Change in retail environment is linked to new chain stores

By Gloria I. Wang

The retail environment in Los Gatos is changing, and the town has responded to public concern with a proposal to regulate new chain stores.

An amendment to the town code is in the works, which will give the definition of a "formula retail business" and establish the findings the town must make in order to deny such a business permission to operate.

In addition, applications for chain stores will be scrutinized and evaluated on a case-by-case basis before the town will issue a conditional-use permit. All new chain stores will need to have a conditional-use permit; currently, chain stores are unregulated and the main downtown businesses that need permits are restaurants and alcohol-serving establishments.

On April 10, Los Gatos Planning Commissioners reviewed a report written by town staff. In it, Town Attorney Orry Korb defined a formula retail business as "a retail business which, along with one or more other business locations, is required by contractual or other arrangement to maintain any of the following: standardized merchandise, services, decor, uniforms, architecture, colors, signs or other similar features."

Director of Community Development Bud Lortz said community members had concerns that chain stores were "changing the fabric of our downtown." Although most were satisfied with the current blend of businesses in downtown and did not want to prohibit chain stores from coming in, Lortz said, some regulation was necessary.

Eight years ago, the town prohibited first-floor office uses of downtown buildings along the pedestrian corridor. "With that prohibition, I think we've maintained that delicate balance between retail and restaurants," Lortz said. "We've reached that symbiotic relationship and that very careful mix."

"Protecting against formula business is not necessarily protecting local businesses," Korb pointed out. Instead it is "the desire to protect ... a district that has a particular appearance and vibrancy."

"If it turned into nothing but chain stores, while it may be vibrant like [Valley Fair] is vibrant," Korb said, "nobody would know they're in Los Gatos anymore."

Korb mentioned that some businesses that the community identified as local businesses--such as the Los Gatos Coffee Roasting Company and Andale Taqueria--actually fit under the definition of a formula store. "It's not necessarily that they're locally owned; it's that they're a type of business that's unique in many respects," Korb said.

Uniqueness is defined not only by the type of retail that is available, but also by the size of the store, the merchandise and the type of ownership, Korb said.

As a result, the town has determined that new formula chain stores must have a conditional-use permit, either by applying for a new one or conforming to an existing one.

Already, the town requires businesses totaling more than 6,000-square-feet--allowable in any commercial zone except for downtown--to apply for a conditional use permit.

Conditional-use permits are linked to the piece of property and not the business itself. Therefore, when a business moves out, the replacement formula retail store must meet the conditions of the old permit. Korb later said, however, that the town "tries to draft the conditions of a conditional-use permit fairly specifically to the type of business." If the new chain store has different uses, requirements or intensification, it would need a new permit.

Korb had suggested that the town make one of two determinations in order to deny a chain store's request for a permit. The application would have to be inconsistent with the town's General Plan, which is its blueprint for development, or it would have to "detract from the existing balance and diversity of businesses in the Central Business District"--downtown Los Gatos.

Korb said he singled out downtown because it is so different and unique from the rest of town. The more objective and quantifiable the ordinance, the easier it is to defend, Korb said.

Planning commissioners, however, disagreed with the restriction and asked Lortz to change the wording to "in the district in which the use is proposed to be located." That way, the town could look at applications in the context of the surrounding area, instead of merely studying proposals that are in the central business district.

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