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Senior Planner Steve Lynch presented the staff report.
Councilmember Swegles confirmed with staff that for the special development permit, the office space is increasing, but that the retail is not being reduced. Senior Planner Lynch stated that the retail may be reduced with a modified site plan if the developer chooses to locate the office space where there is now retail. However, at this point what is before Council is the approval of downtown specific plan entitlements over and above what is already allowed.
Councilmember Swegles inquired about the possibility of having a grocery store in this project as he did not see that addressed in the staff report. Councilmember Swegles also inquired if the grocery store should be addressed in the staff report by Council input or suggestions. Planning Officer Trudi Ryan stated a grocery store is permitted with the existing special development permit but not required. If Council wishes to add a policy statement that would encourage the location of a grocery store, it would be appropriate to include in their action this evening. Staff suggests an encouragement rather than a requirement due to potential changes that staff would not be able to anticipate.
Councilmember Swegles confirmed with Planning Officer Ryan that a grocery store would be considered as retail within this project.
Councilmember Hamilton stated the staff report identifies 87 proposed additional parking places for the potential hotel and inquired if the proposed parking spaces were in addition to underground parking that has already been approved for the project. Director Paternoster stated that parking is not a decision (regarding the site plan) before Council this evening; rather the decision is whether or not a hotel should be included. Should the hotel be approved, the developer expects to add 87 additional parking spaces underground specifically for hotel guests and employee parking. If that occurs, it will come before the Planning Commission as a revised site plan.
Councilmember Hamilton stated the staff report mentioned that the hotel would displace retail on the second floor and inquired where the displaced retail could be relocated. Senior Planner Lynch stated there is a proposed grocery store with two levels of office above it; however, certainly a second level of retail could go above the grocery store such as a restaurant or health club. Adding levels to existing buildings would be the likely location where retail could be added.
Councilmember Hamilton spoke about Planning Commission recommendation 3 (page 11 of staff report) and inquired if there is a similar constraint on any other hotel in the City. Senior Planner Lynch stated there was not and added that this is a forward-looking recommendation. If adopted, any major hotel would be invited or encouraged to sit on such a board.
Councilmember Hamilton inquired about what size the hotel would be compared to hotels in the City. Senior Planner Lynch stated the proposed hotel would be on the larger size and would be considered to be a cut above other hotels in the area.
Councilmember Hamilton inquired about Planning Commission recommendation 4 regarding height limits and inquired if the height limit would be a realistic condition of approval considering the displacement of retail. Planning Officer Ryan stated the hotel (as currently proposed by the applicant) would be higher than the other buildings in the Town Center project. Staff advised the Planning Commission that they should consider this recommendation as general direction. Therefore, when the final application comes to the Planning Commission, if there is a need for some changes in height (in order to accommodate different packaging for the various uses on the site) the Planning Commission can allow these changes. Staff expressed caution to the Planning Commission not to make this recommendation absolute.
Councilmember Hamilton asked what the impact of approving a hotel would be if it is not specifically called out in the Environmental Impact Report (EIR). Senior Planner Lynch stated staff looked at the square footage studied through the EIR (never approved through the downtown specific plan) and studied the intensities such as traffic and found the hotel was generally on the same order. Of the levels of intensity studied under the EIR, the biggest impact is traffic circulation.
Vice Mayor Spitaleri inquired if the square footage taken away from retail space for the hotel will be placed elsewhere in the project. Senior Planner Lynch stated the developer is showing approximately 70,000 square feet to be displaced by the hotel and office space. The retail that is lost is the first level of the hotel and the first level of office above the grocery store. In both locations there had been second level retail proposed seen as a health club or second tier type retail. The site plan has not been finalized, as staff pressed the developer to come forward with a set of plans in order to conceptually understand where they were planning to put the hotel in the project. The developer’s final set of plans will come back to the Planning Commission and it is likely some retail will be lost with the addition of the hotel.
Vice Mayor Spitaleri inquired as to what amount of retail staff believed they would lose. Senior Planner Lynch stated he is not able to guess at this point. Director Paternoster stated they do not have a figure as yet and that the plans are due to be filed on May 11 and will be brought before City Council on May 22. Council will be able to see the proposal before Planning Commission takes action which is scheduled for June 2007.
Councilmember Howe inquired if the City has any transportation demand-management programs for residential. Planning Officer Ryan stated the City has requirements for developments (near transportation hubs) to provide information on alternative modes of transportation to encourage fewer trips, but there is not an existing transportation demand-management program.
Councilmember Howe inquired if the City has any transportation demand-management programs for retail. Planning Officer Ryan stated there is not an existing program; however, the special development permit (approved for the town center) will require a transportation demand-management program for the entire center, which will include retail, office, residential, and the hotel if approved.
Councilmember Howe inquired if there was anything included in the special development permit that deals with the transient occupancy tax (TOT) and Planning Officer Ryan stated there was not.
Councilmember Howe confirmed with Planning Officer Ryan that Planning Commission recommendation 3 is an attempt to set policy for the City. Councilmember Howe stated the Planning Commission should stick to land-use issues and leave policy issues to the Council.
Councilmember Hamilton inquired if the footprint of the hotel building would need to enlarge in order to accommodate the lobby. Senior Planner Lynch stated it may become a little larger; however, the lobby will be fairly small and the true lobby will be on the second floor. Director Paternoster stated a great deal of the ground floor will be retail (such as a potential restaurant). Director Paternoster stated the Planning Commission recommendations are not conditions of approval, rather just suggestions to the developer to let them know what the Planning Commission will be looking at when they review the plans.
Public hearing opened 7:55 p.m.
Peter Pau, Sand Hill Properties and REEF, thanked staff for their assistance.
Pau stated his support and reasons for adding a hotel to the Town Center. Pau stated there will be a loss to some of the second floor retail, but this space was put in by the previous developer (to fill floor space) and was not the best quality retail. Pau stated the space would be replaced by high quality hotel space.
Pau confirmed that underground parking would be added for the hotel along with some on-grade parking (based on a suggestion by Macy’s) and additional spaces for use by companies who occupy the office spaces. Pau stated there will be 100 parking spaces and as a result an additional parking deck will be added.
Pau spoke about the Planning Commission recommendations and stated there are not any plans to further increase the height of any buildings. The hotel (which will be taller than the retail on the second floor) and the additional parking level will be the only height adjustments. The hotel will be five stories from grade level.
Councilmember Howe asked Pau what the anticipated amount of hotel rooms would be if the hotel were to be approved. Pau stated there would not be less than 150 rooms due to efficiency and the room count would probably be closer to 200. If approved, the hotel would not materialize until 2010. Pau stated the hotel would be first class and nicer than any hotel in the surrounding area.
Councilmember Swegles inquired about green building and Pau stated his company is building two other hotels that meet green standards. Pau stated they are also building green for the office buildings and residential. Pau stated it is easier to build the hotel with green standards because his company will control everything on this project.
Councilmember Hamilton confirmed with Pau that the previous plan had too much second level retail floor space.
Councilmember Hamilton inquired about height of the project and Pau stated his company plans to place two-levels of office on top of the market in order to achieve the proper scale and proportion as identified in the staff report. The remainder of the buildings will be the same height with the exception of the additional parking deck (a one level addition).
Councilmember Chu confirmed that Pau plans to add underground parking at the corner of McKinley and Murphy (where previously there was not any underground parking) and then at the parking structure along Mathilda, the parking behind the office spaces will be raised one level.
Mayor Lee confirmed the proposed hotel would be smaller, but similar in concept to the Hotel Valencia located at Santana Row in San Jose.
Mayor Lee inquired what amount of retail space will be reduced and Pau stated the leasing office is having a difficult time identifying second floor retailers and he is waiting to see if they will be able to obtain retailers. Should a desirable retailer come forward and wanted to take the second floor, Pau would replace the proposed office space with that retailer, but he would keep the hotel.
Mayor Lee inquired as to when the demolition would take place and Pau stated they have the permit in hand and as soon as Macy’s approves the demolition, Pau will proceed. Mayor Lee requested Pau keep the Council posted as to when the demolition will occur.
Arthur Schwartz stated his concern over the increase in commercial space within this project and would like the original project of 282,000 square feet maintained. Schwartz requested that the entrance and exit locations for the parking garages be widely separated to allow for one-way travel. Schwartz explained he is concerned over the location of the hotel because it would be near residences, and suggested that it be located on Washington Street (between Murphy and Sunnyvale Avenues). Schwartz stated he submitted his additional suggestions and concerns in a letter to Council and the developer.
Pau made final comments on this project and stated he is looking forward to bringing the project proposal before the Planning Commission.
Mayor Lee inquired if this project has been the most efficient he has worked on and Pau stated the City has been very cooperative and followed through on what they agreed to do from the start. He has not experienced this with the other cities that he has worked with. City staff has been very proficient and professional.
Public hearing closed 8:27 p.m.
Councilmember Swegles stated the Planning Commission did not make a recommendation about a grocery store and inquired if it would be appropriate for Council to add a recommendation at this time. Planning Officer Ryan stated if the Council wishes to make any recommendations or policy statements for inclusion in the specific plan, this would be the proper time to do so.
MOTION: Vice Mayor Spitaleri moved and Councilmember Howe seconded to approve Alternative 1: Council approves a Resolution to amend the Downtown Specific Plan for Block 18 and introduce an ordinance to increase the intensity of Block 18 by an additional 40,000 square feet of office and a new hotel with up to 200 rooms.
Councilmember Howe offered a friendly amendment to encourage the inclusion of a grocery store in Block 18.
Friendly amendment accepted.
Councilmember Hamilton inquired if the motion included the Planning Commission’s recommendations and Vice Mayor Spitaleri stated the motion does not include the recommendations.
Councilmember Hamilton offered a friendly amendment to include Planning Commission recommendations 1, 2, 4, 5, and 6 as suggestions to the developer.
City Manager Amy Chan stated it is Council’s prerogative to include these items; however, it probably would be best to include these when Council considers the site plan. Council could add language to encourage the developer.
Councilmember Hamilton stated she encourages the developer to take the Planning Commission recommendations 1, 2, 4, 5 and 6 into consideration when developing the site plan.
City Manager Chan stated the site plan will not come back to Council for approval; however, staff will hold a study session with Council to answer questions before Planning Commission consideration of the proposed plan. This project would only come back to Council if the public or a member of the Council appealed the Planning Commission’s decision.
Councilmember Hamilton stated she will withdraw her friendly amendment; however, it is her intent that these recommendations will come back to Council during the study session.
City Clerk Katherine Chappelear read the title of the ordinance into the record.
VOTE: 7-0
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