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8.A. - Page 14 of 56 <br />Recommendation: <br />1) The City Council should consider not allowing banks and financial service uses on key retail <br />corners within the downtown core or where active ground floor uses are required. <br />2) An alternative is to require a conditional use permit for banks that wish to locate on key <br />retail corners or where active ground floor uses are required. <br />(See Attachment A for Downtown Precise Plan Map Showing Active Ground Floor Use <br />Overlay.) <br />3. Consider encouraging Downtown property owners to notify the City when retail spaces <br />become vacant so that City staff can assist with finding appropriate uses for the site. (Task <br />Force recommendation) <br />Analysis: Many cities are concerned about the amount of vacant retail space in their cities and <br />downtowns. The problem is prevalent in both large urban cities and smaller communities. There <br />are many reasons why retail space remains vacant. Often older buildings need retrofitting for <br />code improvements or a potential retail tenant requires a large tenant improvement allowance <br />and the property owner does not have the funds to assist with these changes. Other reasons for <br />long-term vacancies are due to particular retail spaces not meeting the space requirements of <br />prospective retail tenants. An example is an older retail space that is too deep (100 feet) which <br />is not desirable to retailers currently in the market. If the retail market is active, obsolete space <br />can get leased to independent store tenants, but as markets shift and change, the vacant space <br />will take longer to lease. Even retail space in new mixed use developments can be difficult to <br />lease when it is not designed to meet the needs of retail tenants currently in the market. As a <br />result, the space remains vacant for a long period of time. <br />Oakland, San Francisco and San Jose have a large number of newer mixed-use projects and older <br />buildings with vacant ground floor retail space.' These cities have recently approved ordinances <br />to address the vacancy problem that include financial penalties and other code compliance <br />regulations but it is too early to determine how effective these policies are. <br />Below are examples of solutions adopted by other cities to address the problem of long-term <br />vacant buildings: <br />• Grants or low interest loans could be made available to fund improvements to assist <br />property owners with vacant space in older buildings that require earthquake retrofitting, <br />code upgrades or fagade improvements. If the property owners find retail tenants, loans <br />could be "forgiven" based on the duration of the retail tenancy. (A potential source of <br />funding for these programs might be the Redwood City Improvement Association property <br />based assessment funds.) <br />• Some cities are using a vacant property registry that requires property owners to notify the <br />City of vacant commercial storefronts; the registration can include a database with building <br />' City-wide retail vacancy rates for Oakland and San Francisco as of second quarter 2019 are 11.6% and 3.6% <br />respectively. Vacancy rates for the same period for San Jose/Santa Clara County is 3.6%. (Source: Cushman and <br />Wakefield). Vacancy rate for San Jose alone is not available as it is quoted for the metro area. (Source: Kidder - <br />Matthews) <br />0 <br />234 <br />