City staff and a retail broker led a study session on Oct. 29 to pursue a permanent retail revitalization ordinance that would replace an interim ordinance adopted in December 2024. Jean Eisberg, planning staff, outlined proposed changes to zoning definitions, size thresholds, the permitting process and ground-floor retail rules, and said staff sought commission guidance to prepare an ordinance for council review.

Staff proposed several categories of change: simplify overlapping use tables and combining districts, expand the definition of "retail-like" uses to allow more uses typically excluded under older zoning (examples discussed included takeout-only food businesses, medical retail or medical spas, fitness studios), raise certain size thresholds (such as fitness centers), and make the conditional-use/administrative permitting process easier to understand for prospective retailers. Eisberg also flagged parking rules as a barrier to some change-of-use applications and suggested larger shared-parking reductions and use of state parking exemptions near transit.

Christine Firstenberg, a retail broker advising the project, told commissioners the code is "very, very dense" and that simplifying rules would help brokers and retailers evaluate sites quickly. Firstenberg also said a factor limiting leasing is the size of many available spaces in Palo Alto (the meeting reference data showed a median available space around 3,460 square feet), and that expanding permitted "retail-like" uses — which include fitness, medical/spa and other large-footprint tenants — would help lease those larger spaces.

Commissioners debated several detailed points. On animal care, members asked whether the code should separate daytime services (grooming, short-term care) from overnight kennels and whether objective limits for noise, waste and odor should be added. On medical-related uses they asked staff to produce a narrower "medical retail" or "medical personal services" definition (staff proposed a 35-square-foot street-facing display threshold for some medical-office uses). On formula retail the commission noted the current definition applies only to California Avenue and discussed whether to keep a stricter rule there to preserve small local character.

The retail preservation ordinance (RPO) drew sustained comment. Staff proposed options including narrowing the RPO's applicability, reducing or waiving the 1:1 square-foot replacement requirement in some contexts, or replacing the citywide replacement approach with a node-based requirement that mandates ground-floor retail only in targeted retail nodes. Commissioners and staff discussed legal complications posed by state housing laws (including density bonus provisions and SB 79) and the practical challenge that some housing projects may claim concessions; staff said those statutory interactions would need careful treatment.

On process and administration, staff recommended renaming or clarifying the perceived "conditional use permit" burden (which can deter prospective tenants) and making objective criteria available for director-level reviews to reduce uncertainty for developers and small businesses.

What happens next: Staff said it would return with draft ordinance language informed by the commission's feedback, run additional technical checks (parking ratios, thresholds), and coordinate public outreach with business stakeholders and the retail committee prior to forwarding recommendations to the City Council.