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EDC 08-20-97 City of Cupertino Economic Development Committee Regular Meeting August 20,1997 1. CALL TO ORDER At 7:40 a.m. Carol Atwood called the meeting to order in Conference Room C & D of Cupertino City Hall, 10300 Torre Avenue, Cupertino. 2. ROLL CALL City Staff: Carol Atwood, Bob Cowan, Steve Dowling, Dorothy Steenfott, Bert Viskovich Chamber of Commerce: Tom Hall, Donna Lawler, George Steele, John Statton City Council: Lauralee Sorensen Absent: John Bautista, Don Brown Guests: Alan Billingsley, Sedway Kotin Mouchly Group; Alex Byer, Byer Properties; David Doyle, Cupertino Planning Commission; Sandra James, Cupertino Parks and Recreation Commission; Frank Jelinch, Cupertino Parks and Recreation Commission; Colin Jung, Cupertino Planning Department; Pam Marino, Cupertino Courier; Dave Taxin, Meacham/Oppenheimer, Inc. 3. NEW BUSINESS A. Review of Sed way Report Bob Cowan summarized the "big picture" regarding retail capacity as to I) where our retail is located and 2) how much more square footage potential is available. According to the General Plan, the City still has 446,240 square feet to allocate plus approximately 550,000 square feet for Valleo. Bob described two maps which identified the degree to which retail property is developed based upon the .25 floor area ratio bench mark. The floor area ratio map indicated that, with the exception of uses that typically have low floor area ratios such as restaurants, auto dealerships, nurseries, etc., most of the properties that are zoned retail are fully developed. The second map indicated how much actual growth could be allowed on those properties that are built less than the .25 floor area ratio. The map contained notes which identified a rough estimate of how much growth could occur on large properties not fully developed. The total amount of square footage amounted to approximately 140,000 square feet which included a 31,000 square foot expansion of Target as well as approximately 25,000 square feet that could be added to the Oaks and Cupertino Village Shopping Centers should all the restaurant space be converted to general retail space. Bob indicated that the Sedway report showed a need (based on demographics) of approximately 115,000 square feet of new convenience store space. The Sedway information and the physical constraint maps/data indicate that there may not be adequate space or demand to accommodate the 446,000 square feet of retail space that is within the general plan retail pool. Bob indicated that the .25 benchmark might be increased to .28 or .30 in recognition of the reduced parking requirement. In that case, the 140,000 square feet may be increased to 170,000 square feet. Alan Billingsley, Sedway Group, reviewed the analysis prepared by his firm. He stated that we are drawing heavily from Saratoga and San Jose. The analysis showed that Cupertino is strong in comparison goods shopping, such as Vallco, Mervyns and Target. The City is weak in the area of auto dealers, convenience shopping (food and drug stores), building materials and home furnishings. August 20.1997 Economic Development Committee Page 2 During the last five years, Santa Clara County has added many retail stores and Cupertino would be competing with neighboring jurisdictions that have "big box" retail. Alan stated that it is impossible to capture retail business without sites. Looking at what Cupertino's retail is primarily located on Stevens Creek and De Anza Boulevard. Demand has greatly diminished for small size parcels. Alan stated that the analysis shows that 55% of Cupertino's retail is healthy, 15% is average, and 30% is poor (investor is just letting the property decline). In addition to this large percentage of old, marginally operated retail sites, Valleo is a major concern. He felt that Cupertino is fairly built out as to retail and therefore would not need to allocate an additional 446,000 square feet. This current recommendation differs from that in 1990 due to: 1) a shift away from "big box" retail, 2) Cupertino's demographics have changed dramatically and 3) we are dealing with a more competitive market today. Dave Taxin, Oppenheimer, Inc., stated that he felt there would be interest in a larger site on Stevens Creek Boulevard for companies such as Frys Electronics, IKEA, Tower Records, or Good Guys. Alex Byer, Byer Properties, stated that our whole industry is going towards entertainment oriented complexes. He also stated that if you revitalize Vallco with an entertainment oriented theme, the large retailers will come. Alex Byer, Alan Billingsley and Dave Taxin all felt that redevelopment will be the key to change Cupertino's existing problem. Developers would need a minimum of three acres, although 10 acres would be ideal if well located. Most current owners have no incentive to redevelop because their land is paid off and they are getting a sufficient cash flow from the property. All felt it was possible that these smaller sites may be rezoned to residential or office in the future or a mix (apartments on top, retail on the bottom). Carol Atwood summarized the discussion with the following: 1. Vallco is the key. The City needs to put energy and effort into revitalizing the center now. A different niche from Valley Fair or Stanford should be found, such as family oriented entertainment. Additional anchors are needed; there is approximately 550,000 additional square feet available. 2. Approximately 45% ofthe City's existing retail centers need to be revitalized. Need to determine what incentives are needed for property owners to take action to revitalize. Money hasn't been the answer; many owners have held the property for many years and do not want any debt. 3. It would take approximately a 10 acre site with a good location to bring large retailers into the City. Cupertino needs to look at each site and decide what it wants for each retail site. 4. Landscaping is still a problem for some sites. August 20, 1997 Economic Development Committee Page 3 5. Entertainment is the current trend for the mall experience. Because there is more Internet and on-line sales, cities need to give people a reason to come to malls. 6. Employees working in Cupertino have contributed to the success of many of our retail strip shopping centers for many years. 7. Recommendations: . Concentrate our efforts on revitalizing Vallco and making it a major center that people want to visit. . Let Tandem build their campus. The Tandem site will only allow for approximately 120,000 square feet for any retail center. . Decide what sites can be built out and/or be redeveloped and how much square footage this will mean for retail business. Provide incentives to encourage owners of declining small centers to redevelop with neighboring retail centers. . Look at land planning efforts and point of sale efforts for Internet now. 4. MISCELLANEOUS COMMITTEE UPDATES Carol Atwood distributed pictures of the Macy's Clearance Center and reported that the City will be meeting with a redevelopment consultant to discuss options for revitalizing Vallco. 5. ADJOURNMENT The meeting was adjourned at 9:39 a.m.