J v` 460t* Assistant Town Manager /Director of Commun ty LAUREL R. PREVETTIL GREG LARSON, TOWN MANAGER MEETING DATE: 09/ 02/ 14.

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1 t wx f MEETING DATE: 09/ 02/ 14 ITEM NO: Vrlr SOS c " tos COUNCIL AGENDA REPORT DATE: AUGUST 27, 2014 TO: A+ p J v` 460t* FROM: GREG LARSON, TOWN MANAGER SUBJECT: NORTH FORTY SPECIFIC PLAN GENERAL PLAN AMENDMENT GP ZONING CODE AMENDMENT Z AND ENVIRONMENTAL IMPACT REPORT EIR PROJECT LOCATION: THE PLAN AREA COMPRISES APPROXIMATELY 44 ACRES LOCATED AT THE NORTHERN EXTENT OF THE TOWN OF LOS GATOS BORDERED BY STATE ROUTE 17 AND STATE ROUTE 85 FREEWAYS TO THE WEST AND NORTH LOS GATOS BOULEVARD TO THE EAST, AND LARK AVENUE TO THE SOUTH APN , 010, 024 THROUGH 027, 031 THROUGH THROUGH , 063 THROUGH 065, 070, 081 THROUGH THROUGH , 100, , 116, AND 129. PROPERTY OWNERS: THOMAS & MIYOKO YUKI HERBERT & BARBARA YUKI ETPH LP WILLIAM MATTES, PETER BRUTSCHE WILLIAM FALES WILLIAM HIRSCHMAN, ELIZABETH DODSON, PATRICIA CONNELL HANS MATTES, TAK PETROLEUM, DEWEY VENTURA ALEXANDER & BETTY MOISENCO, LUCY, DAGOSTINO, ROBERT & GEORGIANNA SPINAZZE MARIANNE EZELL LOS GATOS MEDICAL OFFICE CENTER LLC. APPLICANT: TOWN OF LOS GATOS. A. CONSIDER CERTIFICATION OF AN ENVIRONMENTAL IMPACT REPORT, ADOPTION OF A MITIGATION MONITORING AND REPORTING PROGRAM, AND ADOPTION OF FINDINGS OF FACT AND STATEMENT OF OVERRIDING CONSIDERATIONS. B. CONSIDER ADOPTION OF THE NORTH FORTY SPECIFIC PLAN. C. CONSIDER ADOPTION OF GENERAL PLAN AMENDMENTS. D. CONSIDER ADOPTION OF AN ORDINANCE EFFECTING A ZONING CODE AMENDMENT. PREPARED BY: LAUREL R. PREVETTIL Assistant Town Manager /Director of Commun ty evelopment Reviewed by: N/A Assistant Town Manager WTown Attorney _* Finance N9DEV \TC REP0RTS\2014 \N40TC dm Reformatted: 5/ 30/ 02

2 PAGE SUBJECT: NORTH 40 SPECIFIC PLAN /GP /Z /EIR RECOMMENDATION: After the public hearing, it is recommended that the Town Council: 1. Adopt a resolution (Attachment 14) to certify the Environmental Impact Report (EIR ) Attachments 1 and 2), adopt the Mitigation Monitoring and Reporting Program ( Attachment 2), and adopt the findings of fact and statement of overriding considerations ( Exhibit 14 within Attachment 5); and 2. Adopt a resolution ( Attachment 15) to adopt the North 40 Specific Plan including findings that the Specific Plan is consistent with the General Plan and its corresponding Elements; and 3. Adopt a resolution (Attachment 16) to adopt the proposed General Plan amendments ( GP ) including the findings that the amendments are internally consistent with the existing goals and policies of the General Plan and its corresponding Elements; and 4. Introduce an ordinance ( Attachment 17) to amend the Town Zoning Code including the required finding that the Zoning Code amendment is internally consistent with the General Plan and its Elements. ALTERNATIVES: Given the multiple components of this item, the Town Council may make a motion( s) to do one or more of the following for each component: Deny the General Plan amendments and Zoning Code amendment without certifying the Environmental Impact Report pursuant to the California Environmental Quality Act (CEQA); or 2. Continue the matter to a date certain with specific direction; or 3. Remand the matter to the Planning Commission with specific direction. BACKGROUND: What is a Specific Plan? Under California State law, a municipality may prepare and adopt a Specific Plan to help implement the municipality' s General Plan for a particular geographic subarea of the community. A Specific Plan provides more detailed land use and establishes the primary means of development guidance within the project area than occurs in the community' s General Plan. By law, Specific Plans must include, among other items: Explanation of the relationship to and consistency with the General Plan; Location and distribution of land uses, including the amount of each type and the development densities and intensities; Development standards and guidelines for each land use; Transportation circulation, other infrastructure, and public facilities to support the planned level of development; and Implementation strategies, including financing of infrastructure.

3 PAGE SUBJECT: NORTH 40 SPECIFIC PLAN /GP /Z /EIR Once a Specific Plan is adopted, development applications for the area are reviewed by the municipality for consistency with the Specific Plan as well as other governing land use documents in the community. North 40 Specific Plan Process Overview The North 40 is approximately 44 acres in size and is a key gateway to the Town of Los Gatos. The area is bounded by State Route (Highway) 17 to the west, State Route ( Highway) 85 to the north, Los Gatos Boulevard to the east, and Lark Avenue to the south. A draft Specific Plan for this area was written in 1999, but was not adopted. In 2010, the Los Gatos Town Council adopted an updated General Plan, called the 2020 General Plan. It required the preparation of a Specific Plan for the North 40 and included goals, policies, general guidelines, and implementation strategies to inform the preparation of the Specific Plan. In 2011, the Town Council appointed the North 40 Advisory Committee consisting of Town Council, Planning Commission, and other community representatives to provide direction on the preparation of the North 40 Specific Plan, consistent with the General Plan. The Committee participated in over 17 meetings over a two year period. Public participation also occurred at the Committee meetings and through two community workshops, an on -line survey, and three Town Council / Planning Commission study sessions. In addition, a dedicated North 40 webpage contains all of the Advisory Committee summaries, draft documents, and other materials for public access. On March 5, 2012, the Town Council adopted the following Vision statement and Guiding Principles to inform the preparation of the Specific Plan and the Advisory Committee' s work: Vision The North 40 reflects the special nature of our hometown. It celebrates our history, agricultural heritage, hillside views, and small town character. The North 40 is seamlessly woven into the fabric of our community, complementing other Los Gatos residential and business neighborhoods. It is respectful of precious community resources and offers unique attributes that enrich the quality of life of all of our residents. Guiding Principles to Achieve this Vision The North 40 will look and feel like Los Gatos. The North 40 will embrace hillside views, trees and open space. The North 40 will address the Town' s residential and/or commercial unmet needs. The North 40 will minimize or mitigate impacts on town infrastructure, schools, and other community services. The Specific Plan contemplates up to 364 housing units and up to 580,000 square feet of nonresidential uses. Of the non - residential uses, maximums for specific uses are:

4 PAGE 4 SUBJECT: NORTH 40 SPECIFIC PLAN /GP /Z /EIR , 000 square feet of office/hotel; and 400,000 square feet of other commercial ( such as retail, restaurants, specialty market, health clubs, personal service, and entertainment). Open space is an important component of the North 40 Specific Plan. At least 30% of the area approximately acres) is required to be open space in the form of green spaces and plazas, integrated throughout the Plan area. An overview of the Specific Plan is contained in the staff report to the Planning Commission for its meeting of July 23, 2014 (Attachment 4). After reviewing and commenting on the October 2013 Screencheck Draft of the North 40 Specific Plan, the Advisory Committee concluded its work on October 15, 2013 and it was dissolved ( see Attachment 4, Exhibit 10 for the notes of this meeting). The Committee did not formally recommend the Specific Plan; however, it did identify specific next steps: Staff should provide language on phasing to the Planning Commission that meets the Vision Statement. Staff should identify any " ripple" effects of phasing. Staff should communicate with the school districts on student generation rates. The Planning Commission should be provided information on the impacts of the number of residential units, including a traffic study. These and other topics are addressed in the Planning Commission staff report, addendum, and desk items (Attachments 4-8). DISCUSSION: Planning Commission Recommendations On July 23, 2014, the Planning Commission conducted a public hearing on the Draft North 40 Specific Plan, its Final Environmental Impact Report ( FEIR), and other related items. The Commission heard testimony from 25 individuals and closed the public portion of the public hearing. Due to the lateness of the hour, the Commission continued the entire item to its regularly scheduled meeting of August 13, 2014, including the opportunity for the applicant (i.e., the Town) to respond to the testimony and answer Commission questions. In addition, the Planning Commission identified specific issues for staff review to facilitate the Commission' s deliberation on the North 40. The issues were Transportation/ Traffic, Residential, Retail, Height, Schools, Historic Resources, Alternatives, Environmental Impact Report, Utilities, and General. The Planning Commission staff report (Attachment 7) responds to these issues by topic area and also responds to public comments and questions that were not specifically identified in the Commission' s requests. The information contained in Attachment 7 was coordinated with the Town Attorney, Parks and Public Works Department, and Economic Vitality staff.

5 PAGE 5 SUBJECT: NORTH 40 SPECIFIC PLAN /GP /Z / EIR On August 13, 2014, the Planning Commission completed its work on the North 40 Specific Plan and Environmental Impact Report ( EIR). They unanimously passed two motions ( , Burch recused) as summarized in Attachment 11 and restated below: A. Recommend that the Town Council consider the North 40 Specific Plan in light of the specific recommendations and possible amendments to the Specific Plan accordingly ( see Attachment 18 for detailed recommendations), and B. Forward the Final Environmental Impact Report to the TC without certification for the reasons that the PC cannot make the overriding considerations and due to specific deficiencies in the EIR related to traffic and urban decay: Update the traffic analysis to include the new development capacity identified in the recently released Notice of Preparation for the Dell Avenue Area Plan. Update the traffic analysis to study the effects of full interchanges at Winchester and Highway 85, and Bascom and Highway 85. Analyze the reduction in traffic impacts with a reduction in the overall development capacity of the Specific Plan. Address the concern that the expert traffic opinion is inconsistent with the perception and " hard facts of experience of Los Gatos traffic." Complete additional analysis on alternative circulation plans. Convene a focus group to identify mechanisms ( other than the CUP process) to ensure that the North 40 complements and does not compete with Downtown Los Gatos. Consider additional controls to protect Downtown. In addition, the Planning Commission Chair acknowledged the value of all of the public comments that the Commission received in testimony and in writing. She recognized the important work completed by the citizens and she encouraged the Council to review all public comments. The letters are included in Attachment 4 ( Exhibits 12 and 13), Attachment 5 ( Exhibit 17), Attachment 6 ( Exhibit 18), Attachment 7 ( Exhibits 23 and 24), and Attachment 8 ( Exhibit 29). Verbatim minutes of the public testimony provided on July 23, 2014 can be found in Attachment 7 ( Exhibit 22).

6 PAGE 6 SUBJECT: NORTH 40 SPECIFIC PLAN /GP /Z- 14- OOI/ EIR Policy Issues This report discusses the recommendations of the Planning Commission and provides additional information to assist the Town Council with its deliberations on the North 40 Specific Plan and Final Environmental Impact Report. Many of the Commission' s detailed recommendations have been consolidated in Attachment 18 as proposed text modifications to the Specific Plan. While some of the detailed recommendations have policy implications, there are five larger policy considerations that need further clarification and direction from the Town Council. These items include traffic, development capacity and density, building heights, and Conditional Use Permits and economic vitality. Although the Planning Commission did not focus on phasing, staff understands that this may be an issue of interest to the Council and it is also included in this report. The Council may wish to consider these and other issues in the context of the Vision and Guiding Principles adopted by the Town Council on March 5, 2012 for the North 40 mentioned on page three of this report. As the Council makes decisions on these individual items, staff will be tracking how those decisions may have implications for text revisions to the Specific Plan and related documents. Tra c The Planning Commission expressed concern about the overall traffic impacts to the community with development of the North 40 Specific Plan. This concern was also voiced in public testimony. The Commission recommended that one or more additional studies be completed to provide the Town with supplemental information to guide its decision on the North 40 Specific Plan. General estimates of the cost and time to prepare each traffic analysis are provided below. These costs do not include the costs of revising the Environmental Impact Report ( EIR), recirculating it for another 45 -day public comment period, and holding a new Planning Commission hearing. TRAFFIC ANALYSIS ESTIMATED ESTIMATED COST TIME Update the traffic analysis to include the new development capacity identified in the recently 15, 000 Nine Weeks released Notice of Preparation for the Dell Avenue Area Plan. Update the traffic analysis to study the effects of full interchanges at Winchester and Highway 85, and 20, 000 Eleven Weeks Bascom and Highway 85. Analyze the reduction in traffic impacts with a reduction in the overall development capacity of the 20,000 Seven Weeks Specific Plan ( e. g., 25% reduction for all land uses).

7 PAGE 7 SUBJECT: NORTH 40 SPECIFIC PLAN /GP /Z / EIR The Council may choose to direct one or more of the above studies; however, for purposes of compliance with the California Environmental Quality Act ( CEQA), no additional traffic analysis is required. Attachment 13 contains a memorandum from the Town Attorney regarding the Dell Avenue Area Plan and explains that the cumulative traffic analysis contained in the North 40 EIR was prepared following CEQA Guidelines and recent case law. - The Council may choose to reduce the development capacity of the Specific Plan without an additional traffic study because the EIR includes a No Project Alternative and a Reduced Scale Alternative in addition to the proposed Specific Plan. The analysis contained in these alternatives brackets the potential impacts of a 25% reduction alternative. Should the Council direct one or more of the studies, this information would be available in a revised EIR and the public would have the ability to comment on the revised document. The Specific Plan and its revised EIR would be the subject of new hearings before the Planning Commission and Town Council. Development Capacity and Density While the Planning Commission did not have a specific recommendation for a reduced development capacity, they did recommend that the Town Council consider lower densities for both residential and non - residential uses. The Specific Plan currently proposes up to 364 housing units and up to 580,000 square feet of non - residential uses. The EIR provides environmental clearance for a Reduced Scale Alternative with a 25% reduction in the amount of non - residential uses ( up to 435, 000 square feet total). Similarly, clearance is also provided for a reduced amount of housing down to the existing number of homes on the North 40. Reductions in development capacity would create a corresponding reduction in traffic impacts; however, significant and unavoidable impacts would still occur. If the Council would like consider reduced development in the North 40, the Council should indicate the specific amount of each land use. This information is necessary to verify environmental clearance and to make any needed changes to the Specific Plan and associated documents. The Guiding Principles for the Specific Plan reference meeting the Town' s " unmet needs" for housing and commercial development while having the " look and feel of Los Gatos." The Plan focuses on providing housing opportunities for first time homebuyers, " empty nesters," and seniors based on the demographic trends and the existing housing mix in Los Gatos. A reduction in housing capacity and density may prompt the development community to propose more typical single - family detached housing that would encourage families to move to North 40 and therefore increase the number of students at local schools. Likewise, a reduction in nonresidential capacity may result in more segregated land uses and typical, auto - oriented shopping centers. Another way to consider reduced development capacity is to retain the housing types and design parameters while translating the reduced capacity into an increase in the open space

8 PAGE 8 SUBJECT: NORTH 40 SPECIFIC PLAN /GP /Z / EIR requirements. The development community would likely comment that these changes could affect the financial feasibility of construction and they may not be able to build under those parameters. Buildine Heights After hearing public testimony regarding building heights, individual Planning Commissioners offered several approaches to addressing heights in the North 40. Some of the recommendations are included in Attachment 18 with specific text revisions to the Specific Plan. Another recommendation was to set a 35 -foot building height limit as the " rule" and to make it very difficult to obtain an exception; the Town Council would be the deciding body for all height exceptions. As drafted, Appendix E of the Specific Plan ( Attachment 3) currently specifies the deciding body for height exceptions ( and many other discretionary Planning approvals) as the Planning Commission. A third height recommendation was to consider a process to rescind a height exception after a Conditional Use Permit (CUP) has been granted. Although there was not much discussion about the specific reasoning behind the recommendation, staff understood that this was intended to ensure that any height exception did not run with the land. For example, if one development received a CUP approval for a height exception and many years later, a replacement project was proposed, then a new CUP would be required so the deciding body at that time could determine if increased heights were still appropriate. Conditional Use Permits and Economic Vitalitv The Planning Commission discussed the importance of a vital and vibrant Downtown in Los Gatos while creating appropriate non - residential development opportunities in the North 40 area. The Commission was particularly interested in making sure that Downtown had the appropriate protections from competitive uses in the North 40. These comments reflect back on the Council adopted Guiding Principles for the North 40 to provide for the Town' s unmet needs. As discussed in the staff report to the Planning Commission for August 13, 2014 ( Attachment 7), several uses, such as general merchandise retail, are not currently provided in Los Gatos, resulting in residents shopping in neighboring communities. Another concern was that the Conditional Use Permit requirements for certain uses in Downtown may discourage tenants from Downtown and instead attract them to the North 40. In public testimony, the Commissioners also heard that the North 40 would have abundant parking compared to Downtown, further discouraging investment Downtown. In response, some Commissioners thought that all uses in the North 40 should obtain a CUP to " provide equity and fairness" with Downtown. One Commissioner suggested that specific criteria be developed to determine when a CUP would be required. One criterion could be " equity and fairness" with Downtown, while other criteria might include, but not be limited to, uses that may generate potentially disruptive behaviors ( e. g., alcoholic beverage consumption) and uses that result in large assemblies of people.

9 PAGE 9 SUBJECT: NORTH 40 SPECIFIC PLAN /GP /Z /EIR As the Council considers these recommendations, staff suggests that the Council review Tables 2-1 on pages 2-7 through 2-9 for the uses for which a CUP is proposed to be required and Appendix E for the Discretionary Approvals (Attachment 3) Finally, the Commission recommended convening a focus group to identify mechanisms ( other than the CUP process) to ensure that the North 40 complements and does not compete with Downtown Los Gatos. This could occur after the Specific Plan is adopted and when a specific development application is on file with the Town. This would allow the prospective North 40 developer the opportunity to respond specifically to concerns and/ or prepare additional analyses. The Town anticipates an ongoing dialogue with the business community throughout the implementation of the Specific Plan. Phasing Although the Planning Commission did not have a specific recommendation regarding phasing, this issue was raised by the Advisory Committee who requested that " staff should provide language on phasing to the Planning Commission that meets the Vision Statement." This was done in the staff report to Planning Commission for its July 23, 2014 meeting ( Attachment 4). The Council may wish to discuss and provide direction on this issue. ENVIRONMENTAL ASSESSMENT: An Environmental Impact Report has been prepared pursuant to the California Environmental Quality Act. The Planning Commission did not recommend the certification of the EIR because they found that the traffic and urban decay analyses to be deficient. Specifically, they requested additional traffic analyses as discussed above, alternative circulation plans, and a reconciliation of expert traffic opinion with the " hard facts of experience of Los Gatos traffic." In terms of urban decay concerns, the Commission requested additional assurances that development in the North 40 would not have a negative effect on downtown. This topic is addressed above in the section of Conditional Use Permits and Economic Vitality. It is staffs opinion that the EIR analysis is complete, legally adequate, and compliant with CEQA and that the Council may direct additional policy protections for Downtown as part of the Specific Plan rather than the EIR. CONCLUSION: At its hearing on September 2, 2014, the Town Council should take public testimony and begin its deliberations on the Specific Plan, its EIR, and associated General Plan amendments and Zoning Code amendment. Town staff from multiple Departments and consultants will be at the meeting to answer questions and assist the Council as appropriate. Draft resolutions have been provided as a basic framework for Council consideration. The Council may wish to include additional facts and findings to reflect its deliberations and decision( s). Once the Town has an adopted Specific Plan, the Town can continue its review of a pending application for a portion of the North 40.

10 PAGE 10 SUBJECT: NORTH 40 SPECIFIC PLAN /GP /Z /EIR Attachments ( Previously received on April 4, 2014) 1. Draft Environmental hnpact Report ( htty : / / Attachments ( Previously received on Julv Final Environmental Impact Report with the Mitigation Monitoring and Reporting Program h!w:// 3. Public Hearing Draft North Forty Specific Plan ( Note: The complete Specific Plan including appendices is also available online at: htty : / / Attachments (Previously received on August ): 4. Report to the Planning Commission for the meeting of July 23, 2014 (excluding Exhibits 5 & 6) 5. Desk Item Report to the Planning Commission for the meeting of July 23, Desk Item 2 Report to the Planning Commission for the meeting of July 23, Report to the Planning Commission for the meeting of August 13, Desk Item 3 Report to the Planning Commission for the meeting of August 13, 2014 Attachments received with this report: 9. Verbatim minutes from the August 13, 2014 Planning Commission meeting ( 141 transcribed pages) 10. Public Comment received through 11: 00 a.m. Thursday, August 28, Detailed Planning Commission recommendations on the North Forty Specific Plan from their August 13, 2014 meeting (six pages) 12. Draft findings (one page) 13. Memorandum from the Town Attorney (four pages) 14. Draft Resolution certifying the Environmental Impact Report ( EIR ), adopting the Mitigation Monitoring and Reporting Program, and adopting the Findings of Fact and Statement of Overriding Considerations, including Exhibit A. 15. Draft Resolution for the adoption of the North Forty Specific Plan 16. Draft Resolution adopting General Plan Amendments of the Town' s General Plan ( GP ), including Exhibit A. 17. Draft Ordinance effecting a Zoning Code Amendment of the Town Code ( Z ), including Exhibit A. 18. Planning Commission Recommendations for Text Changes to the North 40 Specific Plan four pages) Distribution cc: Grosvenor Americas, Attn: Steve O' Connell, 1 California St, Ste. 2500, San Francisco CA Summerhill Homes, Attn: Wendi E. Baker, 3000 Executive Pkwy, Ste. 450, San Ramon CA LRP:JSP: cg