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Planning Commission Staff Report (2016-02-23) ITEM NO. 3 CITY OF CAMPBELL ∙ PLANNING COMMISSION Staff Report ∙ February 23, 2016 PLN2013-13 Text Amendment Public Hearing to consider the City-initiated Zoning Text Amendment (PLN2013-13) to amend the Campbell Zoning Code to reclassify restaurants and motor vehicle sale establishments (within an enclosed building) as conditionally permitted uses subject to approval of a Conditional Use Permit and specifically prohibiting drive-through and drive-in restaurants within the C-3 (Central Business District) Zoning District. STAFF RECOMMENDATION That the Planning Commission take the following action: 1. Adopt a Resolution, incorporating the attached findings, recommending that the City Council adopt the attached draft ordinance. ENVIRONMENTAL DETERMINATION An amendment to the Zoning Ordinance is considered a "project" under Section 15378(a)(1) of the California Environmental Quality Act (CEQA) Guidelines, typically subject to environmental review. However, such an action may be exempted from environmental review if the City finds that there is no possibility that it will have a significant effect on the environment (Sec. 15061(b)(3)). Since the proposed text amendment represents a minor adjustment to the allowable uses within one zoning district, it would not result in new activity that would alter the physical environment. Therefore, staff recommends that the project be found categorically exempt. BACKGROUND Over the last several years, the City has witnessed a shift in the commercial makeup of the Downtown as restaurants have overtaken traditional retailers to now constitute a plurality of all land uses (both numerically and in aggregate square-footage). In response to these observations, the City Council has held three study sessions and one joint study session with the Planning Commission, to determine if there are any policy, code, or market factors that have influenced this change: • March 5, 2013 (reference Attachment 3 – Staff Report): The City Council considered a comprehensive 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 C-3 Zoning District. • July 16, 2013 (reference Attachment 4 – Staff Report): Staff presented a tailored approach that would require a CUP for a restaurant conversion tied with findings that would direct 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. Staff Report ~ Planning Commission Meeting of February 23, 2016 Page 2 of 6 PLN2013-13 – C-3 Zoning District • February 17, 2015 (reference Attachment 5 – Staff Report): The Council was provided with updated information on this matter, highlighting the changes over the preceding two years. The Council discussed 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 the February 17th study session be continued and reconvened jointly with the Planning Commission to allow for input and discussion with the Commission. • June 16, 2015 (reference Attachment 6 – Staff Report): At the joint study session, the Commission and Council received public comment and had an 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, the zoning text amendment was placed on the FY2016 work plan for staff to bring forward within the fiscal year. DISCUSSION Current Requirement: Within the C-3 (Central Business District) Zoning District, a restaurant that includes any of the following features is considered a "conditional use," requiring approval of a CUP, subject to the Downtown Alcohol Beverage Policy: 1. Sale of "hard alcohol" (distilled spirits of any type, including in mixed-drinks). 2. A delineated "bar area" (defined as a "separate area, tables, or a room intended primarily for serving alcoholic beverages" per CMC Sec. 21.10.060.F.1.b). 3. Operation after 11:00 PM ("late-night" hours), including staff clean-up. 4. Live entertainment in association with any of the above features. A restaurant without any of these features—including restaurants without a separate bar area that provide beer and wine service—is considered a "permitted use" and does not require approval of a CUP. Almost without exception, CUP requests in association with restaurants are related to alcohol service (technically defined as a "liquor establishment"). When reviewing such applications, CMC Sec. 21.46.070 directs the Planning Commission to determine whether an (1) overconcentration of liquor establishments in the vicinity exists, (2) if the establishment would create a nuisance or (3) adversely affect the neighborhood, and (4) if it would result in an increased demand for City services. The intent of these findings is to limit the concentration of bars and restaurants with alcohol service and to substantiate conditions of approval intended to impose reasonable restrictions on business operations (e.g., hours of operation). In large part, establishment of these findings may be grounded in conformance with the Downtown Alcohol Beverage Policy, in that an establishment that maintains responsible alcohol service is unlikely to create a nuisance, disturb the neighborhood, or increase the demand on City services. However, this analysis pertains only to alcohol service associated with a restaurant, and does not consider the merits of the restaurant use itself. Moreover, a policy is a poor tool to guide desired land uses absent formalized implementation, such as an ordinance establishing a codified discretionary process, in as much the Policy is mere guidance, and is not binding on the Commission or Council. Staff Report ~ Planning Commission Meeting of February 23, 2016 Page 3 of 6 PLN2013-13 – C-3 Zoning District Proposed Text Amendment: The attached draft ordinance includes the following proposed zoning text revisions intended to provide more regulatory authority of restaurants, as a separate and distinct land use discussion from alcohol service: 1. Restaurant CUP Requirement: Restaurants in the C-3 Zoning District would be categorized as "conditional use", requiring approval of a CUP. This would allow the Planning Commission to consider the merits of a new restaurant proposal on a case-by- case basis. However, new restaurants locating within ground-floor tenant spaces along Campbell Avenue currently occupied by an office or salon would be exempted as an incentive for property owners to turn-over ground-floor tenant spaces currently occupied by these non-conforming uses (offices and salons are no longer permitted along Campbell Avenue, east of Second Street). 2. Findings of Approval: A CUP is not merely a mechanism to impose conditions of approval. Rather, it is a tool that allows the City to determine if a particular use is appropriate in a particular location. In this regard, in making its determination to approve or deny a CUP application, the Planning Commission must rely on established findings, which form the basis for a decision. Since the purpose of this CUP requirement is to determine appropriateness of a new restaurant on a site-specific basis, the findings should speak to the applicable goals and policies of the City. To this extent, staff has prepared the following findings that would be applicable to new restaurant CUPs: • Establishment of the proposed restaurant will foster a balance of day and evening activity in the downtown; • Establishment of the proposed restaurant will maintain a balanced mix of permitted uses in the downtown; • Establishment of the proposed restaurant will contribute to the diversification of eating establishments in the downtown; • Establishment of the proposed restaurant will not result in an over concentration of restaurants in the immediate vicinity. In effect, these findings would "raise the bar" for new restaurateurs to demonstrate the desirability of their specific proposal in relation to City policies and goals. These findings may encourage establishment of eateries not currently represented in Downtown or those that provide a unique dining experience. Additionally, the CUP process would create a new barrier to entry for restaurants, providing a layer of protection to retail businesses who would have a competitive advantage to secure and/or retain tenant space. In terms of the last finding, the Commission would need to establish that there is not an "over concentration" of restaurants in the "immediate vicinity". Both of these terms are subject to interpretation such that individual Commissioners may come to a different conclusion as to how many restaurants constitute too many. However, the wording provides broad discretion allowing the Commission to make that determination on a case- by-case basis. The Commission could consider more specifically defining "over concentration" by including a specific locational criteria such as a minimum distance (x number of feet) between restaurants or other separation standard ("not immediately adjacent to") as to remove individual judgment from the review. Staff Report ~ Planning Commission Meeting of February 23, 2016 Page 4 of 6 PLN2013-13 – C-3 Zoning District 3. Miscellaneous Restaurant Changes: The following are other minor changes included in the proposed ordinance: a. Downtown Alcohol Beverage Policy: The findings for approval for alcohol service (i.e., "liquor establishments") would be amended to include language requiring that the use is "consistent with the Downtown Alcohol Beverage Policy, when applicable." Incorporation by reference of the Policy in this manner will formalize its use in review of CUP applications. b. Non-Conforming Status: Language would be added to the non-conforming section to clarify that any restaurant with an existing CUP is "conforming" use and would not be affected by the proposed ordinance. c. Drive-through/drive-in Restaurants: Drive-through and drive-in restaurants would be specifically prohibited in the C-3 Zoning District. These uses have been long deemed prohibited as they are not specifically identified as allowable, and are not consistent with the pedestrian-orientation of the Downtown. 4. Motor Vehicle Sale Establishments: Unrelated to the proposed changes to restaurant uses, staff is recommending that motor vehicle sale establishments (within an enclosed building) be listed as a "conditional use" in C-3 Zoning District. Although not currently identified in any manner, former Community Development Director Fierro determined this use to be allowable—in regard to Import Connection—pursuant to CMC Sec. 21.10.060.B.18 which allows "other uses similar" to those listed. This change would formalize this past determination. Since vehicle showrooms bear a strong similarity to a retail store, more so than an outdoor vehicle sales lot, their allowance is consistent with the C-3 Zoning District. ANALYSIS Pursuant to CMC Sec. 21.60.070, an amendment to the Municipal Code may only be approved if the decision-making body finds that: (1) the proposed amendment is consistent with the goals, policies, and actions of the General Plan; (2) the proposed amendment would not be detrimental to the public interest, health, safety, convenience, or general welfare of the city; and (3) the proposed amendment is internally consistent with other applicable provisions of the Zoning Code. Staff believes that these findings can be favorably established, as discussed below: 1. The proposed amendment is consistent with the goals, policies, and actions of the General Plan; City land use policies applicable to this matter can be found in the Campbell General Plan and the Downtown Development Plan. Together, these documents speak to a desire to promote and enhance a Downtown environment that provides a desirable balance of land uses including shopping, services, and entertainment. This vision is evidenced in policies that encourage a mix of day and evening activities, a distinctive retail presence, a diversity of eating establishments, support for neighborhood-serving businesses, and protection of surrounding residential neighborhoods. Adoption of the proposed ordinance to reclassify restaurants a conditional use would be consistent with this policy vision. Staff Report ~ Planning Commission Meeting of February 23, 2016 Page 5 of 6 PLN2013-13 – C-3 Zoning District Campbell General Plan: Policy LUT-5.1: Neighborhood Integrity: Recognize that the City is composed of residential, industrial and commercial neighborhoods, each with its own individual character; and allow change consistent with reinforcing positive neighborhood values, while protecting the integrity of the city’s neighborhoods. Policy LUT-5.3: Variety of Commercial and Office Uses: Maintain a variety of attractive and convenient commercial and office uses that provide needed goods, services and entertainment. Strategy LUT-5.3g: Day and Evening Activities: Encourage restaurant and specialty retail uses in the Downtown commercial area that will foster a balance of day and evening activity. Strategy LUT-9.1c: Land Use Objectives and Redevelopment Plans: Permit only those uses that are compatible with land use objectives and redevelopment plans. Policy LUT-11.2: Services Within Walking Distance: Encourage neighborhood services within walking distance of residential uses. Policy LUT-19.1: Campbell Downtown Development Plan: Ensure that new development within the Downtown Area complies with the requirements of the Campbell Downtown Development Plan. Strategy LUT-19.1a: Mix of Uses: Encourage a compatible mix of uses (i.e. professional offices, services and retail uses) with ground floor retail uses. Downtown Development Plan Goal LU-1: To continue the development and revitalization of the Downtown areas in a manner that positions it as a viable, self sustaining commercial district in the competitive marketplace of Silicon Valley. Goal LU-2: Work to develop and promote a variety of retail businesses and diversification of eating establishments that will help create a unique destination and identity for Downtown. Policy LU-2.1: Ground Level Commercial: Develop and maintain the ground floor space along East Campbell Avenue between Third Street and the light rail tracks as a distinctive retail and restaurant experience with ground floor uses that are diverse and interesting and contribute strongly to a distinctive and unique shopping experience. Strategy LU-6.1a: Expand the Downtown boundaries while maintaining a scale that is in keeping with the “small town” image identifiable in the community and create a comfortable experience for the pedestrian. 2. The proposed amendment would not be detrimental to the public interest, health, safety, convenience, or general welfare of the city; The proposed Zoning Text Amendment is not detrimental to the public interest, health, safety, convenience, or general welfare of the City, as it will provide greater regulatory authority over the establishment of new restaurants in furtherance of the above noted General Plan policies and strategies. 3. The proposed amendment is internally consistent with other applicable provisions of this Zoning Code. Staff Report ~ Planning Commission Meeting of February 23, 2016 Page 6 of 6 PLN2013-13 – C-3 Zoning District The proposed text changes to Section 21.30.60 (C-3 Zoning District) and Section 21.46.070 (Special findings for liquor establishments) do not affect other provisions of the Zoning Code and would, therefore, not result in an internal incontinency. NOTIFICATION Since the proposed text amendment affects a geographically distinct area of the City (C-3 Zoning District), all properties within the zoning district, as well as those within 300 feet, were noticed of this hearing. Attachments: 1. Findings for Recommendation 2. Draft City Council Ordinance 3. City Council Staff Report, dated March 5, 2013 4. City Council Staff Report, dated July 16, 2013 5. City Council Staff Report, dated February 17, 2015 6. City Council Staff Report, dated June 16, 2015 Prepared by: Daniel Fama, Associate Planner Approved by: Paul Kermoyan, Community Development Director Attachment 1 FINDINGS FOR APPROVAL OF FILE NO. PLN2013-13 APPLICANT: City-Initiated P.C. MEETING: February 23, 2016 Findings for recommending City Council adopting an Ordinance to amend the Campbell Zoning Code to reclassify restaurants and motor vehicle sale establishments (within an enclosed building) as conditionally permitted uses subject to approval of a Conditional Use Permit and specifically prohibiting drive-through and drive-in restaurants within the C-3 (Central Business District) Zoning District. The Planning Commission finds as follows with regard to File No. PLN2013-13: 1. The project consists of a Zoning Text Amendment that would reclassify restaurants and motor vehicle sale establishments (within an enclosed building) as conditionally permitted uses subject to approval of a Conditional Use Permit and specifically prohibiting drive- through and drive-in restaurants within the C-3 (Central Business District) Zoning District. 2. The proposed Zoning Text Amendment would encourage a compatible mix of uses in the Downtown, reinforce East Campbell Avenue as a pedestrian-oriented retail street, and foster a balance of day and evening activity. 3. The legislature of the State of California has, in Government Code Sections 65302, 65560 and 65800, conferred upon local government units authority to adopt regulations designed to promote the public health, safety and general welfare of its citizenry; 4. Review and adoption of this Text Amendment is done in compliance with California government Code Sections 65853 through 65857, which require a duly noticed public hearing of the Planning Commission whereby the Planning Commission shall provide its written recommendation to the City Council for its consideration. Based upon the foregoing findings of fact, the Planning Commission further finds and concludes that: 1. The proposed amendment is consistent with the goals, policies, and actions of the General Plan; 2. The proposed amendment would not be detrimental to the public interest, health, safety, convenience, or general welfare of the city; and 3. The proposed amendment is internally consistent with other applicable provisions of this Zoning Code. 4. The Proposed Text Amendment is exempt from review under the California Environmental Quality Act as there is no possibility for the project to have a significant effect on the environment, pursuant to §15061(b)(3). Ordinance No. _____ BEING AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CAMPBELL AMENDING CERTAIN SECTIONS OF TITLE 21 (ZONING) OF THE CAMPBELL MUNICIPAL CODE TO RECLASSIFY RESTAURANTS AND MOTOR VEHICLE SALE ESTABLISHMENTS (WITHIN AN ENCLOSED BUILDING) AS CONDITIONALLY PERMITTED USES SUBJECT TO APPROVAL OF A CONDITIONAL USE PERMIT AND SPECIFICALLY PROHIBITING DRIVE-THROUGH AND DRIVE-IN RESTAURANTS WITHIN THE C-3 (CENTRAL BUSINESS DISTRICT) ZONING DISTRICT. After notification and public hearing, as specified by law and after presentation by the Community Development Director, proponents and opponents, the hearing was closed. After due consideration of all evidence presented, the City Council of the City of Campbell does ordain as follows: SECTION 1. To encourage a compatible mix of uses in the Downtown, to reinforce East Campbell Avenue as a pedestrian-oriented retail street, and to foster a balance of day and evening activity, the City Council finds it necessary and appropriate to more specifically restrict certain land uses within the C-3 (Central Business District) Zoning District in furtherance of the Campbell General Plan and Downtown Development Plan. SECTION 2. The City Council finds and determines that the adoption of the proposed Text Amendment qualifies as Exempt from the California Environmental Quality Act (CEQA) under Section 15061.b.3. which states that a project is exempt from CEQA if the activity is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA review. SECTION 3. Section 21.30.060 (C-3 (Central Business District) zoning district) of the Campbell Municipal Code is hereby amended as set forth in attached Exhibit A. Additions are indicated by underlined text and deletions are indicated by strikethrough text. Portions of Section 21.30.060 not shown in underlined text or strikethrough type are not changed. SECTION 4. Section 21.46.070 (Special findings for liquor establishments) of the Campbell Municipal Code is hereby amended as set forth in attached Exhibit B. Additions are indicated by underlined text and deletions are indicated by strikethrough text. Portions of Section 21.30.060 not shown in underlined text or strikethrough type are not changed. SECTION 5: This Ordinance shall become effective thirty (30) days following its passage and adoption and shall be published, one time within fifteen (15) days upon passage and adoption in the Campbell Express, a newspaper of general circulation in the City of Campbell, County of Santa Clara. Attachment 2 PASSED AND ADOPTED this _____ day of ____________, 2016 by the following roll call vote: AYES: Councilmembers: NOES: Councilmembers: ABSENT: Councilmembers: APPROVED: _____________________ Jason T. Baker, Mayor ATTEST: _______________________________ Wendy Wood, City Clerk EXHIBIT B 21.10.060 - C-3 (Central Business District) zoning district. A. Purpose of C-3 (Central Business District) zoning district. The C-3 zoning district is applied to the heart of the city including and surrounding parts of Campbell Avenue in downtown Campbell. The building forms in this zoning district edge the street and include retail commercial uses (e.g., entertainment, shopping, and servicesrestaurants) on the ground floor, with either office or residential uses on the upper floors. Residential uses may be allowed where compatible with the general mix of downtown uses. The C-3 zoning district is consistent with the central commercial land use designation of the General Plan. The C-3 zoning district is specifically created to promote the following objectives in the central business area of Campbell: 1.To retain and enhance the Downtown area as a unique and economically viable retail and business center serving local and area wide commercial needs; 2.To reinforce Campbell Avenue as a pedestrian-orientated retail street; 3.To promote ground floor retail use, upper floor commercial and residential uses where appropriate and a suitable mix of uses in the Downtown area. 4.To establish development intensities consistent with the scale of the central business area and the amount of parking which can be accommodated within and adjacent to it; 5.To maintain the pedestrian scale, character, and diversity of a small town business district; 6.To maintain adequate parking and to encourage the joint utilization of parking; 7.To improve pedestrian, visual, and vehicular connections between the Downtown and adjacent areas; 8.To preserve and enhance significant historic structures within the Downtown area; and 9.To ensure that new construction in the Downtown area is of a high architectural design quality while accommodating suitable architectural diversity. B. Permitted uses in C-3 (Central Business District) zoning district. The following uses are permitted with a zoning clearance in compliance with Chapter 21.40 (Zoning Clearances): 1.Retail business, including but not limited to clothing stores, department stores, drugstores, furniture stores, toy stores, jewelry stores, shoe stores, florist shops and gift shops subject to standards for alcohol sales in compliance with paragraph (F) (Standards for alcohol sales in the C-3 zoning district), below. Does not include retail business uses specified in paragraph (C) (Uses permitted with a conditional use permit in the C-3 district). 2.Tutoring centers (small and large), studios (small and large), and professional offices, except on the ground floor of parcels abutting East Campbell Avenue east of Second Street unless the following standards can be met: a.The business is located in a separate tenant space that is a minimum of fifty feet from the East Campbell Avenue property line; and b.The separate tenant space does not have a door or entrance that takes access from East Campbell Avenue. 3.Service commercial establishments including but not limited to barber shops, beauty parlors, dry cleaning, massage services, photographic studio, shoe repair shops, and tailors, except on the ground floor of parcels abutting East Campbell Avenue east of Second Street unless the following standards can be met: a.The business is located in a separate tenant space that is a minimum of fifty feet from the East Campbell Avenue property line; and b.The separate tenant space does not have a door or entrance that takes access from East Campbell Avenue. 4.Outdoor seating and merchandise displays, subject to approval of an outdoor seating and merchandise display permit in compliance with paragraph (H) (Standards and permit requirements for outdoor seating and merchandise display), below. 5. Restaurants, abutting East Campbell Avenue, between Winchester Boulevard and Railway Avenue, most previously occupied by a lawfully existing restaurant, professional office or service commercial establishment subject to the provisions of paragraph (F) (Standards for alcohol sales in the C-3 zoning district) and standards for live entertainment in compliance with paragraph (G) (Standards for live entertainment in the C-3 zoning district), below. 6.Wireless telecommunications facilities—stealth (requires approval of a site and architectural review permit). 7.Other uses similar to the above in compliance with Chapter 21.02 (Interpretation of Provisions). C. Uses permitted with conditional use permit in C-3 district. The following uses are permitted subject to approval of a conditional use permit in compliance with Chapter 21.46 (Conditional Use Permits): 1.Arcade (containing amusement devices and games). 2.Banks and financial services. 3.Fast-food restaurants. 4.3. Government offices and facilities. 5.4. Grocery-stores and convenience markets. 6.5. Health spa, except on the ground floor of parcels abutting East Campbell Avenue east of Second Street, unless the following standards can be met: a.The business is located in a separate tenant space that is a minimum of fifty feet from the East Campbell Ave. property line; and b.The separate tenant space does not have a door or entrance that takes access from East Campbell Ave. 7.6. Late night activities. 8.7. Liquor establishments (subject to the findings provided for in Section 21.46.070), other than those located within establishments restaurants permitted to sell alcoholic beverages under subsection B of this section. 9.8. Liquor store. 10.9. Live entertainment (except as permitted under subsection B of this section). 11.10. Motor vehicle sales (when conduced entirely within an enclosed building). 12.11. Nightclub. 13.12. Public assembly uses. 14.13. Residential condominiums or apartments (upper floors only). 14. Restaurants, including cafes, standard restaurants, and fast food restaurants, not otherwise permitted by subsection B of this section, in compliance with subsection H, (Special findings for restaurants in the C-3 zoning district). 15. Parking lot or structure. 16. Secondhand/thrift store. 17. Theater. 18. Wireless telecommunications facilities - non-stealth. 19. Other uses similar to the above in compliance with Chapter 21.02 (Interpretation of Provisions). D. Prohibited uses in C-3 (Central Business District) zoning district. The following uses are prohibited in the C-3 district: 1.Storage of industrial vehicles, except for the purpose of loading and unloading; 2.The storage or warehousing of merchandise or products in the building or on the premises for sale other than at retail on the premises; 3.The outdoor storage of merchandise or products, unless otherwise approved, in compliance with subsection H of this section; 4.The assembly, compounding, manufacturing or processing of merchandise or products, except such as are customarily incidental or essential to permitted retail commercial and service uses; 5.Any use which is obnoxious or offensive or creates a nuisance to the occupants or commercial visitors of adjacent buildings or premises by reason of the emission of dust, fumes, glare, heat, liquids, noise, odor, smoke, steam, vibrations, or similar disturbance; 6.Auto repair; 7.Restaurants, drive-through 8.Restaurants, drive-in 7.9. Any business that includes smoking tobacco on site (e.g., smoking lounges, hookah lounges, etc.); 8.10. Any use inconsistent with state or federal law. E. General development standards. New land uses and structures, and alterations to existing uses or structures shall be designed, constructed, and/or established in compliance with the requirements in Table 2-11 (General Development Standards - C-3 Zoning District), in addition to the general development standards (e.g., landscaping, parking and loading, etc.) in Article 3 (Development and Operational Standards). Table 2-11 General Development Standards - C-3 Zoning District Development Feature C-3 Maximum floor area ratio Up to 1.25 The planning commission or City Council may approve an F.A.R. of up to 1.5 if it makes all of the following findings: a. The scale and intensity of the development does not create adverse traffic and parking impacts on the Downtown. b. The balance of land uses emphasizes retail and restaurant uses consistent with the goals and objectives of the Redevelopment Agency Implementation Plan. c. The design, scale, and context of the project are consistent with the goals and objectives established in the Downtown Development Plan. d. A finding of community benefit be established stating how the development furthers the goals and objectives of the Redevelopment Agency in the Downtown area that otherwise could not be achieved with a lesser F.A.R. Setbacks Required Front None, except as may be required by the Site and Architectural Review Permit. Side (each) Street side Rear Maximum Height Limit 45 ft. Fences, Walls, Lattice and Screens See Section 21.18.060 (Fences, Walls, Lattice and Screens) F. Standards for alcohol sales in the C-3 Zoning District. 1.Alcohol sales by retail businesses. a.Gift shops and florists may include products containing alcohol in gift baskets, flower arrangements or other similar uses as approved by the community development director upon finding that the sale of alcohol would be incidental to the primary activity on the site; b.Retail businesses permitted to sell alcohol in compliance with this paragraph shall obtain the required licenses or permits from the State Alcoholic Beverage Control Department. Uses meeting the definition of liquor store as defined by Section 21.72.020 ("Liquor Stores") shall not be considered as a florist or gift shop; 2.Alcohol sales by restaurants permitted by subsection B of this section. a.Beer and wine sales for on-site consumption only are permitted in restaurants without a separate bar area. b.A separate bar area is defined as a separate area, tables, or a room intended primarily for serving alcoholic beverages. c.Restaurants that serve alcohol may be required to establish a designated driver program. d.Restaurants shall obtain the required licenses or permits from the State Alcoholic Beverage Control Department. 3.Beer and wine festivals. See also Section 21.36.030 (Beer and Wine festivals). G. Standards for live entertainment in the C-3 zoning district. Live entertainment, when clearly ancillary to the restaurant function, is permitted in restaurants subject to the following restrictions: 1.Permitted only in standard restaurants without a separate bar area. A separate bar area is defined as a separate area, tables, or a room intended primarily for serving alcoholic beverages; 2.Maximum of four performers; 3. Hours of nine a.m. to eleven p.m.; 4. Alcoholic beverage service shall be restricted to Type 41 or 47 licenses only from the State Alcoholic Beverage Control Department, and at no time shall off-site sales be allowed. Full food service shall be available during entertainment; 5. Ambient noise levels shall allow normal conversation, and may not be audible more than 50 feet from the businesses tenant space. However, in no case may noise from the live entertainment disrupt neighboring businesses; 6. No cover charge may be imposed; 7. Areas for dancing and festival seating are not allowed; 8. If the police department or community development department find that a business is in noncompliance with any of the above conditions, live entertainment shall be prohibited at the site until a live entertainment permit is issued by the City Council subject to the requirements set forth by Section 5.24.010(a) et seq. (Live entertainment) of this Zoning Code; H. Special findings for restaurants in the C-3 zoning district. Whenever a Conditional Use Permit is required for a restaurant by this Chapter, the planning commission shall first find all the following conditions, and when applicable those findings identified in Section 21.46.040, are satisfied in order to approve the Conditional Use Permit application: 1. Establishment of the proposed restaurant will foster a balance of day and evening activity in the downtown; 2. Establishment of the proposed restaurant will maintain a balanced mix of permitted uses in the downtown; 3. Establishment of the proposed restaurant will contribute to the diversification of eating establishments in the downtown; 4. Establishment of the proposed restaurant will not result in an over concentration of restaurants in the immediate vicinity. H.I. Standards and permit requirements for outdoor seating and merchandise display within the public right-of-way. The following standards govern the provision of outdoor seating/dining areas and the outdoor display of merchandise within the public right-of-way (sidewalk) in the C-3 zoning district. These standards are minimum standards and additional requirements may be added through the discretionary review process. 1. Permit required. Outdoor seating and merchandise displays may be allowed subject to approval of an outdoor seating and display permit by the community development director. Approval is subject to the standards provided below and any other conditions as may be deemed necessary by the community development director in order to protect the health, safety, and welfare of the city. 2. Application. Application for an outdoor seating and display permit shall be filed with the community development department. The application shall be accompanied by a plan set, drawn to scale, depicting sidewalk dimensions, the location of seating, tables, umbrellas, and merchandise displays together with other information and exhibits as required by the community development director. 3. General standards. a. A four-foot-wide pedestrian walkway shall be provided at all times along the public sidewalk. This walkway shall provide for pedestrian access to doorways, crosswalks, and along the public sidewalk. No part of the walkway shall be within two feet of the building face or within one foot of the face of curb, and the walkway shall not cross the path of outward-opening doors or windows. b. All tables, seats, and displays shall be placed inside at the end of each business day. c. Material placed on the sidewalk shall be secured so as not to be moved by the wind. However, tables, seats, or displays may not be bolted into the ground or secured to the streetlights, trees, or other street furniture. d. The permit holder is responsible for picking up all litter associated with the outdoor seating or display and shall maintain the area in a clean condition at all times. 4. Outdoor seating. a. Outdoor seating shall be located directly in front of the permit holder's tenant space as set forth in the approved application and accompanying plans. b. Tables, seating, or displays shall not be placed within the area of any disabled ramps, driveways, or doorways. c. Tables or seating shall not be placed in the street, or on the sidewalk within two feet of the face of curb. d. The canopies of umbrellas associated with outdoor tables shall provide a minimum vertical clearance of seven feet, unless the umbrella does not extend beyond the outside edge of the table, and shall not extend past the curb. e. Tables, chairs, umbrellas, and other furniture associated with the outdoor seating shall be attractive, made of durable materials, and be maintained in good repair and in a manner to enhance the downtown area. 5. Outdoor Displays. a. Outdoor merchandise displays shall be placed against the building face abutting the permit holder's tenant space and shall be limited to fifty percent of the business frontage. b. Tenants on corner lots are permitted displays along one frontage only. c. Merchandise shall be attractively displayed on appropriate racks or other similar stands. Displays using card tables, cardboard cartons, plastic milk cases, or plywood boxes are not permitted. Merchandise too large to be placed on a display may be freestanding. d.Displayed merchandise shall be the same type of merchandise sold in the existing business at the site. e.Displays, including the merchandise placed on them, may not be more than four feet high. The community development director may approve displays greater than four feet if it can be found that the display will not block the visibility of windows of that business. f.One sign, not to exceed one square foot, per display is permitted for pricing. "A" framed signs and other types of signage shall not be considered displays. 6.Indemnification/insurance. The permit holder shall indemnity, defend and hold the city, its agents, officers, attorneys, employees, and officials harmless from any and all claims, causes of action, injuries, or damages arising out of any negligent acts on part of the permit holder, its agents, officers, employees, or anyone rendering services on their behalf. This indemnity shall include all reasonable costs and attorney's fees incurred in defending any action covered by this provision. a.The permit holder, during the continuance of this permit and at no cost to the city, shall maintain a comprehensive liability policy in the amount of one million dollars and if applicable a workers compensation liability policy each with a minimum coverage of one hundred thousand dollars. b.The policy shall include the city as additional insured and shall apply as primary insurance and shall stipulate that no other insurance effected by the city will be called on to contribute to a loss. c.Before the issuance of a permit, the permit holder shall furnish to the city a certificate of insurance, duly authenticated, evidencing maintenance of the insurance required under this permit. d.If the insurance policy is canceled, terminated, suspended, or materially changed, the outdoor seating and display permit shall be suspended until the time that compliance with the requirements of this subparagraph has been fully satisfied. I.J. Standards for parking in the C-3 (Central Business District) zoning district. In addition to other applicable parking requirements in Chapter 21.28 (Parking and Loading), the following requirements shall apply in the C-3 (Central Business District) Zoning District: 1.Shared parking facilities. All new parking spaces shall be provided in shared parking facilities, unless the City Council, upon recommendation of the planning commission, finds that another parking arrangement would better serve the public safety or welfare and would not be detrimental to the overall parking and circulation in the area. 2.Parking requirement computation. In computing the total parking requirement, credit shall be allowed for existing on-site parking or for existing shared off-site parking if an agreement, acceptable to the city, which provides for the use and maintenance of shared parking is in effect. 3. Change in use. Legally existing buildings shall be required to meet the current parking standards upon expansion of the building or when there is a change in use which requires more parking than is currently provided, except for retail uses, and standard restaurants, and restaurants or cafes that are not required to provide additional parking unless the building is expanded in compliance with Section 21.28.040.D.2, (Expansion/remodeling of structure, or change in use). 4. Parking ratios. The required shared-facility parking ratios, based on gross square footage of a building, unless otherwise indicated, shall be as specified by Table 2-11a, (Parking Requirements by Land Use, below. follows: (parking spaces/square foot): 5. Uses not listed. Land uses not specifically listed by Table 2-11a shall provide parking as required by the community development director. The community development director shall use the requirements of Table 2-11a as a guide in determining the minimum number of parking spaces to be provided, based on the similarity of the unlisted use to the uses listed in the table. Table 2-11a - Parking Requirements by Land Use Land Use Type: Vehicle Spaces Required (parking spaces/square foot): Retail 1:345 sq. ft. gross floor area Office 1:425 sq. ft. gross floor area Restaurant 1 space per 4 seats Banks 1:350 sq. ft. gross floor area Residential 2 spaces per unit Service commercial 1:345 sq. ft. gross floor area J.K. Development review regulations for projects in the C-3 (Central Business) zoning district. 1. Purpose. Downtown Campbell possesses a wealth of small-scale commercial buildings that are architecturally exemplary of the variety of historic periods in which they were constructed. These design standards are intended to both promote the conservation and rehabilitation of buildings and to encourage new building and remodeling which is simultaneously in keeping with existing buildings and architecturally exemplary of contemporary design. In this way the architectural history and richness of downtown will be continued and expanded. Each new building and remodeling project in the downtown shall adhere both in its large- and small-scale parts to the architectural parts or style adopted for the project. Architectural design shall be of high quality, measured against contemporary standards. 2.Intent. The guidelines below govern building mass; building form and composition; storefronts; materials, colors and finishes; and other elements. They are intended to encourage the relation of specific project aspects to the designated architectural parts or style. 3.Site and Architectural Review required. Buildings and structures in the C-3 (Central Business) zoning district shall conform to the design standards in paragraphs 4—8 below and are subject to approval in compliance with the provisions of Chapter 21.42 (Site and Architectural Review): 4.Building mass. a.Large building facades shall be divided into smaller elements to complement the intimate scale created by the existing small property divisions. b.Second floor decks or terraces at the rear of buildings for use by adjacent offices or restaurants should be incorporated whenever practical to add a sense of vitality to the rear building facades. c.Roof design shall be consistent with the building's architectural style. Mansard, shed or residential type roofs are prohibited unless it is demonstrated that such a roof style is structurally or architecturally suitable for the particular project or location. d.The existing residential building types of historical significance should retain their character, including features such as landscaped setbacks. 5.Building form and composition. a.Unique and historic building elements such as parapet details and belt courses shall be retained and restored. b.Traditional commercial building forms should be incorporated whenever practical. c.Open air dining areas facing Campbell Avenue should be employed to the greatest extent practical. The buildings should not be set back from the street, but should contain the dining areas within their architectural framework. d.Upper stories in multistory buildings are required to have solid surfaces with vertical rectangular windows, augmented with frames. Glass curtain walls should not be approved unless it is demonstrated that such walls are the only structurally or architecturally suitable form of wall for the particular project or location. e.Architecturally exemplary design of high quality shall be employed. Buildings should not be made to look "old time" unless such design would be clearly more appropriate and harmonious with the purpose of this chapter. f.Buildings shall incorporate base, cornice, and other elements appropriate to their architectural style. 6. Storefronts. a. First floor frontages shall have an integrated design including display windows, an entry, and signing. b. The design of the building storefront shall be consistent with the building's architectural style. c. Walls facing pedestrian ways should have elements of visual interest, such as fenestration, displays, signing, or landscaping, unless the effect of such elements would be clearly contrary to the purposes of this chapter. Large areas of blank walls should not be permitted unless it is demonstrated that such blank areas are clearly more appropriate and harmonious than would be the case if elements of visual interest were incorporated. d. Buildings facing Campbell Avenue shall have their primary entries along that street. e. Entries should be recessed, as they add depth to storefront, and act as transition areas between the street and shop interiors, unless the effects of such entries would be clearly contrary to the purposes of this paragraph. f. Doors and windows shall be of clear glass. Unglazed wood doors, screen doors and doors or windows of heavily tinted or reflective glass should not be approved unless it is demonstrated that such doors and windows are the only structurally or architecturally suitable form for the particular project or location. g. Storefront windows shall reflect the building's character. For instance, on 1940's and 50's "showcase" buildings, exposed aluminum frame windows are appropriate. h. Ground floor offices facing Campbell Avenue are required to maintain the same storefront character as retail spaces. i. Awnings on building facades should be employed when appropriate, as they add color, weather protection, and opportunities for signing. As in other architectural elements, the awnings should be designed to reflect the building's geometry. 7. Materials, colors, and finishes. a. Primary facade materials shall be limited to those that are characteristic of the building's architectural style. b. Exterior wall finishes shall be smooth and of finished quality, not deliberately rough in an attempt to look antiqued or used. c. Primary building colors shall be characteristic of the building's architectural style. Overly bright, garish, or otherwise offensive colors or color combinations are prohibited. d. Accent materials such as tile bases shall be carefully chosen to complement the building style and coordinate with adjacent buildings. The use of shingles, lava rock, sheet metal siding, or any other residential or industrial materials should not be approved unless it is demonstrated that such material would be the only structurally or architecturally suitable materials for the project or location. e.Painted trim shall coordinate with primary facade colors to add more depth and interest to the buildings. f.A coordinated color scheme that responds to the style of the structure shall be developed for each building. The colors of signing, awnings, planters, accent materials, and primary facade colors should all be considered. The number of colors should be limited. 8.Other elements. a.Trash collection and storage areas shall be carefully screened. b.Mechanical equipment shall be screened from view. Exhaust louvers shall not be located in the storefront areas. c.Colorfully landscaped planters are allowed. These are especially appropriate below second floor windows. d.All building maintenance shall be done conscientiously. K.L. Sign regulations for C-3 (Central Business) zoning district. The following provisions shall apply to the C-3 (Central Business District) zoning district only and shall supersede those listed under Chapter 21.30 (Signs): 1.Intent. The intent of these regulations is to stimulate creative, good quality signing which will complement the intimate scale and architectural character of the area, and which will complement the architectural style of the building to which the signing is fixed. 2.Allowable signs. Each business shall be allowed one square foot of sign area for each one linear foot of business frontage. A minimum of twenty square feet is allowed and a maximum of forty square feet is allowed for each business. 3.Sign materials. Appropriate sign materials include enameled metal, painted wood, cast metal, painted fabric, and similar materials. Plastic signs should not be approved unless it is demonstrated that the use of the plastic signs at the proposed location would be more harmonious with the purpose of this paragraph than the foregoing enumerated materials. 4.Wall signs. Each business may have one wall sign, except corner businesses, which may have two. This sign shall be located below the top of parapet on single story buildings and below the second floor sill on multistoried buildings. It may be painted directly on a wall, a sign panel attached to a parapet wall, or of individually formed letters attached to a wall. 5.Awnings. Awnings may be used in lieu of wall signs. An insignia or name may be painted, silk screened or appliquéd onto the awning. Awnings may project five feet into the public right-of-way on Campbell Avenue and shall maintain a minimum clearance of eight feet from the ground. All other streets shall be limited to a two-foot projection and have a minimum clearance of eight feet. Awnings shall be securely attached to buildings and well maintained. No supports or poles may be located in the public right-of-way. Awning forms shall be carefully chosen to complement the architectural style of the building to which they are fixed. Figure 2-1 Awning 6.Projecting signs. a.In addition to a wall sign or awning sign, a business is allowed one, non- illuminated, double-sided projecting sign. The projecting sign may be a maximum of six square feet and may serve to identify more than one tenant in the building. b.Signs may project a maximum of four feet over the public right-of-way with a minimum eight-foot clearance from the ground. Signs shall not project above any roofline or facade of the building. c.Projecting signs shaped as symbols depicting the goods or services being sold by the business are encouraged. d.Wood signs, that are carved, painted, stained, or feature raised letters and symbols are specifically encouraged. e.Sign colors should relate to material or paint scheme of the building. Fluorescent colors are not allowed. f.Internally or externally illuminated signs are not allowed, nor are can signs, metal signs, neon signs, or flashing signs. g.Projecting signs shall be mounted perpendicular to the street and may be hung from coverings over sidewalks or affixed to the building wall. (1) Signs shall be structurally attached to the building with wood, metal brackets, chain, or other similar materials in a manner compatible with the architectural style of the building. (2) Fabric signs shall be anchored to the building from both the top and bottom of the sign. Figure 2-2 Projecting Sign 7.Lighting. Only external illumination of signs is allowed except for individual letter signs. L.M. Nonconforming uses and structures in the C-3 (Central Business District) zoning district. Nonconforming uses and structures shall be governed by the standards set forth in Chapter 21.58 (Nonconforming Uses and Structures), except that whenever a nonconforming use has been abandoned or discontinued for a continuous period of six months, the nonconforming use shall not be reestablished; and the use of the structure and the site shall comply with the regulations for the C-3 zoning district. Notwithstanding the foregoing provision, an existing restaurant that has an associated conditional use permit that was issued before March 15, 2016 shall be considered a conforming use for purposes of this section. EXHIBIT B 21.46.070 - Special findings for liquor establishments. Whenever a Conditional Use Permit is required for a liquor establishment by this Zoning Code, the planning commission shall first find all the following conditions in addition those findings identified in Section 21.46.040, are satisfied in order to approve the Conditional Use Permit application: A. Over concentration of uses. The establishment will not result in an over concentration of these uses in the surrounding area; B. Not create a nuisance. The establishment will not create a nuisance due to litter, noise, traffic, vandalism, or other factors; C. Not disturb the neighborhood. The establishment will not significantly disturb the peace and enjoyment of the nearby residential neighborhood; and D. Not increase demand on services. The establishment will not significantly increase the demand on city services. E. Downtown Alcohol Beverage Policy. The establishment would be consistent with the Downtown Alcohol Beverage Policy, when applicable. To: Honorable Mayor and City Council Date: March 5, 2013 From: Daniel Fama, Associate Planner Paul Kermoyan, Interim Community Development Director Via: Mark Linder, City Manager Subject: Study Session to Review Mix of Downtown Uses PURPOSE OF STUDY SESSION Since 2011, Downtown Campbell has witnessed a rapid growth in new restaurants which have displaced traditional retail shops. Some have viewed this transition as contributing to the Downtown's continued success as an attractive and vibrant community destination. However, at issue is a concern that the increasing number of restaurants may be altering the Downtown's historic balance of uses. To discuss how the mix of Downtown uses is changing, and if such a change is consistent with the City's desired vision, the Council directed staff to schedule a study session on this matter. For context, attachment 1 is a map of the greater Downtown that identifies current shops and restaurants. This study session is also intended to serve as an opportunity for the community to provide input to the Council. In this regard, staff took steps to notify potential stakeholders and other interested parties of this study session. An email notice was provided to the Downtown Campbell Business Association (DCBA), non-DCBA business owners, the Campbell Chamber of Commerce, and to the general public through the NextDoor website. Additionally, notice of this meeting was posted to the City website, a press release to local news organizations was sent, and a mailed noticed was also provided to all Downtown property owners. Correspondence received by staff is included as Attachment 2. BACKGROUND Land Use Policies. City land use policies applicable to this discussion can be found in the Campbell General Plan, the Downtown Campbell Development Plan, the Downtown Alcohol Beverage Policy, and the Redevelopment Implementation Plan (reference Attachment 3). Together, these documents speak to a desire to promote and enhance a Downtown environment that provides a desirable balance of land uses including shopping, services, and entertainment. This vision is evidenced in policies that encourage a mix of day and evening activities, a distinctive retail presence, a diversity of eating establishments, and support for neighborhood-serving businesses. City of Campbell MEMORANDUM Attachment 3 City Council Study Session – March 5, 2013 Page 2 of 10 Mix of Downtown Uses In providing for diversity of uses, a Downtown can serve the needs of many people during all parts of the day. Uses such as salons, retail stores, and casual eateries provide opportunities for day-time patronage by area employees as well as by local residents. Other uses, such as traditional restaurants, wine bars, and entertainment venues attract patrons from both within and outside of the community, later in the evening. This mixing of commercial uses—especially in combination with office and residential uses that provide a base of local customers—can result in a balanced Downtown environment. Zoning Standards. The majority of Downtown properties are contained within the two loop streets—Orchard City and Civic Center Drives. This "inner core" is designated by the Zoning Map as the Central Business District (C-3) (reference Attachment 4 – Zoning Map). Although various City planning documents identify properties outside of the loop streets as part of the greater Downtown, they are located in the P-D (Planned Development) Zoning District. In terms of allowable uses, however, these properties are generally governed in the same manner. The C-3 Zoning District standards are designed to implement the vision of the General Plan and the Downtown Development Plan. In this regard, the following objectives (among others) are specifically identified for this zoning district (CMC 21.10.060): Retain and enhance the Downtown area as a unique and economically viable retail and business center serving local and area wide commercial needs. To reinforce Campbell Avenue as a pedestrian-orientated retail street To promote ground floor retail use, upper floor commercial and residential uses where appropriate and a suitable mix of uses in the Downtown area. To establish development intensities consistent with the scale of the central business area and the amount of parking which can be accommodated within and adjacent to it. To achieve these objectives, the C-3 zoning district emphasizes high-activity uses such as retail stores and restaurants in ground-floor tenant spaces along Campbell Avenue, while limiting other uses such as office and salons to side streets or upper stories. As with all other zoning districts, some types of uses (restaurants, salons, retail stores, and offices) are classified as "permitted" meaning that only a business license is required for operation. Others are listed as "conditional", requiring approval of a Conditional Use Permit, such as the case for restaurants with sale of hard alcohol, bars/wine bars, and businesses with the late-night operation (after 11 PM). Designation of a use as "conditional" allows the City to decide on a case-by-case basis whether a particular use should be established in a particular location. This allows the City to regulate the number and distribution of conditional uses consistent with applicable land use policies. Additionally, through issuance of a Conditional Use Permit, the City may impose reasonable restrictions as appropriate to minimize the impact on nearby businesses and residents. City Council Study Session – March 5, 2013 Page 3 of 10 Mix of Downtown Uses The following summarizes zoning requirements applicable to restaurants, bars and wine bars, and retail uses in the C-3 Zoning District: 1. Retail Uses: Although the term "retail" generally signifies sale of products and goods such as clothing, jewelry, or art, the Zoning Code definition (CMC 21.72.020.R) is more encompassing. In addition to these typical retail uses, the definition includes several food-related uses such as retail bakeries, candy stores, delicatessens, and specialty shops (which may or may not include food products). However, through incorporation of indoor and outdoor seating, many such uses are more appropriately classified as restaurants per the City's definition (emphasis added): [an] establishments whose primary business is the sale of food and beverages to customers for their consumption within the restaurant or restaurant patio area. Customarily at least fifty percent of the total gross floor area is used for the seating of customers. The restaurant may be open for breakfast, lunch, and/or dinner. Alcoholic beverages and carry-out food service are allowed if they are incidental to the primary purpose of consumption of food and beverages in the restaurant. 2. Restaurants. Restaurants, including those with beer and wine service, with a closing time before 11 PM are permitted without a Conditional Use Permit. If a restaurant includes the service of hard alcohol or is open after 11 PM, a Conditional Use Permit is required. To approve this type of request, the Zoning Code requires the Planning Commission to make specific findings (CMC 21.47.070): a. Over concentration of uses. The establishment will not result in an over concentration of these uses in the surrounding area; b. Not create a nuisance. The establishment will not create a nuisance due to litter, noise, traffic, vandalism, or other factors; c. Not disturb the neighborhood. The establishment will not significantly disturb the peace and enjoyment of the nearby residential neighborhood; and d. Not increase demand on services. The establishment will not significantly increase the demand on city services. Additionally, applications for new or modified Conditional Use Permits are subject to the Downtown Alcohol Beverage Policy (reference Attachment 5). The intent of the Policy, in part, is to regulate the operational characteristics of late night alcohol- serving restaurants so that they do not evolve into bars or nightclubs. For instance, hours of operation are limited to 12 AM, the bar area is limited to 25% of total seating, and alcohol service must be accompanied by food. Lastly, restaurants opening within existing tenant spaces are allowed without being held to a parking standard, so long as the building is not expanded (CMC 21.10.60.I.3). This provision recognizes that most Downtown parcels have limited or no on-site parking and instead rely on shared public parking. 3. Bars and Wine Bars. As with restaurants that include sale of hard alcohol or that have a separate bar area, stand-alone bars and wine bars are required to obtain a Conditional Use Permit, subject to the additional findings (CMC 21.47.070) noted City Council Study Session – March 5, 2013 Page 4 of 10 Mix of Downtown Uses above. The Downtown Alcohol Beverage Policy "strongly discourages" establishment of new stand-alone bars. However, wine bars are allowable through approval of a Conditional Use Permit. The Zoning Code does not distinguish between a "full bar" and a "wine bar"—both are considered "liquor establishments". However, per discussions with Alcohol Beverage Control (ABC) staff, the City can restrict a wine bar to service of only wine and beer and prohibit sale of hard alcohol; restrictions which ABC will attach to an issued license. DISCUSSION Mix of Uses. The City maintains informal records (reference Attachment 6) that track the amount and types of ground-floor space leased in Downtown Campbell. Over the last five years, these records reveal an evident change in the mix of Downtown uses. Since 2009, restaurants make up the plurality of uses—in terms of square-footage— now occupying approximately 86,000 square-feet of ground floor tenant space. The table below provides square-footage values for the past five years. Anticipating several recently vacated spaces leased out to restaurants, the table also projects into later this year, indicating that restaurants could potentially occupy an additional 6,500 square- feet. Ground Floor Tenant Space by Use 2007 2008 2009 2010 2011 2012 2013 (Current) 2013 (Projected) Restaurant 61,095 61,120 67,124 68,074 69,168 78,318 85,701 92,191 Other Retail 63,964 69,651 59,316 60,294 53,631 55,118 57,068 57,068 Office 26,475 26,475 26,475 26,475 27,773 28,123 28,123 28,123 Service 46,258 45,903 47,153 46,853 43,958 41,101 40,801 40,801 Vacant 16,619 10,245 16,928 12,428 23,000 19,380 15,480 8,990 Bars/Clubs 6,632 6,632 2,132 2,132 5,032 2,132 2,132 2,132 The graph on the next page illustrates this trend over time in percentage of total Downtown floor space occupied. Although restaurants and retail food uses eclipsed traditional retailers in 2009 as the predominant Downtown land use, this likely was the result of the recession, which greatly affected small retailers. The increasing number of restaurants beginning in 2011 corresponds to a decreasing vacancy rate, suggesting that vacant space—largely former retail space—was being occupied by restaurants rather than by retailers. This trend is further evidenced by records for approved Downtown alcohol-serving establishments. Attachment 7 charts the number and types of alcohol-serving establishments, including restaurants, bars, and wine bars. Since 2003, the number of alcohol-serving establishments increased from 11 to 23, with a greater percentage of restaurants now holding "Type 47" (hard alcohol) licenses than "Type 41" (beer and wine) licenses. Attachment 8 is a detailed listing of all Downtown alcohol-serving establishments. City Council Study Session – March 5, 2013 Page 5 of 10 Mix of Downtown Uses Ground Floor Tenant Space by Use 2007 to 2013 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 2007 2008 2009 2010 2011 2012 2013 2013 (Projected) YearPercentage of TotalRestaurant/Food Retail Office Service Bars/Clubs Vacant Trend Factors. To what extent any specific factor(s) can be attributed to the increase restaurant occupancy over the last two years is unclear. National economic factors affecting the region, as well as local policies, have likely both played a role. Market forecast suggests that independent retailers will continue to be challenged by the increasing divergence of the retail market between luxury and budget segments, as well by increasing competition from internet retailers. These trends largely benefit restaurants and entertainment uses, which are maintaining continued growth nationally.1 Notwithstanding the affect of the national economy, several local factors may have facilitated and concentrated this growth in Downtown Campbell. Specifically, the City's Downtown parking standards allow an increase in seating capacity, adoption of the Downtown Alcohol Beverage Policy eased regulatory hurdles necessary to secure approval for alcohol sales, and rescinding of the Interim Parking In-lieu Fee eliminated a significant incurred cost for new restaurants. Together, these actions, in concert with national economic trends, may have "set the stage" for Downtown Campbell to become a restaurant destination. 1. Downtown Parking: Most Downtown properties have little or no on-site parking, reflecting the historic development pattern of the Downtown and following most urban design practices. Consistent with land use policies that encourage a walkable, pedestrian-oriented Downtown, the Zoning Code encourages use of public parking facilities in lieu of parking on private property. To this end, retail stores and 1 Brown, Garrick and Matt Kircher, U.S. National Retail Report – 2013 Forecast (Chainlinks Retail Advisors, 2012) City Council Study Session – March 5, 2013 Page 6 of 10 Mix of Downtown Uses restaurants may occupy existing buildings without provision of additional parking understanding that patrons can park in a public lot or garage. However, due to the manner in which parking is calculated for restaurants—on a per seat basis—this allowance has resulted in restaurants realizing a significant increase in seating capacity in comparison to the rest of the City. As such, a restaurant in Downtown can accommodate upwards of three to four times the number of seats as a comparable restaurant located outside of Downtown. Since more seats may result in greater revenue, Downtown may be seen as more attractive for restaurants. 2. Downtown Alcohol Beverage Policy: The Downtown Alcohol Beverage Policy was adopted to provide specific guidance to staff and the Planning Commission regarding alcohol service. Although the Policy effectively placed a moratorium on new "full bars", it allowed restaurants to obtain approval for hard alcohol service so long as the restaurant closed down before midnight. This policy may have eliminated much of the uncertainly often associated with the Conditional Use Permit (CUP) process given the legal advice staff has received linking compliance with the Policy as grounds to approve a CUP. In effect, many of the findings of the CUP process were voided by the Policy. In this regard, the Policy had the unintended result of removing from discussion the issue of over-concentration of alcohol establishments. Prior to the Policy, the Planning Commission would generally consider the number and types of alcohol- serving establishments within the vicinity of the proposed restaurant to determine if an "over-concentration" existed, consistent with the CUP findings. However, the Policy does not address over-concentration nor provide indication that there can ever be too many restaurants with alcohol service. As such, staff and the Planning Commission concluded that there was no limit so long as the restaurant complied with the Policy. 3. Parking In-Lieu Fee: To address parking impacts placed on the Downtown by new restaurants, the City Council adopted an interim parking in-lieu fee in late 2007. The Policy required restaurants to pay a fee after an established "baseline" number of seats had been reached. The interim fee was established at $6,000 per required parking space or the equivalent of $1,500 per additional seat. As an economic development measure, the interim fee was rescinded in 2010. Since establishment of the fee coincided with the start of the recession in 2008 to what extent it discouraged new restaurants is unclear. However, during the years the fee was in effect, no new restaurants opened in Downtown Campbell. Nonetheless, its elimination removed a significant financial barrier. For example, had the fee been in effect in 2011, Blue Line Pizza—the first restaurant to open after it was rescinded—would have owed $54,000. City Council Study Session – March 5, 2013 Page 7 of 10 Mix of Downtown Uses Potential Effects. The increasing number of Downtown restaurants has several possible effects, including altering of the Downtown's mix of uses, displacement of traditional retailers, increased demand on public parking, and altering of sales of tax revenues. 1. Mix of Uses: The shift to a restaurant-oriented commercial base may diminish the ability of the Downtown to serve as the "economically viable retail and business center" envisioned by the General Plan by reducing opportunities for unique or neighborhood-serving retail. As the mix of uses changes over time, the Downtown may become more evening-oriented, resulting in a daytime environment with little activity. Restaurants, especially those where alcohol service plays a prominent role tend to be a more evening-centered use, having later "peak hours" than retail stores. To what extent this shift achieves consistency with the City's land use policies is an issue for the Council to consider. 2. Displacement of Retail Space: Through increased demand for leasable Downtown space, restaurants may be displacing retail tenants by increasing asking rents, (although the City does not have access to prevailing rent statistics to document such increases). Although much of Downtown's formally vacant tenant spaces have been occupied by restaurants, this may reflect the economic forces that continue to challenge the "brick and mortar" retail market. Retailers may have been unable to occupy space vacated during the recession. It is possible that restaurants established in the last two years may have occupied space that otherwise would have remained vacant. However, the events of the last two years may limit future retail growth by "locking up" viable retail space with long-term restaurant leases. 3. Increase Demand on Parking: An increase in the number of restaurants is likely increasing demand on public parking supplies. To what extent this may be occurring is unknown without preparation of a parking demand study. What is known, however, is that the City is not receiving complaints from residents regarding parking in the neighborhoods (although, complaints from Downtown merchants desiring additional convenient parking for their customers are periodically received). However, that the assumptions underlying the last Downtown parking demand study no longer reflect current circumstances suggests a foreseeable issue. The 1999 'Downtown Campbell Parking Study', prepared by Walker Parking Consultants reviewed current and projected land uses in the Downtown to determine the parking supply needed to accommodate anticipated "build-out". The Study noted that the projected land use scenario ("build-out") was based on information provided by City staff. In effect, the "build-out" scenario reflected the long-term development vision of the City at the time. As shown in the table below, the mix of uses as anticipated by the Study foresaw a greater amount of retail and a lesser amount of service than currently exists. Parking Study – Projected Land Uses v. Actual Land Use Projected Sq. Ft. Current Sq. Ft. +/- Retail 100,000 57,000 (-) 43,000 Service 17,500 41,000 (+) 23,500 Restaurant 75,00 85,000 (+) 10,000 City Council Study Session – March 5, 2013 Page 8 of 10 Mix of Downtown Uses The mix of uses seen today is not consistent with the projections of 14 years ago, suggesting the City's vision for the Downtown is not being implemented. As it stands today, the current amount of restaurant square-footage now exceeds the study's projections by 10,000 square-feet. The changing mix of uses alters any number of assumptions of the parking study. Parking demand studies review not only aggregate square-footages, but also the alternating "peak hours" of different uses. In other words, the Downtown parking supply may be able to accommodate a relatively high amount of traditional retail and personal service square-footage because these uses do not attract a significantly higher number of visitors at any given time. In comparison, restaurants concentrate visits during the typical dinner hours and generate more visitors per square-foot than retailers. In this regard, the growing number of restaurants will likely result in an increased demand on the Downtown parking supply. Fiscal Impact: Restaurants generate a disproportionate amount of sales tax revenue for the City. Approximate aggregate sales tax revenue generated by businesses located within the loop streets for the last three years indicate that restaurants now account for two-thirds of sales tax revenue.2 From 2011 to 2012, restaurant- generated sales tax increased 20% to approximately $314,000 while retail sales tax fell 18% to $161,000. This trend is illustrated in Attachment 9, a chart of Downtown sales tax revenue by "benchmark year", categorized by economic category.3 An increasing number of restaurants will result in an increase in overall sales tax receipts. However, unaccounted cost, in terms of increased demand on City services, associated with restaurants with late night hours and alcohol service should also be considered. Approximate Downtown Sales Tax Revenue 2010 2011 2012 Revenue Revenue +/- Revenue +/- Restaurants $257,000 $260,000 (+) 1.5% $314,000 (+) 20% Retail $180,000 $196,000 (+) 9% $161,000 (-) 18% Combined $437,000 $456,000 (+) 4.5% $475,000 (+) 4% OPTIONS If the Council believes that there are—or will soon be—an imbalance of restaurants to other preferred commercial uses in the Downtown, several options designed to limit the establishment of new restaurants may be considered, as discussed below. These options reflect approaches taken by various cities and towns to control different types of uses (e.g., chain 'formula' retailers, fast-food restaurants, tasting-rooms, art galleries, etc.). Locally, the Town of Los Gatos requires issuance of a Conditional Use Permit for restaurants and formula retail stores. To grant a CUP, the Town must find "the proposed use would not create an over-concentration of similar types of businesses". 2 Sales tax figures represent the 1% "Bradley-Burns" sales tax revenue, adjusted to include approximate additional "Measure O" ¼ cent revenue. 3 Chart reflects the only 1% "Bradley-Burns" sales tax revenue. City Council Study Session – March 5, 2013 Page 9 of 10 Mix of Downtown Uses 1.Establish a maximum number of restaurant uses that may be allowed within the Downtown. The number could be set at the current number or at higher or lower number, depending if the intent is to "lock-in" the status quo, to allow some allowance for future restaurants, or to decrease the number of restaurants. 2.Establish a maximum square-footage of Downtown floor area that could be occupied by restaurants. Instead of restricting the number of restaurants, this option would restrict the aggregate square-footage occupied by restaurants. As with Option 1, the maximum number could be set at different levels depending on the intent. 3. Prohibit new restaurants, rendering all existing restaurants "non-conforming". As compared to Options 1 and 2, which may allow for the shifting of restaurant space between buildings and tenant spaces over time, this option would effectively "freeze" all restaurants to their current size and location, indefinitely. 4.Require a Conditional Use Permit for all future conversion of existing retail space to restaurant use. To be effective, this requirement would need to be tied to a clearer interpretation of how the Downtown Alcohol Beverage Policy influences decision- making and possibly a new finding to reach a decision pertaining to over- concentration of restaurants (similar to Los Gatos). This would allow the Planning Commission to review each application to determine its appropriateness given site specific considerations. 5.Reinstate the Interim Parking in-lieu Fee so that new restaurants would incur an up- front cost commensurate with their impact on the Downtown parking supply. Although not a direct limitation of new restaurants (as with a numeric maximum), this option would likely slow or stem the increase due to higher incurred costs. During the years when the fee was in effect, staff was informed by several prospective restaurateurs that the fee was a deciding factor in choosing not to locate in Downtown Campbell. However, a fee of this sort would require preparation of a parking study to become permanent. 6.Eliminate the parking exception for restaurants, reducing allowable seat counts. This may diminish the economic attractiveness of Downtown over other areas of the City. 7.Modify the Downtown Alcohol Beverage Policy to address over-concentration of alcohol-serving establishments. Such a change would more easily allow the Planning Commission to find an over-concentration exists and deny request for future Conditional Use Permits. However, this change would not affect restaurants that do not serve hard alcohol and/or have late-night hour (after 11 PM). Urgency Ordinance. Any of the above options will require additional time to allow to staff to research potential changes, outreach to stakeholders, and prepare an ordinance and/or revise policies. Additionally, preparation of a parking study and/or market study to identify the appropriate mix of land uses in the Downtown may also be warranted. As a result, any change is unlikely to be accomplished quickly. City Council Study Session – March 5, 2013 Page 10 of 10 Mix of Downtown Uses At present time, two major tenant spaces have been recently vacated; former Green Planet Yarn and Sonya Pazz Gallery. Staff anticipates applications to be submitted shortly to allow for establishment of a wine bar and a restaurant, respectively, in these tenant spaces. If the Council wishes to prevent the conversion of additional retail space to restaurant use until further legislative or policy action is taken, establishment of a temporary moratorium may be considered. A moratorium could be enacted through adoption of an "urgency ordinance". Adoption of an urgency ordinance requires a four-fifths vote of the City Council, and must contain findings substantiating that there is a current and immediate threat to the public health, safety, or welfare. However, the ordinance may be adopted without following the notice and adoption procedures required for other ordinances. A moratorium adopted in this manner would have an initial duration of 45 days and may be extended as specified by California Government Code for up to a total span of two (2) years. NEXT STEPS Although staff is aware of the concern shared by some of the Downtown business community, it may be advisable to view this issue in context of the City's overall economic development efforts. When one views economic development in its purest sense, sustainable land uses—community-wide—should be the focus. In other words, while some areas of the community may be oriented to one use over others (e.g., office centers, shopping plaza, and R&D parks), a community built on the premise of "sustainability" will achieve a diverse economic base so long as the balance of uses community-wide is maintained. In this regard, the Council should consider whether having a restaurant-oriented Downtown is consistent with the City's vision documents in the context of the many retail-dominated shopping centers elsewhere in the City. The influx of new restaurants within the Downtown has the potential to reflect on the overall success of Campbell as a desirable community as viewed by some. Amenities such as a diversity of eateries contribute to a community's social and cultural landscape as well as its economic vitality. Moreover, Downtown Campbell exists in a broader economic environment that includes surrounding communities; any attempt to limit restaurants in the Downtown may result in placing the City at a competitive disadvantage. The City Council should take public comment and then provide direction to staff on how to proceed. EXHIBITS 1.Downtown Map 2. Correspondence 3.Land Use Policies 4.Zoning Map 5.Downtown Alcohol Beverage Policy 6. Downtown Floor Space – 2013 7. Alcohol-Service Establishments Chart 8.Downtown ABC Licenses Chart 9.Sales Tax Chart To: Honorable Mayor and City Council Date: July 16, 2013 From: Daniel Fama, Associate Planner Paul Kermoyan, Community Development Director Via: Mark Linder, City Manager Subject: C-3 Zoning District – Restaurant CUP Requirement ~ Study Session PURPOSE OF STUDY SESSION On March 5, 2013, the City Council held a study session to discuss the mix of uses in Downtown Campbell, and specifically the increasing number of restaurants and other food-related businesses (reference Exhibit 1 – Study Session Memorandum). At the conclusion of that meeting, the Council directed staff to proceed with an amendment to the Zoning Code to require that new restaurants obtain a Conditional Use Permit. The purpose of this study session is to discuss the options for this amendment and anticipated scheduling. BACKGROUND Current Requirement: Within the C-3 (Central Business District) Zoning District, a Conditional Use Permit (CUP)—subject to the City's Downtown Alcohol Beverage Policy—is required for a restaurant if it includes any of the following features: 1.Sale of "hard alcohol" (distilled spirits of any type, including in mixed-drinks) 2.A separate bar area (e.g., Aqui's "Saddle Bar") 3.Operation after 11:00 PM ("late-night" hours) 4.Live entertainment in association with any of the above features A restaurant without any of these features—including restaurants that provide beer and wine service (without a separate bar area)—do not require approval of a CUP. Examples of such restaurants include Stacks, Liquid Bread, Orchard Valley Coffee, Willow Glen Yogurt, and the upcoming Molly's Diner. Observation: Almost without exception, CUP requests in association with restaurants are related to alcohol service (technically defined as a "liquor establishment"). As such when reviewing such applications, CMC Sec. 21.46.070 directs the Planning Commission to determine whether an (1) overconcentration of liquor establishments in the vicinity exists, (2) if the establishment would create a nuisance or (3) adversely affect the neighborhood, and (4) if it would result in an increased demand for City services. The intent of these findings is to limit the concentration of bars and restaurants with alcohol service and to substantiate conditions of approval intended to impose reasonable restrictions on business operations (e.g., hours of operation). City of Campbell MEMORANDUM Attachment 4 City Council Study Session – July 16, 2013 Page 2 of 4 Downtown Restaurant Conditional Use Permit However, with adoption of the Downtown Alcohol Beverage Policy in 2009, the Planning Commission's review of restaurant CUP applications has largely focused on compliance with the Policy. As an outgrowth of this review, compliance with the Policy has led to a de-facto affirmative determination of the findings required for alcohol service. Although this was not the Council's intent, absent specific provisions pertinent to the concentration or number of Downtown restaurants with alcohol service, an expectation to approve CUP applications found consistent with the Policy has been created. DISCUSSION CUP Requirement: As discussed at the March 5th study session, one approach to address this issue is to require a CUP for new restaurants. Such a change would allow the Planning Commission to consider the merits of a new restaurant in the Downtown— and not simply the associated alcohol service—on a case-by-case basis. The Council may also wish to consider an exemption to the CUP requirement as an incentive to property owners to turn-over ground-floor tenant spaces currently occupied by non- conforming offices or salons. Suggestion – Within the C-3 Zoning District, list restaurants as a "conditional use", requiring approval of a CUP, unless otherwise exempt. Suggestion – Exempt from the CUP requirement new restaurants locating within ground-floor tenant spaces along Campbell Avenue currently occupied by an office or salon. Findings: A CUP is not merely a mechanism to impose conditions of approval. Rather, it is a tool that allows the City to determine if a particular use is appropriate in a particular location. In this regard, in making its determination to approve or deny a CUP application, the Planning Commission must rely on established findings, which form the basis for a decision. Since the purpose of this CUP requirement is to determine appropriateness of a new restaurant on a site-specific basis, the findings should speak to the applicable goals and policies of the City. Suggestion: Create findings that draw in applicable policies of the General Plan and Downtown Development Plan, such as the following tentative findings: 1.Establishment of the proposed restaurant will foster a balance of day and evening activity in the downtown; 2.Establishment of the proposed restaurant will maintain a balanced mix of permitted uses in the downtown; 3.Establishment of the proposed restaurant will contribute to the diversification of eating establishments in the downtown; 4.Establishment of the proposed restaurant will not result in an over concentration of restaurants in the immediate vicinity. City Council Study Session – July 16, 2013 Page 3 of 4 Downtown Restaurant Conditional Use Permit In effect, these findings would "raise the bar" for new restaurateurs to demonstrate the desirability of their specific proposal in relation to City policies and goals. These findings may encourage establishment of eateries not currently represented in Downtown or those that provide a unique dining experience. Additionally, while not entirely preventing new restaurant uses, the CUP process would also provide an extra layer of protection to existing retail businesses. Staff will work with the Planning Commission to further develop these findings following direction from the Council. For context, the Town of Los Gatos, while requiring a CUP for new or expanded restaurants, does not include specific findings for approval. However, the Town's CUP requirement for new "formula retail" businesses (chain stores), are subject to the following findings: 1. The proposed use of the property is not in harmony with specific provisions or objectives of the general plan and the purposes of this chapter; 2. The proposed use will detract from the existing balance and diversity of businesses in the commercial district in which the use is proposed to be located; 3. The proposed use would create an over-concentration of similar types of businesses, or 4. The proposed use will detract from the existing land use mix and high urban design standards including uses that promote continuous pedestrian circulation and economic vitality. Restaurant Definition: Since the proposed CUP requirement would apply to all new "restaurants", the codified definition of this term determines the scope of the requirement. Under the City's current definition, a restaurant is any food or beverage related business that provides seating for patrons to consume products on site. This would include traditional restaurants and cafés, as well as ice-cream shops, delis, and bakeries where seating is provided. Suggestion: Maintain the existing "restaurant" definition to capture the wide range of eateries in today's market. NEXT STEPS Staff has completed an initial draft of the text amendment. Following this study session, the following schedule is anticipated: • July – Complete preparation of a draft zoning text amendment (ZTA). • August – Send ZTA to City Attorney for review. • September – Planning Commission public hearing to consider the ZTA. • October – City Council public hearing to consider the ZTA. City Council Study Session – July 16, 2013 Page 4 of 4 Downtown Restaurant Conditional Use Permit EXHIBITS 1.Study Session Memorandum, dated March 5, 2013 2.Downtown Zoning Map To: Honorable Mayor and City Council Date: February 17, 2015 From: Daniel Fama, Associate Planner Paul Kermoyan, Community Development Director Via: Mark Linder, City Manager Subject: Study Session to Review Mix of Downtown Uses (Follow Up) BACKGROUND The shifting commercial landscape of Downtown Campbell—from a boutique retail district to a regional restaurant destination—has resulted in a continued public dialog regarding the vision and future of the Downtown. Over the last several years, the City Council has identified this matter as a priority item. The Council held a March 5, 2013 study session to discuss the "mix of Downtown uses". Staff prepared a comprehensive report outlining applicable City policies and standards, as well as an analysis providing an explanation for the observed shift (reference Attachment 1). 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. Subsequently, the Council held a July 16, 2013 study session to discuss the scope of the potential CUP requirement. Staff presented a tailored approach that would require a CUP for a restaurant conversion tied with findings that would direct the Planning Commission to consider potential "over-concentration" of restaurants in the immediate area (reference Attachment 2). Although the Council expressed a concern for the loss of long-term retailers, the consensus was not to proceed with a CUP requirement at that time. However, the Council did direct to staff continue to monitor the situation. Therefore, this study session is intended to provide the Council with updated information and to allow for further discussion on this matter. Policy Vision: The City has adopted a variety of policies (reference Attachment 3)— found in the Campbell General Plan, the Downtown Campbell Development Plan, and the Redevelopment Implementation Plan—that have guided the City decision-making for the Downtown. Together, these policies speak to a vision for the Downtown that is best articulated by the Downtown Development Plan: The vision for Downtown Campbell is to continue to reinforce its place as the center for community activity, cultural and civic events, and as a vibrant central business district. It is intended that the Downtown be an active, walkable central business district that attracts local residents and visitors to experience a variety of retail businesses and restaurants. The ground level along East Campbell Avenue is slated for retail and restaurant to provide a vibrant, pedestrian-oriented streetscape. City of Campbell MEMORANDUM Attachment 5 City Council Study Session – February 17, 2015 Page 2 of 6 Mix of Downtown Uses (Follow Up) Historical Observations: In furtherance of this vision, the City has made deliberate decisions to incentivize restaurants within the Downtown (reflecting a time when Downtown had few restaurants). As more thoroughly discussed in the previous study session materials, the City eliminated various regulatory obstacles including: •Exempting restaurants (and retail stores) locating within existing buildings from parking standards. This had the effect of allowing Downtown restaurants to maximize seating capacities up to what is permitted by the Building Code. Since seating capacities are normally tempered by parking, a Downtown restaurant is allowed more seats per square-foot than a restaurant outside of the Downtown. •Limiting allowable uses along E. Campbell Avenue (east of Second Street), and 50-feet down side streets to restaurant and retail. This zoning restriction minimized competition for tenant space by other types of businesses such as salons, office, studios, and personal services. •Eliminating the interim Parking In-Lieu fee, thereby removing a significant financial obstacle (tens of thousands of dollars) for restaurants locating in non- restaurant tenant spaces. •Adopting the Downtown Alcohol Beverage Policy in 2009, which eased regulatory hurdles by reducing the inherent uncertainty in the permit process for restaurants seeking Conditional Use Permit approval for alcohol sales. Relaxation of the Policy in 2011 to allow wine bars and 12 AM closing times further facilitated the permitting process. These actions have proved successful in attracting eateries to Downtown Campbell, as depicted by the chart below (based on informal records maintained by the City – reference Attachment 4). Moreover, the demand for restaurant space was strong enough to support construction of the Odd Fellows building for speculative restaurant use in 2011 (which accounted for a notable increase in restaurant square-footage). City Council Study Session – February 17, 2015 Page 3 of 6 Mix of Downtown Uses (Follow Up) Recent Observations: At the time of the March 5, 2013 study session, staff made note that approximately 6,500 square-feet of vacant tenant space (including Bruni Gallery, Sonya Pazz Gallery, and Green Planet Yarn) was likely to be occupied by restaurant uses within the coming year. These spaces were ultimately leased by Rendezvous Wine Bar, La PanotíQ Bakery Café, and Socialight Restaurant. Currently, three retail tenant spaces have or will shortly be vacated, including Vintage and Vogue (1,300 sf), Toys Toys Toys (1,470 sf), and Gabrillia's Bridal (1,500 sf), resulting in a slight uptick in the vacancy rate (reference Attachment 5 – Downtown Map). Based on staff's conversations with property owners, it seems possible that at least one of these tenant spaces may be leased to a restaurant or food-serving tenant. Unless the tenant proposes "late-night" operations (after 11 PM), hard alcohol, or a separate bar area, a Conditional Use Permit will not be required. Additionally, there are now a total of 26 approved alcohol-serving establishments, including bars, wine bars, and restaurants with alcohol service (reference Attachment 6 –Downtown Campbell "On-Sale" Licenses). This is an increase of three establishments since the Council's March 2013 session; Mo's, Rendezvous Wine Bar, and the Socialight Restaurant (reference Attachment 7 – Approved Alcohol-Serving Establishments). Additionally, the CUP approval for the Regale wine bar for the Grower's National Bank (former Gaslighter) was converted to a restaurant with "hard- alcohol" sales. DISCUSSION At its core, the City's vision for the Downtown is a balance of uses that serve the needs of many people during all parts of the day. Based on feedback from Councilmembers, Planning Commissioners, residents, and other community stakeholders, it appears that there is a sentiment that the mix of uses is out of balance, resulting in various issues: •Loss of a Retail Character: As restaurants increase their "share of the pie" (see chart below) by occupying vacant and former retail space, and become the predominant land use, the sense of Downtown as a retail district may be diminishing. In addition to the loss of individual retailers, this may result in reduced overall retail patronage, as customers may no longer see Downtown Campbell as a place to shop, but rather a place to eat and drink. City Council Study Session – February 17, 2015 Page 4 of 6 Mix of Downtown Uses (Follow Up) •Less Daytime Activity: Since many Downtown restaurants do not offer lunch service, much of the occupied tenant space is idle during the afternoon. This lessens the activity and vibrancy of the Downtown, compounding the challenge to retailers who depend on passerby traffic. •Parking: Due to their operational characteristics, restaurants concentrate visits during the typical dinner hours and generate more visitors per square-foot than retailers. As a result, the Downtown parking supply is increasingly taxed in the evenings and during the weekends, in large part due to the increasing number of restaurants. However, absent preparation of a new parking study for the Downtown, this effect cannot be quantified. •Neighborhood Impacts: Restaurants, particularly those with the late-night operational hours and alcohol service, can have a cumulative impact on the surrounding Downtown neighborhoods. Issues such as neighborhood parking, noise, vandalism, and nuisance activity, may be seen as affecting the quality-of- life of Downtown resident. The impact of these affects has increasingly been voiced at Council and Planning Commission meetings. NEXT STEPS If the Council believes that the current mix of Downtown uses is out of balance, there are various approaches—not all mutually exclusive—that could be undertaken. However, to what extent regulatory action on its own is sufficient to aid retailers is unknown. Although added regulation may weaken or suppress demand for new restaurant uses, new retailers may be unable or unwilling to establish in Downtown Campbell due to other economic factors (i.e., internet competition) outside of the City's control. Proceeding with any of the following options will require time to allow staff to research potential changes, outreach to stakeholders, and prepare an ordinance and/or revise policies. As such, consideration may be given to a temporary moratorium of new restaurants through adoption of an "urgency ordinance". Adoption of an urgency ordinance requires a four-fifths vote of the City Council, and must contain findings substantiating that there is a current and immediate threat to the public health, safety, or welfare. However, the ordinance may be adopted without following the notice and adoption procedures required for other ordinances. A moratorium adopted in this manner would have an initial duration of 45 days and may be extended as specified by California Government Code for up to a total span of two (2) years. 1.Direct Land Use Control a.Establish a maximum number of restaurants allowed within the Downtown. The number could be set at the current number or at higher or lower number, depending if the intent is to maintain the status quo, or to allow some allowance for future restaurants. b.Establish a maximum square-footage of Downtown floor area that could be occupied by restaurants. Instead of restricting the number of restaurants, this option would restrict the aggregate square-footage occupied by restaurants. City Council Study Session – February 17, 2015 Page 5 of 6 Mix of Downtown Uses (Follow Up) c. Prohibit establishment of restaurants. As compared to Options 1 and 2, which may allow for the shifting of restaurant space between buildings and tenant spaces over time, prohibiting new restaurants would effectively freeze restaurants to their current location and perhaps size (some allowance could be provided to allow expansion of existing restaurants). 2. Increase Land Use Discretion a. Require a Conditional Use Permit for all future conversion of existing retail space to restaurant use. To be effective, this requirement would need to be tied to new findings pertaining to over-concentration of restaurants. The Planning Commission could then review each application to determine its appropriateness given site specific considerations. b. Modify the Downtown Alcohol Beverage Policy to address over-concentration of alcohol-serving establishments, and perhaps reduce the allowable closing time back to 11 PM. Tightening of the Policy in this manner would provide increased discretion for the Planning Commission and likely discourage new restaurants with alcohol service. However, this change would not affect restaurants that do not serve hard alcohol and/or have late-night hour (after 11 PM) or other food uses (e.g., ice cream shop). 3. Passive Discouragement of New Restaurants a. Eliminate the parking exception for restaurants, reducing allowable seat capacities. This may diminish the economic attractiveness of Downtown over other areas of the City. b. Reinstate the Interim Parking in-lieu Fee so that new restaurants would incur an up-front cost commensurate with their impact on the Downtown parking supply. Although not a direct limitation of new restaurants (as with a numeric maximum), this option would likely slow or stem the increase due to higher incurred costs. During the years when the fee was in effect, staff was informed by several prospective restaurateurs that the fee was a deciding factor in choosing not to locate in Downtown Campbell. However, a fee of this sort would require preparation of a parking study to become permanent, in order to demonstrate the nexus between parking and restaurant uses. 4. Encourage Retail and Other Non-Restaurant Uses a. Reevaluate the types of allowable uses in Downtown, particularly uses allowable along E. Campbell Avenue east of Second Street. Allowing additional uses such as studios (e.g., yoga, dancing, art, etc.), services uses with quick customer-turn around (e.g., alterations, dry-cleaning, etc.), and/or allowing second-hand retail stores without a Conditional Use Permit, may provide landlords with a greater selection of prospective tenants. b. Establish a grant program to provide financial assistance to offset the cost of interior tenant improvements for new retail tenants. The Council would need to identify the source and amount of funding for this purpose. City Council Study Session – February 17, 2015 Page 6 of 6 Mix of Downtown Uses (Follow Up) CONCLUSION The above represents various tools that can be employed to influence a desired of mix of land uses. As previously noted, however, the community's land use should be considered in a broad-based manner. The Downtown is one component of the City's overall commercial base, which also includes a regional shopping center, several local- serving shopping centers, "big-box" retailers, and numerous stand-alone retail buildings. Moreover, Downtown Campbell exists and competes in a wider economic environment that includes surrounding communities. Staff will use this study session as an opportunity to receive public comment and City Council direction. Attachments 1. Council Study Session Report, dated March 5, 2013 2. Council Study Session Report, dated July 16, 2013 3. Applicable Policies 4. Chart: Downtown Commercial Space by Use 5. Downtown Business Map 6. Downtown Campbell "On-Sale" Licenses 7. Approved Alcohol-Serving Establishments To: Mayor Cristina and City Council Chair Finch and Planning Commission Date: June 16, 2015 From: Daniel Fama, Associate Planner Paul Kermoyan, Community Development Director Via: Mark Linder, City Manager Subject: Joint Study Session to Review Downtown Uses and Economic Development INTRODUCTION Over the last several years, the City has witnessed a shift in the commercial makeup of the Downtown as restaurants have overtaken traditional retailers as the predominant land use (reference Attachment 1 – Downtown Use Charts/Tables). In response to these observations, the City Council has held three study sessions to determine if there are policy, code, or market factors that have influenced this change: •March 5, 2013: The City Council considered a comprehensive report outlining applicable City policies and standards, as well as an analysis providing an explanation for the observed shift (reference Attachment 2 – Staff Report). 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. •July 16, 2013: Staff presented a tailored approach that would require a CUP for a restaurant conversion tied with findings that would direct the Planning Commission to consider potential "over-concentration" of restaurants in the immediate area (reference Attachment 3 – Staff Report). Although the Council expressed a concern for the loss of long-term retailers, the consensus was not to proceed with a CUP requirement at that time. Instead, the Council directed staff to continue to monitor the situation. •February 17, 2015: The Council was provided with updated information on this matter, highlighting the changes over the last two years (reference Attachment 4 –Staff Report). The Council discussed various issues, including o Understanding and defining what a "mix of uses" is o Potential to adopt new zoning restrictions to discourage/encourage specific land uses o The role of alcohol service o Consideration of a moratorium for new restaurants o Further defining restaurants from "food-retail" uses o Impact to the downtown parking supply City of Campbell MEMORANDUM Attachment 6 Joint Study Session – June 16, 2015 Page 2 of 6 Mix of Downtown Uses and Economic Development The Council requested that the February 17th study session be continued and reconvened jointly with the Planning Commission to allow for input and discussion with the Commission. The City Council also recently held a series of budget meetings which involved discussion of the Community Development Department’s request to create an Economic Development program that would be staffed by reassignment of an existing staff member from the City Manager's Office and a new part-time ($25,000) intern position. This study session is intended to provide an opportunity for the City Council and Planning Commission to discuss the commercial makeup of Downtown Campbell as well as the relationship between the land use policy and the City's approach to economic development. VISION AND POLICIES A community's long-term vision for itself is expressed as written policy. Since the realization of an adopted vision can take many years, written policies are intended to carry out a vision over time, beyond the tenure of any individual elected or appointed official. In this regard, policy is more than a personal opinion or preference, it is the recognized consensus of the community. The City's vision for the Downtown is best articulated by the 2006 Downtown Development Plan (reference Attachment 5): The vision for Downtown Campbell is to continue to reinforce its place as the center for community activity, cultural and civic events, and as a vibrant central business district. It is intended that the Downtown be an active, walkable central business district that attracts local residents and visitors to experience a variety of retail businesses and restaurants. The ground level along East Campbell Avenue is slated for retail and restaurant to provide a vibrant, pedestrian-oriented streetscape. The Development Plan, as well as the General Plan itself provides several goals— general statements of values or aspirations—that further focus this vision. These goals reflect a consistent theme for proactive action in business development, attraction and retention, as well as preservation of the Downtown's cultural and historic heritage. Goal LU-1: To continue the development and revitalization of the Downtown areas in a manner that positions it as a viable, self-sustaining commercial district in the competitive marketplace of Silicon Valley. Goal LU-2: Work to develop and promote a variety of retail businesses and diversification of eating establishments that will help create a unique destination and identity for Downtown. Goal LU-3: To promote the Downtown as the civic and cultural center of activity for the community. Goal LU-4: To promote and assist the restoration and protection of the historic character and elements that embodies the Downtown and characterizes it as a unique place. Goal LU-5: To increase the residential presence in the Downtown to achieve an active "24 hour" downtown neighborhood. Goal LU-6: To promote and encourage development along the loop streets, and beyond. Goal LU-7: To attain development densities that are urban in nature and representative of a traditional Downtown but remain in scale with the small town character and historic nature of the Downtown. Joint Study Session – June 16, 2015 Page 3 of 6 Mix of Downtown Uses and Economic Development Goal LUT-13: Strong and stable sources of City revenues while promoting an appropriate balance of land uses and a high quality of life in the City. Goal LUT-19: A vibrant community oriented Downtown that serves as the retail, service commercial, cultural and historic center of the city. Implementation of an adopted vision and supporting goals is guided by specific policies and strategies. These directives are intended to shape the City's approach to land use decision-making, program development, and capital improvement planning. In this regard, staff's role is not to "pick and choose" which polices and strategies to follow, but rather to conduct the City's business in a manner in keeping with the policy framework that has been provided. Consistent with the below noted General Plan and Development Plan policies and strategies, the City has taken affirmative steps from a land use perspective to facilitate the development of the Downtown. As discussed in the February 17th Study Session memorandum, recent examples of such actions include creation of zoning standards supportive of restaurants and retail uses in the Downtown, adoption of the Downtown Alcohol Beverage Policy (reference Attachment 6), and elimination of the Interim Downtown Parking In-Lieu Fee. Policy LU-1.1: Development Potential: To maximize the development potential of property within the C-3 zone, particularly ground floor retail and restaurant space. Strategy LU-1.1a: Encourage the development and redevelopment of property in the C-3 zone by developing land use strategies and incentives that create attractive, functional ground floor retail space along Campbell Avenue. Strategy LU-1.1b: Require new or converted retail space to include tall ceilings and expansive storefront windows to provide the appropriate setting for displaying and marketing retail merchandise. Policy LU-2.1: Ground Level Commercial: Develop and maintain the ground floor space along East Campbell Avenue between Third Street and the light rail tracks as a distinctive retail and restaurant experience with ground floor uses that are diverse and interesting and contribute strongly to a distinctive and unique shopping experience. Strategy LU-2.1a: Restrict the use of ground floor commercial space along East Campbell Avenue to retail/restaurant uses. Strategy LUT-5.3f: Redevelopment: Facilitate redevelopment opportunities that further revitalization efforts in the Downtown commercial area. Strategy LUT-5.3g: Day and Evening Activities: Encourage restaurant and specialty retail uses in the Downtown commercial area that will foster a balance of day and evening activity. Policy LUT-13.1: Variety of Uses: Attract and maintain a variety of uses that crate an economic balance within the City while maintaining a balance with other community land use needs, such as housing and open space, and while providing high quality services to the community. Strategy LUT-13.1b: Business Retention and Attraction: Develop programs to retain and attract businesses that meet the shopping and service needs of Campbell residents. Joint Study Session – June 16, 2015 Page 4 of 6 Mix of Downtown Uses and Economic Development Strategy LUT-13.1c: Fiscal Effects of Land Use: Evaluate the fiscal effects of different land uses on City revenues and services. Strategy LUT-19.1a: Mix of Uses: Encourage a compatible mix of uses (i.e. professional offices, services and retail uses) with ground floor retail uses. Strategy LUT-19.1b: Pedestrian-Orientation: Reinforce East Campbell Avenue as a pedestrian- oriented retail street. In 2006, the City also adopted the Economic Development Strategy (reference Attachment 7), consistent with Policy LUT-13.1 and Strategy LUT-13.1b, which direct the City to "attract and maintain" a variety of uses and to "develop programs" to aid in the retention and attraction of businesses that service the community. The Strategy specifically states that its purpose is to serve "as an instrument to help provide direction for implementing partnerships between local government and private enterprise in an effort to further support and enhance economic resources." Similar with the above stated goals and policies that require a more proactive approach for attracting and retaining business, the Strategy establishes an expectation that the City will: 1. Implement business retention and expansion programs. 2. Identify sites that may be ripe for reuse and make recommendations as to how the City can put itself in the best position to achieve the highest and best use of the site. 3. Identify "critical projects" that present an opportunity to generate significant tax dollars and/or employment. 4. Meet with business to develop an understanding of the business community and how local government can better respond to its needs. 5. Identify development and redevelopment opportunities. 6. Continue the identification of Downtown Campbell sites that are ripe for development to eliminate blight and help “tie together” the downtown, which has the opportunity to generate additional revenue. 7. Continue the “Shop Campbell” campaign. 8. Develop and update the “Doing Business” brochure. 9. Develop an Economic Development page on the City’s Website. Although the Strategy remains in effect, the staff resources previously purposed to implement it have since been displaced or redirected to other priorities following the dissolution of the Redevelopment Agency. As a result, staff has largely operated in a reactive mode to requests to locate new business in the City. More recently, the City Manager directed the Community Development Department to take a more active role in "business development" and "attraction." This has primarily taken the form of additional outreach to the business community, nurturing of relationships with key individuals, and increased promotion of the City, such as preparation of a "key-facts" handout when Equity Offices placed the Pruneyard on the market (reference Attachment 8). However, this represents only a limited form of the "active" economic development practiced by other jurisdictions. Joint Study Session – June 16, 2015 Page 5 of 6 Mix of Downtown Uses and Economic Development REQUESTED DIRECTION Downtown: As discussed in the previous study session memorandums, the last several years have seen a marked shift in the character of Downtown from a boutique retail district to a regional restaurant destination. Although this shift has increased the vibrancy and vitality of the Downtown in many ways, it has resulted in a more evening- oriented environment catering to diners, to the detriment of local retailers that were once its mainstay. At issue, however, is to what extent the City can or should influence this matter. Staff poses the following questions to seek direction from the Council: •Question: Is there a use mix problem in the Downtown? If the Council consensus finds that the trend towards a greater number of restaurants is an issue that needs to be resolved by City action, then answers to the following questions are also requested. •Question: Is the desired "mix of uses" clearly articulated in policy? If the Council believes that a revaluation of the Downtown policy—the adopted vision and/or the goals/policies/strategies—is warranted, consideration of this matter could be incorporated into the upcoming General Plan update. However, if the need for new policy direction is believed to be urgent, policy modifications may be processed separately. •Question: If the desired "mixed of uses" is understood, should the veer towards a heavier concentration of restaurant be tempered by reconsideration of a Conditional Use Permit (CUP) process for new restaurants? As had been considered at the July 16, 2013 study session (reference Attachment 3), a CUP requirement for new restaurants would provide increased land use discretion in determining the appropriateness of individual requests a case-by-case basis. However, other approaches may also be considered as more specifically discussed during the February 17, 2015 study session (reference Attachment 4), including: o Limiting the overall number or square-footage for restaurants o Prohibiting all new restaurants o Eliminating the parking exception for restaurants and/or reinstating the parking in-lieu fee, in order to passively discourage new restaurants o Reevaluate allowable uses on Campbell Avenue such as studios (e.g., dance, yoga, art, etc.) to provide increased competition o Consider establishment of a retail grant program to provide financial assistance for new retail tenants Joint Study Session – June 16, 2015 Page 6 of 6 Mix of Downtown Uses and Economic Development Economic Development: The steady increase of restaurants that have displaced traditional commercial businesses in the downtown may be seen as resulting from the City's limited economic development efforts. These businesses have established on their own initiative without staff involvement or encouragement. Had the City been more active in implementing the Economic Development Strategy through staff interaction and/or influence to encourage establishment of retailers, the mix of uses may not have been as unbalanced as perceived. •Question: Does the Council support a more active economic development approach? Once provided the resources, staff is prepared to become more active in developing strategies and promoting business opportunities in Downtown Campbell and the community as a whole. If the Council believes that a greater amount of traditional retail stores are desired to balance the mix of uses, staff will seek out ways to attract traditional retail businesses through a variety of methods. Maintaining membership in the Silicon Valley Economic Development Alliance (SVEDA) is one such method that provides many opportunities to meet business representatives in personal settings, to engage in conversations, and to sell the City of Campbell as a place to locate their business. Attachments 1.Downtown Use Charts/Tables 2.Council Study Session Report, dated March 5, 2013 3.Council Study Session Report, dated July 16, 2013 4.Council Study Session Report, dated February 17, 2015 5.Downtown Development Plan 6.Downtown Alcohol Beverage Policy 7.Economic Development Strategy 8.Pruneyard Handout Attachment # 1 Downtown Use Charts/Tables – February 17, 2015 Study Session Meeting Downtown Commercial Space by Use* 2007 2008 2009 2010 2011 2012 2013 2014 2015 Restaurant 28% (61,095) 28% (61,120) 31% (67,124) 31% (68,074) 31% (69,168) 35% (78,318) 37% (85,701) 41% (94,667) 41% (94,667) Other Retail 29% (63,964) 32% (69,651) 27% (59,316) 28% (60,294) 24% (53,631) 25% (55,118) 25% (57,068) 25% (57,188) 23% (51,888) Office 12% (26,475) 12% (26,475) 12% (26,475) 12% (26,475) 12% (27,773) 13% (28,123) 12% (28,123) 14% (31,773) 15% (33,648) Service 21% (46,258) 21% (45,903) 22% (47,153) 22% 46,853 20% (43,958) 18% (41,101) 18% (40,801) 18% (41,091) 18% (41,091) Vacant 8% (16,619) 5% (10,245) 8% (16,928) 6% (12,428) 10% (23,000) 9% (19,380) 7% (15,480) 2% (5,000) 3% (6,770) Bars/Clubs 3% (6,632) 3% (6,632) 1% (2,132) 1% (2,132) 2% (5,032) 1% (2,132) 1% (2,132) 1% (2,132) 1% (2,132) *Totals do not equal 100% due to rounding. All values are estimates based information provided by property and business owners.