News

Property owners win exceptions from retail law

City Council agrees to allowed addition uses for properties where retail has been a hard sell

Business may be booming in some parts of Palo Alto, but Chris Hansen and Robert Wheatley have spent nearly two years trying to find a retailer to rent out their building at 999 Alma St., former site of Anthropologie.

The reaction so far? Crickets.

On Tuesday night, the property owners came to plead their case to the City Council, which two years ago banned the conversion of ground-floor retail to other uses. For Hansen and Wheatley, whose building stands on a peripheral downtown site in what is known as South of Forest Avenue (SOFA 2), this creates an insurmountable challenge, they said.

"I feel like I'm in the middle of an ocean and treading water," Hansen said, describing his fruitless quest to land a tenant. "I'm drowning and I'm literally asking for aid -- for a life preserver."

For Lund Smith, retail has also been a hard sell. Smith made his case for an exception from the law on Monday night, when he tried to get a waiver for his building at 425 Portage Ave., a former warehouse that recently housed Pet Food Depot. Smith cited the lack of parking at the site (nine total spots), its poor visibility and shabby infrastructure as reasons for the fact that there were no takers. He described the squat building in the Ventura neighborhood as a "70-year-old corrugated metal shed."

"If there's someone who wants retail right now, come talk to me," Smith said. "I'd like to lease it to somebody. It's just sitting there vacant."

Neither Smith nor Hansen got everything that they wanted from the council, where lauding retail is a popular position. At the same time, neither walked away empty-handed. After some debate, the council voted 6-3, with Mayor Greg Scharff, Vice Mayor Liz Kniss and Councilman Adrian Fine dissenting, on Monday night to allow warehouse use for the Portage Avenue building. All three dissenters wanted to give the property owner even more flexibility on future development.

And on Tuesday night, they followed suit by throwing Hansen a lifeline and making medical offices an allowed use at 999 Alma St. by an 7-1 vote, with Councilwoman Karen Holman dissenting and Councilman Tom DuBois absent.

For some council members, the requests for waivers from the two property owners were a sign of the law's limitation. Fine, who as a member of the Planning and Transportation Commission voted against the retail-protection ordinance, continued to argue during both public hearings that the law is too blunt and that it puts an onus on council members to decide whether particular locations are suitable for retail -- a task for which they aren't well equipped.

"Are we really going to legislate the retail use of every single property in the city? Because that's what we're doing in this city," Fine said.

Vice Mayor Liz Kniss, who supported the retail-protection law when it was enacted, indicated Tuesday that she is having second thoughts about it.

"Even though I'm one of those who voted for the emergency retail ordinance, I'd certainly like to revisit that," Kniss said, adding that she thinks it's a "shame" that the city is requiring the Alma Street building to be retail.

Councilwoman Karen Holman took the opposite view. If Anthropologie lasted this long on the Alma site, why can't another retailer do the same, she asked Tuesday. She was also skeptical about the claims from Alma Street Partners that they solicited all offers for the property and even listed it with an unmarked price (they still didn't get any offers). Holman said that she herself had called the broker to inquire about the property and was told, without hesitation, that the price is $6 per square foot.

"Nothing was offered about negotiating a rate," Holman said. "I don't find that as something that's going to make me sympathetic to changing the rule on this property."

She was the only dissenting vote, however. Others sympathized with Hansen's and Wheatley's tribulations, though they didn't go as far as Fine and Kniss in attacking the retail-preservation ordinance. Mayor Greg Scharff said he favored the law, which he argued probably saved many retail establishments from converting to offices or other uses that fetch higher rents than retail.

He acknowledged that in some cases, developers will seek waivers because their properties are in peripheral areas with little foot traffic and significant restrictions. He said he doesn't feel the need to be "rigid" in his thinking about granting them their requests.

It was Scharff who proposed expanding the allowed uses at 999 Alma St. to include medical offices -- a recommendation that the council majority accepted. However, Scharff was less successful in convincing his colleagues to remove the retail-protection requirement at 425 Portage Ave. altogether, should redevelopment occur. That proposal fell by a 4-5 vote, with Kniss, Fine and Councilman Greg Tanaka voting joining him.

On the Portage property, the council favored a proposal by Councilman Tom DuBois, which denied Smith's request for a waiver from the retail-protection ordinance but allowed him to add warehouse to the list of allowed uses. DuBois agreed that given the property's history, some flexibility should be warranted. But he opposed scrapping the requirement entirely, saying he'd hate to see it redeveloped and converted to office space.

"I think we have to enforce our retail ordinance," DuBois said.

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Comments

40 people like this
Posted by Starting to Turn Things Around
a resident of Crescent Park
on Nov 8, 2017 at 8:15 am

The developers wanted to convert yet more former retail into software company offices but were thwarted. Thank goodness DuBois, Kou, Holman, and Filseth stood up strong on this and stopped the developer-backed councilmembers' never-ending attempts to enrich their campaign donors.


10 people like this
Posted by pacsailor
a resident of Another Palo Alto neighborhood
on Nov 8, 2017 at 8:36 am

Although I normally do not agree with Fine's position on issues, I find myself agreeing with him on the retail issue. There are certain locations that should stay retail but the council used a blunt force approach to retail. Both locations in this article will not work for retail they do not have foot traffic and very limited parking. In the case of Portage the building does not have enough windows for display to advertise the merchandise.


Like this comment
Posted by Coupa Fan
a resident of Another Palo Alto neighborhood
on Nov 8, 2017 at 10:45 am

Maybe CCRS can move into this newly designated warehouse space and stop getting harassed by the cold winter.


7 people like this
Posted by Elizabeth
a resident of Downtown North
on Nov 8, 2017 at 11:17 am

Why not rezone the sites to high-density residential? We could use more housing.


11 people like this
Posted by Becky Sanders
a resident of Ventura
on Nov 8, 2017 at 11:19 am

@ Coupa Fan - Coupa actually looked at the Portage space for a warehouse and rejected it, according to the applicant. This puts the lie to CCRS's claim to be a community serving retail establishment, which its current location's zoning dictates. That Coupa is not in compliance invites other businesses to "test" the law and puts a strain on our embattled and under-resourced Code Enforcement office. Laws are not a convenience to be adhered to based on whim or caprice. They help all of us know what to expect from ourselves and from others as part of the social contract that knits our community together. I am grateful for the leadership, perseverance and perspicacity of our very warm friend in Barron Park.

Becky Sanders
Founder, Ventura Neighborhood Association

ps I used to be a committed Coupa Cafe fan but have not set foot in any of their shops since I discovered their sneaky dealings a block from my house. [Portion removed.]


1 person likes this
Posted by sunshine
a resident of Barron Park
on Nov 8, 2017 at 12:27 pm

I think the Alma St decision is good. It is a difficult place for retail as much separates it from the major retail area. However, we do need to protect downtown retail. I think that the use of some downtown spots on both University and California Aves for exercise shops is not good. I do not want to shop in an area where I am forced to watch someone else exercise. At least put those places on the second floor. Similarly, use of downtown sites for bicycle shops is not a good use of the site. A bicycle shop needs to be in an area where a buyer can try out the bike.
The Alma site would be good for medical offices. You only need a few spaces for a medical office as patrons come and go.
We really don't need a low level warehouse on Portage. That also could be medical offices.
High density apartments need to be closer to downtown so that people can walk to shops.


6 people like this
Posted by Marie
a resident of Midtown
on Nov 8, 2017 at 12:38 pm

Marie is a registered user.

It is all about the rent. Of course you cannot get an renter when you charge the cost of office space for a retail or warehouse space. If the price is right, then renters will come.

Part of the value of a property is its zoning. The purpose of zoning is to have a thriving balanced community, something we don't have much of downtown anymore. Owners have no right for upzoning just to make more money. The price they paid for it and the property tax assessment are all based on the zoning as well as the location.

I think the council was correct to allow the Pet Food Discount store be rented as a warehouse as that was its use before and that is the kind of building it is. I think the council was very generous to allow medical offices for Alma Street. I only hope that they do not allow medical uses that are really businesses, not medical offices that treat patients.


7 people like this
Posted by Resident
a resident of Another Palo Alto neighborhood
on Nov 8, 2017 at 12:41 pm

The retail rules make sense for retail areas but not for places where customers won't appear.

The retail rules are needed for Midtown, shopping plazas and downtown areas and sidestreets.


22 people like this
Posted by Greedy owners
a resident of Downtown North
on Nov 8, 2017 at 1:08 pm

This is all about greedy developers and owners! They don't want to rent these properties for what they are zoned for, they want them upzoned so they can make more money. Thus they actively work to not rent them by demanding more than the space is worth and then whine at the city council that no one wants to rent them and can they please change the zoning to offices or high rise housing.

It is a scam and it is as obvious of there refusal to disclose what they are asking and who they have talked to. To bad the council caved instead of insisting that they remain resident serving retail. Even if they have to rent them at $1 a square foot. IF that is what it is worth to stay retail then that is what they should get. The city council in under no obligation to make these people rich. They are obligated to make Palo Alto a good community to live in - a task that they seem to have forgotten.


5 people like this
Posted by Resident
a resident of Another Palo Alto neighborhood
on Nov 8, 2017 at 1:17 pm

I disagree.

If you have an apartment block or even an office which has say 20 people coming or going each day or even 30, 40, 75 - even if the retail is useful and each person buys one item each day, it is hardly going to be a wise place for a retailer hoping to do well.


18 people like this
Posted by it's location stupid
a resident of Duveneck/St. Francis
on Nov 8, 2017 at 1:39 pm

Councilwoman Holman's argument against lifting retail on the former Anthropology site totally missed the point. In her harsh dismissal of the owners pleas, Holman argued that - If Anthropologie lasted this long on the Alma site, why can't another retailer do the same. She then questioned owner's effort to locate a replacement and went on to cite a "$6 per square foot" asking price without producing evidence (I can see a headline reading - Bargain Palo Alto downtown retail $6 a square foot). In the era of picking one's own reality, this is an elected official attacking a store owner for a lifeline.

The policy (vice Mayor expressed second thought on her original vote on the policy) is meant to preserve retail space and the Council is not meant to be the arbiter of retail pricing! The answer is none but Location, Location, Location! Who knows what pretty pennies that Apple pays for their flagship store on University but one thing is clear. It is a frickin prime spot. And the 999 Alma is not.

The well-meaning but misguided ground floor retail policy is hurting than helping.


17 people like this
Posted by Mayor's bias
a resident of Old Palo Alto
on Nov 8, 2017 at 1:42 pm

Scharff has been pushing for some time for medical offices in that area.
Not coincidentally, he owns a medical office building at 616 University Ave.
And his wife runs an Optometry Practice in Santa Clara.

So his conflict of interest in wanting medical offices at 999 Alma is no secret.

[Portion removed.]

Looking forward to the election of a new Mayor who doesn't also violate Council Meeting Guidelines several times a night. His use of the Mayor's seat is so improper, the city attorney needs to talk to him. O, I just forgot, he just gave her a raise.


10 people like this
Posted by really?
a resident of Duveneck/St. Francis
on Nov 8, 2017 at 2:41 pm

@ starting to turn things around

Just curious which developer plans or have submitted plans to convert former retails into office spaces (specifically for software use).


9 people like this
Posted by Mama
a resident of Crescent Park
on Nov 8, 2017 at 3:06 pm

Now we can watch the domino effect at our upcoming city council meetings...gutless! They have folded at the fiirst real challenges to the ground floor retail law. It's all about the rents they're asking.


10 people like this
Posted by Retail Stores on the Alma Corridor? Makes little rational sense
a resident of Southgate
on Nov 8, 2017 at 6:17 pm

As a neighbor, completely unassociated with "developers" (the word used by some as if it was loathsome...), as someone who drives on Alma and is constantly worried about hitting or being hit by a car when slowing down to turn, or worries about cyclists, and who HAS shopped at Anthropologies, I say: It is a terrible place to have a store. To require that it be limited in its specific retail uses is illogical and overly protectionist Our City Council should be trying to encourage more flexible uses of properties in this area, and not becoming arbiters of commercial use of property in Palo Alto. Anthropologie moved for a reason: It was a terrible place to have a clothing store. The same is true for other retail uses of stores on Alma. Allow it to be used for housing. We need more housing, and more flexible approaches to zoning in our city.


2 people like this
Posted by MyOpinion
a resident of Mountain View
on Nov 9, 2017 at 7:53 am

so How did Palantir get permission to set up shop all over PA? That location is out of the way too far from downtown, there is a reason Anthropologie left.


2 people like this
Posted by Gus L.
a resident of Barron Park
on Nov 10, 2017 at 5:48 am

The location of the Anthropologie building is for sale at $5,500.000.00
Why are they worried about tenant?


11 people like this
Posted by Anon
a resident of Another Palo Alto neighborhood
on Nov 10, 2017 at 3:26 pm

Obviously, in the current environment, there is a premium for office space in Palo Alto. So, naturally, people with retail space would like to convert it to office space if they could, since they can charge more for rent. When someone buys a building, it is a gamble whether or not they can get such a conversion.

The question we voting residents have to ask ourselves is, whether we are serious or not about keeping downtown Palo Alto a pedestrian-friendly-interesting walkable area? Or not. Because, there is nothing less interesting than other people's office space.

Personally, I would like downtown Palo Alto to be more walkable and more interesting, not less.


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

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