San Ramon staff, consultants and planning commission debate removing cap on non-retail uses in shopping centers

San Ramon city staff and a consultant presented a study and public testimony on Feb. 11 weighing whether to raise or eliminate the city’s 25% cap on non-retail uses in neighborhood and community shopping centers.

The discussion urged the City Council to decide whether the cap — part of the zoning ordinance since incorporation and carried into the 2040 General Plan implementation work — should be increased (the consultant modeled 35% and 45% scenarios) or removed entirely.

Why it matters: The cap limits how much ground-floor space in a shopping center can be occupied by uses the city classifies as “non-retail” (medical offices, fitness clubs, tutoring, personal services and similar uses). Supporters of change say the rule makes centers harder to lease as national retail chains shrink, while opponents said loosening the rule risks losing retail that generates sales tax and services residents want locally.

Roger Dale, managing principal of the Nalsendale Group, told the council the consultant team modeled likely changes in vacancy, tenant mix and sales tax under scenarios raising the cap to 35% or 45%. He said shopping centers account for about 29% of the city’s taxable sales; the remaining 71% comes from business-to-business transactions and freestanding retail. Based on HDL and Placer.ai data used in the model, the consultant estimated a modest change in citywide sales tax: roughly a $335,000 reduction under one scenario (about a 3% reduction of total sales tax tied to shopping centers on the consultant’s assumptions) but noted that filling otherwise vacant space with non-retail uses can improve overall center performance and that some non-retail uses generate taxable sales rather than zero.

City planning staff said the Planning Commission, after several meetings and hearing the consultant’s results, recommended eliminating the cap entirely so centers could respond to shifting market conditions and reduce the need for time-consuming discretionary use permits to place otherwise-permitted tenants. Staff noted that many smaller centers already exceed the 25% threshold through discretionary approvals and that the use-permit process places an application cost and weeks-long delay on prospective tenants.

Council questions focused on the data and outreach. Vice Mayor Barros asked whether small-business owners and the Chamber of Commerce had been interviewed; Dale and staff said interviews were held primarily with shopping-center owners and managers and that the Chamber and a representative sample of small businesses were not included in the consultant interviews. Council members asked for additional modeling points and suggested the city add small-business outreach and Chamber input before any final ordinance change. Several council members also asked the consultant to model higher thresholds and a full-removal scenario so the council could compare outcomes.

Public testimony included comments from Byron De Arichel Ramon, a shopping-center owner/operator, who supported removing the cap and said flexible tenant mixes help older centers remain competitive and stable.

What the council is being asked to do: staff asked for direction on how to draft zoning-ordinance edits implementing either a new percentage or removal of the section that imposes the limit. Staff said any ordinance amendment would return to the Planning Commission for formal recommendation and then to the City Council for adoption.

Next steps: Council members requested additional analysis before drafting ordinance language: (1) add a model run showing the effects of removing the cap entirely (in addition to the 35% and 45% scenarios already studied), (2) coordinate targeted outreach to small-business owners (the Chamber was suggested as a partner) and (3) provide summary comparisons where possible to other jurisdictions (staff cautioned no directly comparable Bay Area city was known and that this arm of work could expand the consultant scope). Staff said it would return with the additional modeling and outreach results in advance of a formal zoning-text amendment.

Ending: The council did not vote on a change on Feb. 11; the item remains before the council as staff prepares additional modeling and outreach per council direction.