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AGFUO - Public comments submitted for the June 1, 2021, City Council Meeting Page 2 of 3 'i■ &PU v DOWNTOWN ASSOCIATION proposed mixed-active/non-active-use, and 2) avoiding unreasonably onerous regulation of existing historic and/or purpose-built non -active -use buildings. 1) "SUBSTANTIVE ACTIVE USE" BUSINESS PURPOSE Whether adopted as new legislation or confirmed as guidance from Council to the Planning Commission and City Staff, we believe there are hallmarks of Substantive Active Use that are not manifest in the AGFUO approval process today. These include whether the applicant has committed to keeping regular business hours (rather than by appointment only), providing a point-of-sale transaction system, fielding floor staff, posting prominent business signage with hours of operation, and creating a separate legal entity and holding a separate business license for the active and non-active business operations. Requiring a fully independent entity and license is critical to engaging the ordinary strictures against non -economic enterprises under federal and state tax law. Otherwise, the active use becomes an attractive tax loss opportunity for the non-active use, regardless of possibly negative economic value to Main Street. It is worthy of discussion whether 25% of total space is a sufficient set-aside for the active use to ensure all mixed-use proposals are bona fide. In a very large building, it certainly could be. In a smaller space perhaps not. A percentage of 50% or more, or a minimum square footage and facing -depth combination might be attractive. We trust your considered judgment. 2) PROTECTION FOR HISTORIC/DEDICATED CONSTRUCTION PDA recognizes that our concerns above can be taken too far. If the requirements of the AGFUO are too onerous, landlords are encouraged if not forced into availing the six-month waiting period to bypass active -use and convert to placing a non-active tenant. This could lead to lengthy pro -cyclical vacancies and serious depressive effects. Lengthy vacancies are as bad or worse than conversion to non-active uses. For example, if the prerequisite for a conforming mixed-active/non-artiva-rise requires building a permanent floor -to -ceiling wall between the two operations, the cost of such upfitting (construction, HVAC, etc.) may prevent a sensible mixed use that could be conducted successfully on either side of a solid, 7 -foot -tall, partition. Likewise, the damage of retrofitting an historic building with a wall rather than a partition could have serious unintended consequences. 333 Division Street Pleasanton, CA 94566 (925)484-2199 Distributed to City Council for the September 7, 2021, meeting Page 8