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Pleasanton council finalizes rezoning for proposed Costco site

Referendum proponents have until next week to collect signatures for pending petition

The Pleasanton City Council on Tuesday completed the process of creating a new economic development zone on Johnson Drive near the I-580/I-680 interchange that city leaders hope will become home to Pleasanton’s newest commercial center anchored by Costco, two hotels and other businesses.

With their 4-0 vote, council members formally adopted an ordinance approving a planned unit development (PUD) rezoning of the 40-acre site, a plan that includes strict design guidelines that could help expedite city review of future projects in the marquee area.

The final approval step occurred with little fanfare -- for a proposal at the center of a ballot initiative in 2016 and currently the target of another referendum petition seeking to overturn earlier council approvals of the project.

About a dozen residents were in attendance, including Costco representatives, but no one spoke to the council on the proposal Tuesday night at the Pleasanton Civic Center. Council members didn’t even talk about it, approving the ordinance without discussion as part of the vote on their consent calendar -- with Mayor Jerry Thorne abstaining.

The council members gave initial support to the rezoning plan for the proposed Johnson Drive Economic Development Zone (JDEDZ) last month, introducing the new ordinance and scheduling it for a second reading and final approval this week.

Their 4-0 vote Nov. 7 also included final approval of the JDEDZ environmental impact report, a General Plan amendment to allow new commercial uses at the site and a resolution declaring their intent to adopt a JDEDZ transportation fee some time down the line.

With the rezoning ordinance now adopted, city planning staff could begin accepting applications from JDEDZ developers early next month, according to community development director Gerry Beaudin.

That is unless former City Councilman Matt Sullivan and his citizens coalition, Pleasanton Citizens for Responsible Growth, are successful with their signature-gathering for a referendum petition to overturn the council's JDEDZ approvals from last month.

Sullivan and his group have criticized the city's road infrastructure financing agreement with Costco, city officials' transparency during the public review process and the validity of the JDEDZ's environmental analysis.

The coalition has until next Wednesday (Dec. 13) to collect signatures, 30 days after the city clerk certified the council's approval Nov. 7 of environmental impact report certification and General Plan amendment resolution. City clerk Karen Diaz said she attested those documents Nov. 13.

Signature gatherers would need names of 10% of registered Pleasanton voters -- 4,374 valid signatures -- for a successful referendum petition. If completed and the petition deemed valid, the council would either need to rescind its approvals or send the issue to a citywide vote.

It is unclear how many signatures the group had compiled as of Tuesday night. Sullivan, who served two terms on the council from 2004 to 2012, had not responded to a request for a signature-count update.

If successful, the new petition would be Pleasanton's second ballot measure related to the JDEDZ and new Costco. An earlier citizen-sponsored initiative sought to limit retail stores in the JDEDZ to no more than 50,000 square feet, but it was defeated at the polls in November 2016, 63% to 37%.

The city-initiated JDEDZ proposal details rules for how redevelopment could occur at 12 parcels on Johnson Drive and Commerce Circle near the freeways' interchange, including a nearly 20-acre site left vacant when Clorox closed its research center there. Costco and a hotel developer have stated their intent to build on the former Clorox site now owned by Nearon Enterprises.

On the whole, some of the JDEDZ land is vacant while other areas are in use.

Safeguards are included for those operating in the JDEDZ area now, such as FedEx, AT&T, Black Tie Transportation and Valley Bible Church. Existing land-uses would be permitted to continue as is, protected by grandfathering provisions.

The PUD-commercial zoning approved Tuesday comes with specific rules developers must follow for site design for redevelopment in the zone, covering topics such as vehicular, pedestrian and bicycle circulation, landscaping, architectural standards, lighting, signage, parking, drainage, and outdoor equipment and storage.

It is because the JDEDZ proposal details those design guidelines upfront that city officials support allowing many retail operations, including a potential Costco, to need only staff-level permit approval, rather than consideration during a Planning Commission meeting.

Still pending is final council approval of a financing agreement with Costco to fund more than $21 million in roadwork improvements needed to accommodate the new JDEDZ.

The council endorsed a proposed term sheet with the wholesale retail giant in September, which includes a 60-40 sales tax sharing deal with Costco to cover a portion of the costs.

The final agreement was expected to head to the council Tuesday, but it instead will come forward closer to when Costco is ready to apply for permission to construct its third Tri-Valley warehouse store -- and first in Pleasanton.

"Terms will appear in a financing and infrastructure development agreement when Costco is ready to proceed," city spokeswoman Tracy Dunne said in an interview this week. "It will come back for vote prior to consideration for final Costco project application, date unknown."

One portion of the financing deal would see Costco front the city $6,785,000 in cash for the infrastructure work -- just over a third of the overall design and construction pricetag -- and the city repaying the money with 40% of the sales tax revenue generated by the Costco until the debt is repaid, with the balance subject to 1.5% annual interest.

Any other developer who builds on the JDEDZ in the future would need to pay their proportional share of the infrastructure costs back to the city, and city officials plan to use those funds to pay down their debt to Costco. The council is expected to set the JDEDZ transportation fee early next year.

The other portions of the financing deal, to pay for roadwork design and construction, call for $6.4 million to be paid by city traffic impact fee reserves and $6,785,000 in a separate cash payment from Costco as part of its developer fee package.

Sullivan has condemned this proposal as a "sweetheart deal" that amounts to millions in public subsidies to a multi-billion-dollar company, all to mitigate the impacts of Costco coming to Pleasanton that Costco should pay fully for.

Mayor Thorne has recused himself from the JDEDZ debate after revelations he owned Costco stock in a retirement managed portfolio earlier in the JDEDZ consideration process -- stock he no longer owns.

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