (Roll Call Vote) RECOMMENDATION That the City Council initiate a Zoning Code Amendment to adopt proposed changes as specified in Attachment 1 – Summary of Recommendations. BACKGROUND Starting in late 2012, Planning Division staff was tasked with researching how other cities controlled land use in a Downtown environment. This was done in response to Council and community concerns that too many restaurants were displacing traditional retail, which in turn diminishes the retail character of the Downtown. To this extent, the Council and Planning Commission have held multiple study sessions and public hearings to consider potential ordinance and policy changes that could address this perceived imbalance. In order to assist the Council's understanding of these meetings, a chronology has been provided below (all previous reports can be accessed by clicking the appropriate hyperlink below): •March 5, 2013 (City Council Study Session): The Council considered acomprehensive report outlining applicable City policies and standards, as well as an analysis providing an explanation for the observed shift. At the conclusion of the study session, the Council directed staff to proceed with preparation of an amendment to the Zoning Code that would require a Conditional Use Permit(CUP) for conversion of existing retail space to restaurant use in the (Downtown) C-3 Zoning District. •July 16, 2013 (City Council Study Session): Staff presented a tailored approach that would require a CUP for a restaurant conversion tied with findings that woulddirect the Planning Commission to consider potential "over-concentration" of restaurants in the immediate area. Although the Council expressed a concern for the loss of long-term retailers, the consensus was not to proceed with a CUP permit process at that time. Instead, the Council directed staff to continue to monitor the situation. •February 17, 2015 (City Council Study Session): At the request of the Council, the issue was revisited. The Council was provided with updated information highlighting the changes over the preceding two years. The Council discussed City Council Report Item: Category: New Business Date: May 2, 2017 10. City Council Report ~ May 2, 2017 Page 2 of 8 Initiation of Zoning Code Amendment various issues including defining an appropriate "mix of uses," the role of alcohol service, and consideration of a moratorium for new restaurants. The Council requested that study session be continued and reconvened jointly with the Planning Commission to allow for input and discussion with the Commission. • June 16, 2015 (Joint City Council/Planning Commission Study Session): At the joint study session, the Commission and Council received public comment and had a wide-ranging discussion on the role of restaurants in the Downtown, the future of local retail, potential regulatory options, and the City's economic development efforts. At the conclusion of the meeting, there was an emerging consensus that the CUP requirement should be reviewed again. As a result, preparation of Zoning Code Amendment was placed on the FY2016 Work Plan for staff to bring forward within the fiscal year. • February 23, 2016 (Planning Commission Public Hearing): As directed by the Work Plan item, staff prepared a Zoning Code Amendment that would have required approval of a Conditional Use Permit for any new restaurant, tied to specific findings intended to encourage an appropriate balance of uses, diversification of eating establishments, and to limit an "overconcentration" of restaurants in the Downtown. • March 15, 2016 (City Council Public Hearing): The Council's discussion concluded with a decision not to adopt the proposed amendment. Although there was support for a Conditional Use Permit process, the Council directed staff to review incentives that may encourage retailers as well as reviewing the list of allowable uses in the Downtown. • February 7, 2017 (City Council Study Session): The Council held a study session to continue the ongoing discussion on the mix of uses in the Downtown. At the meeting's conclusion, the Council provided general direction and questions for subsequent follow-up, including: revise the list of allowable uses to include additional uses, provide an allowance for historic buildings to have more use flexibility, eliminate the parking exception for restaurants, modify the signage standards to allow a secondary (smaller) wall signs for menu listings (and similar signs), explore electronic parking signage and a trolley system, and streamline commercial tenant improvement (TI) permits. This matter has evolved from the original conception of more strictly regulating restaurants to expanding the overall number of allowable uses in the Downtown. Therefore, as a matter of procedure the City Council should take action to formally initiate preparation of a Zoning Code Amendment pursuant to CMC Sec. 21.60.020. The Council's action to initiate a Zoning Code Amendment does not bind the Council to approve any particularly change, however, it does clearly define the scope of the amendment that staff will prepare. City Council Report ~ May 2, 2017 Page 3 of 8 Initiation of Zoning Code Amendment DISCUSSION To maintain continuity with the February 7th Council Study Session, the following discussion is organized as a response to the Council's comments from that meeting. The suggested revisions are summarized in Attachment 1. 1. Revise the list of allowable uses to include additional uses. Retail, as it has been traditionally known, is undergoing a radical transformation. This will be seen not only in a shrinking footprint of many national and regional retailers, but also a reimagining of what retail is. New business concepts will increasingly combine several activities, such as retail, services, instruction, and entertainment all within the same store. This increasingly fluidity suggests a need for more permissive zoning regulations. Although zoning cannot generate economic demand, it can influence a local government's expectation of desired land uses. As such, the Council may consider a significant reconstitution of the C-3 land use provisions. As discussed in previous reports, this zoning district is particularly prescriptive in defining what types of business can be established. These restrictions were intended to limit the proliferation of certain "undesirable" businesses at a time when the Downtown was struggling to maintain relevancy. It is increasingly evident now that these standards may have outlived their usefulness, and arguably have been counterproductive by restricting alternatives to restaurants. Therefore, the C-3 provisions may be rewritten to align them with the C-2 (General Commercial) standards (less any obviously inappropriate uses, such as drive-through restaurants). This would entirely eliminate the prohibition of studios, offices, salons, and instruction that currently applies to all properties along Campbell Avenue (east of Second Street and 50-feet down adjoining side streets). It would also allow medical offices to establish in the Downtown, which have long been prohibited in the entirety of the C-3. Additionally, certain land uses that currently require a Conditional Use Permit, particularly banks, financial services, and grocery stores may also be re-designated to no longer require a CUP. Although these destination businesses do not necessarily activate the streetscape in the same manner or degree as restaurants and retail shops, they nonetheless bring additional foot traffic to the Downtown providing greater opportunities for patronage of retail stores and restaurants. A laissez-faire approach to land use would provide an opportunity for the Downtown's composition to evolve in a more organic manner by providing increased competition for tenant spaces. A less regulatory approach could foster an eclectic environment similar to the past, when the Downtown was occupied by a variety of businesses, as shown in the 1950's photograph on the following page (businesses in view include a drugstore, cobbler, meat market, cleaners, real estate office, and café), which were intended to provide the service needs of Campbell's residents. City Council Report ~ May 2, 2017 Page 4 of 8 Initiation of Zoning Code Amendment To ensure that these businesses do not result in dead storefronts that are obscured by blacked-out windows, shades, or adhered window graphics, the new zoning provisions should also be paired with very specific design standards that prohibit obscuring of windows and also necessitate certain design features. For instance, medical offices could be required to place the waiting room at the front of the building so that that the storefront can remain transparent and welcoming. An example of this can be seen in San Jose at the One Medical Group clinic located along The Alameda, below. Similarly, yoga and similar small/large studios could be required to incorporate a reception area at the front of the store to negate the need to obscure the windows (which is commonly done to provide privacy for customers). 2. Clarify how the C-3 Zoning District differs from the 'Central Commercial' area. The above described use-type changes would apply directly to the C-3 Zoning District, which, is the area bound by the two loop streets (Civic Center and Orchard City Drives), as depicted by the Zoning Map excerpt on the following page as the maroon colored parcels: City Council Report ~ May 2, 2017 Page 5 of 8 Initiation of Zoning Code Amendment However, changes made to the C-3 Zoning District will also affect properties within the Winchester Boulevard and East Campbell Avenue Master Plan areas (as outlined in orange and pink, respectively, on the General Plan Map excerpt, right,). However, since these two areas fall within the Planned Development (P-D) Zoning District, there are no "permitted" or "conditional" uses. Rather any new business that constitutes a "change of use" (e.g., salon to retail) requires approval of an Administrative P-D Permit. Staff discussions with the brokerage community has revealed that this requirement may represent a significant obstacle for new retailers on Winchester Boulevard and East Campbell Avenue. Since the City has never denied an Administrative P-D Permit application for a retail use, and it is unclear under what circumstances denial would be warranted, the Planned Development Zoning District chapter could be modified to remove this permit requirement for any new retail use within the boundaries of the Winchester Boulevard and East Campbell Avenue Master Plan areas. Winchester Blvd. E. Campbell Ave. City Council Report ~ May 2, 2017 Page 6 of 8 Initiation of Zoning Code Amendment 3. Provide an allowance for historic buildings to have more use flexibility. Revisions to the C-3 Zoning District to allow more land uses would apply to all properties, negating any need to provide special land use provisions for historic buildings. However, as part of the City's pending update to the Historic Preservation Ordinance, historic properties could benefit from a "historic variance" or comparable relief that could be granted on a case-by-case basis. Additionally, historic properties are already granted additional consideration under the California Historical Building Code. 4. Eliminate the parking exception for restaurants To encourage a greater variety of uses, the Council may consider entirely eliminating the parking requirement for all new uses locating in any existing building (this has been the City's practice), with the exception of restaurants. This requirement would not preclude restaurants, but would rather limit their seating capacities commensurate with a parking standard, as is the case with the rest of the City. Such a change should also be paired with a reinstatement of the parking in-lieu fee to allow restaurants to pay for additional seating capacity. 5. Modify the signage standards to allow a secondary (smaller) wall signs for menu listings and such. Although the City cannot establish separate signage standards for retailers versus other uses, the C-3 Signage standards can be made more permissive to allow larger and a greater quantity of signs, as discussed below. Although these changes would equally apply to all uses—including restaurants—arguably enhanced signage would be of a greater benefit to retailers than other uses. Businesses such as salons, studios and increasingly restaurants, operate as a destination business for which customers specifically plan a visit, diminishing the value of additional signage. In comparison, most retail stores—particularly locally owned small-businesses—are location-based, meaning that they rely on passerby traffic. As such, additional signage could be seen as providing a greater benefit to retail uses and act as an incentive: • Expedite sign review by allowing all signs to be reviewed through a building permit and no longer requiring separate (and costly) sign permits. • Increase the maximum wall sign size from 40 square-feet to 50 square-feet (equal to the rest of the City). • Create an allowance for ancillary menu/special/sale sign boards in addition to wall and projecting signs that are already allowed. • Allow wall signs on second-stories by right (currently requires a Sign Exception). • Formalize A-frame sign allowance (on private property only). • Allow for free-standing signs on certain properties. City Council Report ~ May 2, 2017 Page 7 of 8 Initiation of Zoning Code Amendment 6. Explore electronic parking signage. With approval of the Opa's Building expansion, the City will secure approximately a quarter million dollars parking in-lieu fees which may be used for installation of an active parking management system (i.e., installation of electronic parking signs) for both garages. The Public Works Department will discuss this matter once funding has been secured from the developer (as conditioned, payment of the in-lieu monies is not required until just prior to occupancy of the expanded building). 7. Actively recruit anchor retailers. Develop an aggressive plan to target boutique anchor retailers that could potentially open a new location in Downtown. In order to create a viable retail district, shoppers must have a diversity of retail choices within a close proximity of each other. Creating a plan to strategically recruit more retail tenants, such as successful retail boutiques in neighboring cities like Santa Cruz and San Francisco, would increase the likelihood of local shoppers making intentional trips to shop in downtown Campbell instead of driving long distances to shop at interesting retail areas further away. A boutique retail hub in Downtown would bolster retail sales taxes and stop retail leakages to other regions. NEXT STEPS If the Council adopts a motion to initiate a Zoning Code Amendment, staff will prepare a draft ordinance based on the summary of recommendations contained in Attachment 1. The ordinance would be considered by the Planning Commission who would make a recommendation to the City Council for final decision. ALTERNATIVES 1. The Council may add, remove, or modify any particular change contained in Attachment 1 as part of a motion to initiate preparation of Zoning Code Amendment. 2. If the majority of the Council does not believe there is an issue that needs to be addressed through a zoning change—that is, the status quo is acceptable—the Council should adopt a motion to cease the planning review of this matter. Attachment 1 SUMMARY OF RECOMMENDATIONS 1. Expand the list of allowable uses in the C-3 Zoning District comparable to the C-2 Zoning District (less an obviously inappropriate uses, such as drive-through restaurants). 2. Re-designate some conditional uses to permitted uses (i.e., banks, financial services, and grocery stores). 3. Revise the storefront design standards to: a. Specifically prohibit blacked-out windows, shades, or adhered graphics. b. Require that medical offices, studios, and other similar uses (to be determined) incorporate a front waiting or reception area. 4. Modify the P-D (Planned Development) Zoning District to remove the requirement for an Administrative Planned Development Permit for retail uses. 5. Eliminate the parking requirement for all new uses locating within an existing building, with the exception of restaurants. 6. Reinstate the interim parking in-lieu fee to allow restaurants to expand their seating capacities through payment of a fee. 7. Modify the C-3 signage standards to: • Expedite sign review by allowing all signs to be reviewed through a building permit and no longer requiring separate (and costly) sign permits. • Increase the maximum wall sign size from 40 square-feet to 50 square-feet (equal to the rest of the City). • Create an allowance for ancillary menu/special/sale sign boards in addition to wall and projecting signs that are already allowed. • Allow wall signs on second-stories by right (currently requires a Sign Exception). • Formalize A-frame sign allowance (on private property only). • Allow for free-standing signs on certain properties.