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Bill for preserving ground-floor retail services passes first reading

A bill to prohibit existing retail uses from converting to office use in commercial zones citywide was passed unanimously on first reading last Monday by the Palo Alto City Council. If approved on second reading, it could take effect early next year.

Under the bill, drafted by the Department of Planning and Community Environment (DPCE) and passed on its first reading, retail, personal services, and automobile services in place on or after March 19 cannot convert to office use. Personal services spaces include places like clinics and barbershops.

The ordinance would not apply to Charleston Center or Midtown Shopping District, which are regulated by similar interim ordinances. The council also voted to indefinitely delay a decision on applying the ordinance to the downtown and California Avenue areas.

Council members voted 6-0 to support the ordinance after hearing dozens of citizens strongly debating on the issue. While property owners and real estate brokers spoke in against of the bill, retail service providers and community activists on the said the bill should not only be enforced but also be expended to better protect retail services.

Charles Keenan III, who owns 15 properties in downtown Palo Alto, said there is no emergency to pass the bill.

""The dot-com phenomenon is gone …Let the market sort it out," he said.

The bill threatens the economy, and is unfair to property owners, Keenan said, adding that many buildings are not designed for retail and cannot be converted to retail uses.

But Bob Moss, a local resident, said it's time to pass the ordinance because the city doesn't have pressures of booming economy.

"If we don't do something now, we would have the same problem again, and we will be acting too late," Moss said.

"Property owners would make money even though it's retail. They just wouldn't make as much," he said.

The proposed ordinance first surfaced in March as a way to preserve ground floors of buildings for retail use when the expansion of high-tech business snatched up most office spaces and squeezed places for neighborhood serving business.

Residents have blamed the conversion for bringing too many workers and traffic into the city and eroding base for shopping and other service activities.

In favor of even stronger protections for retail, the Planning and Transportation Commission had recommended the city adopt broader restrictions and ban all ground-floor non-office uses from converting to offices.

But Lisa Grote, the DPCE's planning chief, pointed out that the strong competition for office space has drastically diminished in the past months because of the recent economic downturn.

Palo Alto's office vacancy rate in downtown has dropped to 12 percent from less than 3percent in the past three to four months, she said.

The ordinance is not meant to be a final zoning product, and the city will check its application when further studies are available in four to six months, Grote said.

Property owners who submitted applications for relevant conversions by March 19 can be exempted from the ordinance. The city currently has four applications, said Lisa Grote, head of DPCE's planning division.