​​With Palo Alto's retail scene still in flux because of changing work and shopping habits, the city is advancing a new study that will set the stage for revising zoning and parking policies in key commercial areas.

The aim is to help Palo Alto "modernize its regulations and ensure vibrant commercial areas," according to a report from the Department of Planning and Development Services. This will include developing a retail recovery ordinance, reviewing existing retail-preservation policies and regulatory standards for conditional use thresholds, the report states.

"The goal is to retain, strengthen and facilitate retail in the key commercial areas of Palo Alto," Dan Wery, senior associate with Michael Baker International, the firm performing the study, told the Planning and Transportation Commission during an Oct. 25 discussion of the study.

The Michael Baker analysis has a somewhat narrower scope than the analysis that was recently completed by Streetsense, which took a broader view at local policies on commercial and residential development, changing work habits and the impact of these trends on local retailers.

The City Council adopted the Comprehensive Economic Development Strategy that was crafted by Streetsense and HdL Companies earlier this year.

The Michael Baker report will, among other things, help inform the city's review of its retail-protection ordinance, which prohibits replacement of ground-floor retail with other types of uses, according to staff. It will also examine the impacts of Assembly Bill 2097, a new law that eliminates parking requirements for residential and commercial projects near transit stations. Both University and California avenues are close to Caltrain stations and, as such, can expect to see projects advance without parking requirements.

Consultants from Michael Baker will look at how many parking spaces the two commercial districts currently have, the parking demand from existing businesses and the potential impact of the new bill.

"The study will focus on what that threshold would be. At what time does the city need to intervene and implement certain parking strategies or (transportation demand management) strategies?" said Surabhi Barbhaya, urban planner with Michael Baker International.

The study will also compare local policies — including restrictions on formula retail and the retail-protection ordinance — to those in other cities, including Mountain View, Redwood City and Santa Monica, according to the consultants. Consultants plan to interview officials from these cities as well as local business owners and other stakeholders before issuing their report next spring.

In discussing the new study at its Oct. 25 meeting, members of the city's Planning and Transportation Commission urged the consultants to also include Los Altos in its comparative analysis.

"They have many kinds of independent local retail — clothing stores, thrift shops, toy stores, a sewing store — that are less and less common in Palo Alto, but they seemingly have been able to preserve them," Lu said.

While broad trends like online shopping and remote work are often seen as main drivers of retail struggles, planning commissioners noted that numerous brick-and-mortar stores have recently left Palo Alto for other reasons. They asked the consultants to explore some of the reasons for why these businesses departed.

"Of course, there's great concern about change in the retail environment because of online sales for example, but we do know of a number of instances of businesses that relocated out of Palo Alto and are still doing well," Commissioner Allen Akin said.

Akin gave as an example University Art, which left its prominent Ramona Street location in 2013 and moved to Redwood City. The Dragon Theatre made the same move in the same year, though it recently closed its Redwood City theater and is now in San Jose. Other commissioners pointed to former Palo Alto establishments Shady Lane (now in Menlo Park) and Paperwhirl (now Los Altos).

"It's kind of sad when we're seeing our businesses leaving that are successful elsewhere, and close by," Commission Chair Doria Summa said.

The Michael Baker study is part of a broader effort in Palo Alto to come up with a new vision for its commercial areas.

In addition to the recently completed Streetsense report, the city is also pursuing separate planning efforts for University Avenue and California Avenue. The council's next big decision on this topic will come on Nov. 6, when it considers whether to reopen California Avenue to cars — an option favored by numerous California Avenue retailers but opposed by most restaurants.

The council will also consider approving a $384,990 contract with the firm Urban Field to develop a set of alternatives for California Avenue, which has been car-free since the early days of the pandemic. That effort is expected to take about a year, according to a report from Chief Transportation Officer Philip Kamhi.

Staff is recommending that California Avenue remain car-free for another year, while the study is in progress. The street is currently authorized to only be closed to cars until the end of this year.