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City Council Staff Report (2017-06-06)______________________________________________________________ TITLE Continued Discussion on the 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 provisions which will allow expanded land uses in the Downtown, relax and simplify signage standards, and provide direction to staff to be proactive in attracting new retail uses. BACKGROUND At its meeting of May 2, 2017, the City Council considered initiation of a Zoning Code Amendment to modify various requirements pertaining to the C-3 Zoning District (i.e., Downtown). This meeting was the culmination of multiple Council meetings over the last four years regarding the "mix of uses" in the Downtown (the May 2nd staff report, which includes links to all previous staff reports, is included as Attachment 1). In response to the City Council's February 7, 2017 meeting comments to consider expansion of allowable uses in the Downtown, in particular those "categories of businesses" that have been prohibited or otherwise restricted in the C-3 Zoning District, the May 2nd staff report included a recommendation that would have significantly loosened the land use restrictions for the C-3 Zoning District. From the May 2nd meeting, staff learned that a majority of the Council supports maintaining robust land use controls in the Downtown, as evidenced by the Council's articulation of specific uses that should not be allowed. At this meeting, individual Council Members also provided various comments, including: •The need to include kid friendly spaces like arcades •Look at pharmacies and urgent care facilities •Expanded uses to the loop street •Historic buildings should not be limited to retail on the ground floor •Look at salons, makers space for children and dog washes •Need pedestrian-oriented uses •Should increase flexibility for signs City Council Report Item: Category: New Business Date: June 6, 2017 16. The Council also provided individual procedural comments to include: • Eliminate process that applies the same parking exception for restaurant as it does to retail • Be proactive to find retailers in the Downtown • Explore possibility of commissioning a new Downtown parking study After discussing numerous suggestions, the Council directed staff to return at a subsequent meeting to continue the discussion. DISCUSSION In an effort to continue the Council dialog of addressing the perceived imbalance of uses in the Downtown, staff has included the following information in response to the May 2, 2017 comments: Land Use: The Council requested that staff prepare a land use list that includes new uses that are pedestrian-oriented, kid-friendly, and which attract people. To this extent, staff has prepared a new C-3 land use table (on the following page) that proposes changes as described below (all changes are highlighted and identified in bolded brackets). The table specifies land use allowability as either permitted (P) or conditional (C), and whether allowed on the ground or upper floors (the latter distinction recognizes that some uses may be appropriate in the Downtown, just not on the ground floor). The goal of this new table is to encourage a broader land use base and to increase flexibility for new business concepts that may blend more than one use within the same tenant space, while maintaining the pedestrian-orientation of the Downtown. • New Uses: Various uses allowed in other zoning districts could be permitted, such as indoor amusement centers, medical clinics (upper floors only), hotels, bed and breakfast inns (historic buildings only), photography studios/supply shops, hardware shops (limited to 2,000 square-feet to encourage smaller boutique hardware stores), pet supply stores (including self-serve pet washing), commercial schools (upper floors only), and ATM machines. In terms of brand new uses, the table introduces the term "food retailers"—which is differentiated from restaurants—that would be defined as retail stores that sell novelties/snacks (with no or limited on-site consumption), such as ice cream shops, candy stores, and juice bars. Such a distinction recognizes that food retailers' operational practices are far less intensive than standard restaurants, particularly with respect to the number and duration of customer visits. Additionally "wine stores" (including incidental tasting) and "winery tasting rooms" (operated directly by a winery(s)) could be allowed with a Conditional Use Permit, allowing Downtown to capitalize on the success of the region's wineries. Lastly, "makerspaces" as well as "artisan products, small-scale assembly" could be allowed to provide opportunities for small-scale product development and assembly. The Council should discuss the merits of permitting makerspace use types ability to achieve consistency with the Downtown Campbell Development Plan & Standards since this Plan attempts to encourage “…functional ground floor retail space along Campbell Avenue” (Strategy LU-1.1a). If such uses are located above street level, that location may be more in-line with the Downtown Development Plan. • Existing Uses: The proposed table also includes uses which are currently allowed, but only in a restrictive manner (i.e., east of Second Street or 50-feet down a side street). These include studios, office, tutoring centers, and general service. To encourage greater ground-floor vitality throughout the Downtown, the City Council should discuss the possibility of permitting studios and general service use types on the ground-floor. However, tutoring centers and offices, would remain restricted to upper floors. Several uses that are currently allowed with approval of a CUP could be reclassified as permitted, including grocery stores, convenience markets (without alcohol sales), movie theaters, and arcades. In addition, Restaurants could be processed through a Conditional Use Permit given the City would permit additional uses as a method to incentive non- restaurant businesses. LAND USES GROUND FLOOR UPPER FLOORS Retail Activities Bookstores Convenience markets/stores (no alcohol sales) [no longer require a CUP] Food retailers [new use] Furniture stores Grocery stores [no longer require a CUP] Hardware stores (less than 2,000 sq. ft.) [new use] Music (recordings) stores [new use] Pet supply stores (including self-serve pet washing) [new use] Pharmacies/drug stores Photography studio/supply shops [new use] Retail stores, general merchandise P - Liquor stores Secondhand/thrift stores Wine stores, including ancillary tasting [new use] C - Services and Instruction Personal services [allow on Campbell Avenue] Studios, small and large [allow on Campbell Avenue] P P Banks and financial services Spa Services/Health Spas C - Commercial schools [new use] Medical services, clinics [new use] Schools – K-12, private [new use] Tutoring center, small and large [restrict to upper floor] - C Restaurants and Drinking Establishments Outdoor seating, ancillary to a restaurant P P LAND USES GROUND FLOOR UPPER FLOORS Restaurants, standard or café [require a CUP] Liquor establishment, ancillary to a restaurant or other primary use Liquor establishment, stand-alone bar/tavern Winery tasting room [new use] C C Employment/Office/Production Artisan products, small-scale assembly (w/retail storefront) [new use] P - Artisan products, small-scale assembly (w/o retail storefront) [new use] Government offices and facilities Makerspace [new use] Offices, professional [restrict to upper floor] - P Hospitality/Lodging Bed and breakfast inn (within an historic structure) [new use] Hotels [new use] C C Entertainment and Assembly Arcades1 [no longer require a CUP] Indoor amusement/entertainment/recreation centers [new use] Movie theaters [no longer require a CUP] P P Live Entertainment and/or dancing, ancillary to a primary use Nightclubs (live entertainment and dancing as primary use) Performing arts theaters and concert halls [new use] C - Banquet facilities [restrict to upper floor] Public assembly uses[restrict to upper floor] - C Housing Apartments (condominiums require rezoning to C-PD) Senior citizen housing [new use] - C Leasing/management office, ancillary to a housing use [new use] C - Other Uses Parking lot/structure, public or private C C Automated teller machines (ATM's) [new use] P - Late Night Activities, in association with any use C C Wireless Communication Facilities May be allowed in compliance with Campbell Municipal Code Chapter 21.34 (Wireless Communications Facilities) 1 Would still require City Council approval of an Arcade Permit Expand Uses to the Loop Streets The Downtown Campbell Development Plan & Standards currently includes a goal and policy to respond to the Council suggestion. In particular, Goal LU-6 requires the City “To promote and encourage development along the loop streets, and beyond.” Signage: The Council determined that a comprehensive update to the Downtown Sign Code should be addressed as a separate item and that staff should focus on creating more flexibility for temporary and menu board signs in the meantime. In response to these suggestions, the Zoning Code Amendment could establish flexible temporary signage standards to include provisions for size, shape, dimensions, and materials in order to encourage creative and high-quality designs, such as the following: In addition to the above, a Zoning Code Amendment could include provisions which discuss how the City chooses to regulate restaurant menu displays. For example, the City could choose to classify menu displays as signs with standards to control placement, size and illumination or the City could exempt them from any regulations altogether. Parking: The Council indicated a desire to eliminate the parking exemption for restaurants. Absent a parking in-lieu fee, it would be challenging for a restaurant to demonstrate the necessary findings to justify approval of a parking modification to allow an increase in seating capacity beyond the parking demand credit received from the prior use. Pro-Active Retail Attraction: In addition to broadening the Downtown land use base, creating flexible signage standards for temporary signs and restaurant menu displays, and elimination of the parking exemption, the Council may also wish to affirm whether Community Development Department staff should take proactive efforts to attract retailers. At the May 2nd meeting, staff mentioned that the current practice to locate businesses in the Downtown has been limited to existing Campbell businesses that have been displaced. If the City Council wishes to expand the current practice, staff requests such permission to do so. CONCLUSION Staff is requesting that the Council include in their discussion: • Land use types (i.e., whether to add, remove, and/or modify uses from the table) • Temporary signage to allow portable signage and restaurant menu displays • Parking exemption consideration absent a parking in-lieu fee. • A proactive economic development approach in attracting retail businesses. Should the Council authorize initiation of a Zoning Code Amendment, staff will be begin preparation of a Zoning Ordinance Amendment that would be reviewed by the Planning Commission in the next few months prior to being brought to the Council for formal consideration. Alternatively, the Council may also consider the following options: • Continue this meeting and direct staff to return with specific amendment changes to consider and/or additional research. • Conclude this planning process and maintain the status quo. • Consider preparation of a revised Downtown Development Plan following conclusion of the Envision Campbell General Plan Update to establish new policies that can direct future land use changes. Prepared by: Daniel Fama, Senior Planner Reviewed by: Paul Kermoyan, Community Development Director Approved by: Attachments 1. City Council Staff Report, dated May 2, 2017 ______________________________________________________________ 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.