MH Shoe Palace DC Project - Part II

Updated: Jan 13

Shoe Palace - Questions the City Won't Answer


Have you noticed the massive concrete walls going up along Hwy 101 between the Cochrane exit and Main Ave overpass? Many residents are alarmed at just how enormous this new development is. Yes folks, this is the Shoe Palace Expansion project in progress!

In Part I of our Shoe Palace Story we exposed how City of Morgan Hill, without any engagement with residents, without any environmental impact analysis, without any review by the Planning Commission, or having City Council put the project on a legislative agenda for public input, moved forward on approving this half-million square foot Distribution Center with 56 LOADING DOCKS in 2018. Believe it or not, this was authorized by just one person on the planning staff! Consequently, Morgan Hill citizens only found out about it once they saw dirt being moved and dust flying on the massive construction site.

Morgan Hill Responsible Growth Coalition has been asking questions about this project since July 2019. After getting radio silence from the Planning Department, we filed a Public Records Request for information related to the project. Based on a legal requirement to respond, the City provided a large number of records including emails related to the project.

Those records show the Shoe Palace project was rushed through with no regard whatsoever for public notification, transparency, respect for the law (MH Zoning Code), or negative impacts to the overall community. The intent of the CEQA process was thoroughly trashed.

The City acted as an agent and champion for Shoe Palace, completely disregarding their duty to act on behalf of citizens of Morgan Hill. For some reason unknown to us, December 18, 2018 was the magic date for Shoe Palace and the City was going to get them a green light by that date no matter what.

The Approval Certificate contains knowingly false information including the "key required finding" that the proposed project is consistent with the Zoning Ordinance. This was a fraudulent process from beginning to end.

The City’s January 7, 2020 “Information on the Shoe Palace Expansion Project” states that it is “meant to address many of the questions regarding this project”. We find their responses confusing, misleading and insulting with no mention of apology to residents of Morgan Hill.

It’s way past time we got some real answers!

Q1. Why won't the city hold a public meeting to explain what is going on with this project?

If the City is now serious about answering questions why won’t the Mayor or City Manager agree to schedule a public meeting? This request has been made multiple times at City Council meetings with no response whatsoever. Citizens deserve a chance to ask the Community Development Director, the City Attorney, the City Manager, City Council members and David J Powers and Hexagon Traffic representatives specific questions.

These questions would not be ‘just’ about looking back but more importantly to understand what the City has done or will do to ensure CEQA and development processes are not abused in future projects like they were in the Shoe Palace project.

Q2. Why was the project started even before the application was complete?

The SP Approval Certificate states (page 2, item #7) “Said application was deemed complete for processing and was considered by the Development Review Committee (DRC) at its regular meeting of Wednesday June 6, 2018 at which time the Committee recommended conditional approval of the application.”

But, on June 13th, the Associate Planner responsible for the Shoe Palace project wrote a 6-page letter to the SP architect and project manager that said: “After reviewing the submittal, Planning Division Staff has determined that your project applications are deemed INCOMPLETE…Below is a list of items that will need to be addressed prior to your application being deemed complete”. The City finally acknowledged receipt of the long list of missing items requested sometime in July 2018.

We had never heard of a Development Review Committee and wanted to see the public records for such meeting. However, upon submitting a Public Records Request on August 17th, 2019 we received a response of on August 28th, 2019: “In response to your PRA, the City has no responsive records.” No records?

How is it that a half-million square foot project was even allowed to begin, let alone become ‘recommended for approval’ with an incomplete application? Who is the “Development Review Committee” that is not mentioned anywhere in the Zoning Code? Why was their recommendation for approval not documented in any way? Why was this project even allowed to proceed for months without the application being complete and why does the Approval Certificate falsely state the application was complete on June 6th, 2018?

Q3. Why is the city still using David J Powers and Hexagon Traffic Consultants?

On June 21st, 2019, the City sent SP an estimate for the Initial Study Scope of Work from David J. Powers & Associates – the same CEQA Consultants that are leading the Trammel Crow project. The scope of work is for the complete environmental review, including traffic study, for a half-million square foot warehouse. The next day, on June 22nd, the Shoe Palace CEO writes an urgent email:

We were not expecting this extensive analysis proposed by your consultant for the Shoe Palace Project, and respectfully request a meeting at the City as soon as possible to discuss a plan forward.” “A 6-month review process as outlined by your consultant is surprising. We understood from our prior correspondence and meetings with the City that the project as proposed is consistent with the General Plan and Zoning Ordinance and we would need to complete Architectural and Site Review prior to proceeding directly to Building Permit Application and plan review. The entire design team is currently working expediently to respond to the June 13, 2018 request from your office on the Architectural and Site Review questions.

David J Powers, considered experts in CEQA, apparently never read what the real purpose of the CEQA process is https://wildlife.ca.gov/Conservation/CEQA/Purpose including “to encourage public participation in the environmental review and decision-making process” and “ensure transparency in government decision-making process”.

The SP President instead comes up with some brilliant ways to make Shoe Palace and the City happy, writing on July 18th: Hi, attached please find our revised scope of work, the schedule has been reduced by nine weeks from initial version, primarily by simplifying the traffic analysis and shortening internal review times. The cost came down as well, reflecting the simpler traffic analysis. Other options to reduce the schedule include selecting a 20-day public review for the MND, rather than the 30-days City has been opting to provide.” “We investigated the possibility of preparing an Addendum (which would avoid the need altogether for a public review period) and should discuss that option by phone. If there is a good time for a short call this week, let us know. Thanks.

So the LEAD CEQA CONSULTANT FOR THE TRAMMEL CROW project proposed a way to avoid the need altogether for a public review period – how’s that for encouraging public participation and ensuring transparency?

At the October 2, 2019 City Council meeting Joe from MHRGC presented these facts (see Public Comment Supplement 1 from https://morganhillca.iqm2.com/Citizens/Detail_Meeting.aspx?ID=1819) and asked: “Why is ANY consultant who has demonstrated a willingness to blatantly bypass CEQA public transparency in decision-making purposes still being used ?”

The City Attorney responded by saying: “our consultants work for us, it’s their job to tell us what our options are…”. Maybe in their next update the City can provide a better answer to the other question I asked at that City Council meeting: “Why should the public trust this consultant to lead and produce a fair and unbiased analysis for the Trammell Crow Mega Distribution Center?

Q4. What's the real reason the project was never presented to the Planning Commission?


This question is only rhetorical as we now know the answer. Despite the Assistant City Manager telling the City Council in July 2018 that this project was a ‘big deal’, this half-million square foot warehouse project was never brought for review or vote to the Planning Commission or the City Council.

We considered ways in which the Zoning Code would technically allow that to happen. We asked the City many times how it happened and received various hand-waving answers, including Mr. Larkin’s. In their “Information” bulletin the City now comes up with a new one: “under existing zoning, as provided in Paragraph 10 of the Planned Unit Development Agreement, the project is subject to staff review only”.

Except, that’s not what happened at all. On Oct. 12th, 2018 the Community Development Director alerted the person responsible for scheduling the Planning Commission meetings that: “Shoe Palace is supposed to be on for November 27th. Please check in with Joey - the NOI that is supposed to be released this week is based on a hearing on the 27th. Did PC indicate any problem with that date?”

Upon realizing Nov. 27th was going to be difficult because of Thanksgiving Holiday, but the Planning Dept was prepared to have the Staff Report for the Shoe Palace agenda item ready in time, a Principal Planner suddenly asked: “Do you really want Shoe Palace to go to the PC?” and the Community Development Director jumped at the obvious answer.

From: Principal Planner Sent: Friday, October 12, 2018 10:18 AM This is a Site Review that is an Administrative action and does not require Planning Commission review. The approval of the Negative Declaration does not require Planning Commission approval in accordance with Section 18.136.050 -Delegation of Responsibility. The following delegation of responsibility is made pursuant to Section 15025 of the Guidelines. The director of the community development department shall be responsible for the following functions: G. Approval of negative declarations for administrative project approvals that are not categorically exempt. Seems to me this is an exercise that is unnecessary.

From: Principal Planner Sent: Friday, October 12, 2018 10:33 AM Do you really want Shoe Palace to go to the PC?

From: Community Development Director Sent: Friday, October 12, 2018 10:35 AM We've been under the impression the whole time that it needed to go. Let me take a look at the docs and make sure we aren't missing anything that would prevent us from using the delegation authority.

From: Community Development Director Sent: Friday, October 12, 2018 10:53 AM

"I find it difficult to be able to approve an MND for a 500K building without PC, but you're right, there isn't anything in any of the docs that indicates it absolutely had to go - just my ability to elevate. If the site wasn't already buried in a business park, I'd have more concerns about not elevating it. Let's go ahead and do it admin. That will likely change the notice. Did Cynthia have a chance to chime in? "

So the real reason this project never went to the PC isn’t because of Paragraph 10 or Section 18.136.050 (neither of which even have any relevance) - it’s because it was “BURIED IN A BUSINESS PARK”.

Q5. Why was the project approval based on a fraudulent claim?

This unanswered question is by far the most important because it has long term consequences that are unexpectedly, but not surprisingly, already playing out.

In order to understand this issue, it is necessary to explain the purpose of a Conditional Use Permit (CUP). Each type of zoning district (e.g. Residential, General Commercial, Light Industrial) includes a list of permitted uses allowed ‘by right’. An example would be a Bank is permitted, by right, on land that is zoned for General Commercial. A conditional use permit is designed to allow flexibility within the zoning laws. A zoning ordinance cannot account for every situation, and a CUP allows a local government the ability to permit specific projects that might not otherwise be allowed, as long as the landowner meets certain conditions. For example, the zoning ordinance may permit a convenience store on a commercially zoned parcel, by right, but only allows the establishment to sell liquor with a CUP in place.

The CUP typically imposes additional restrictions, such as limiting business hours. There are some very important aspects of how a CUP works:

1) Whether to grant a CUP to an applicant is not decided by the Community Development Director or any other single individual but by the Planning Commission. Applicants must present their request in a regular, noticed, open Planning Commission meeting giving the public an opportunity to become aware of the request, to participate and voice opposition. Among other important considerations the zoning code mandates that the Planning Commission evaluate (’find’) whether: (a) The proposed use will not be detrimental to the public health, safety, and welfare; and (b) The proposed use would not have a substantial adverse effect in traffic circulation and on the planned capacity of the street system.

2) If granted, the business owner is restricted to the Conditions of Approval listed in the CUP which include a detailed Statement of Proposed Operations. The PC carefully reviews the Statement of Proposed Operations and often requires them to be modified to ensure the findings will be possible. The PC can and often does require additional restrictions. The Conditions of Approval form includes this standard text: Applicants are required to sign the approval certificate form indicating they understand and agree to implement these standard conditions and any special conditions applied to their permit approval.

What the City and the Applicant agree to aren’t worked out with winks and nods between a few people, the applicant is limited to doing what is in the Statement of Operations directly linked to the permit, not some vague project description from a “buried in a business park” CEQA document.

The Shoe Palace property is in the Morgan Hill Ranch Business Park and the allowed uses are those permitted by Light Industrial (IL) zoning. Within Light Industrial, Warehouse & Distribution facilities greater than 75,000 square feet require a Conditional Use Permit. Which is exactly why in 2013, Shoe Palace applied for and was granted a CUP to operate in their existing building. During the PC meeting for that approval, the commissioners asked many questions regarding Truck Traffic, even including the path any trucks would take to get to 101 to avoid going past the school that was on Jarvis Drive. The Statement of Proposed Operations includes limits on the number of daily trips that are allowed.

The entire Planning Department and the Community Development Director know perfectly well that the existing Zoning Code requires Shoe Palace to obtain a CUP for a 500,000 square foot Distribution Center. The most fundamental requirement for any project to be approved is that it be consistent with the Zoning Ordinance and the General Plan. Every approval for every project will include as the very first ‘finding’ something similar to what the Community Development Director wrote in the Shoe Palace Approval: “The proposed project, together with its provisions for its design and improvement, is consistent with the Zoning Ordinance and the General Plan”.

So, where is the CUP which is the only way the proposed project could be found to be consistent with the Zoning Ordinance (the law)? There isn’t one. The project is NOT consistent with the Zoning Code and the City knows that - despite the truly bizarre effort by the City Attorney to make people believe otherwise. On October 2nd, 2019 at the City Council meeting our City Attorney explained:

The second thing I think it's important to understand because there's an assumption that this city approved the project through the CEQA, but what the city approved was an architecture review limited to colors of buildings, placement of trees, not the size of the building, not the number of truck bays, not the number of windows which is what most of those truck bays will likely end up being. Those things are all governed by a voter initiative passed by the residents of Morgan Hill, uhm, what we can and can't require on that site…… it's not correct to say that the city council approved or the city staff approved the project - they approved the Architectural Review.

If this is how the City Attorney behaves is it really any wonder that we are seeing so many examples where the City just does whatever it wants to do? Change is needed at many different levels!

When the Community Development Director signed the Approval Certificate the only logical conclusion is that it was done even though it contained knowingly false statements.

Many neighbors contacted MHRGC asking us to investigate stopping the Shoe Palace project. We committed a substantial amount of time consulting with four lawyers with expertise in Land Use, asking them to review the circumstances and facts of the approval. Without charging anything, all four lawyers looked at the relevant documents and were literally shocked by what the City did and felt that a court would have no doubt granted the Citizens of Morgan Hill relief from the approval if we had been able to file a lawsuit before the statute of limitation expired. Unfortunately, the City was successful in keeping the project in the dark and none of the lawyers saw any way around the statute of limitations that are applicable, and which had expired long before we saw the bulldozers.

Q6. Shoe Palace now wants to lease the new building; does no CUP matter?

As mentioned previously, there ARE serious consequences of what the City did and now those consequences are playing out much faster than we could have ever expected. The Approval Certificate that allowed Shoe Palace to proceed was issued as a Design Permit with no associated Conditional Use Permit.

We all know the bogus Traffic Analysis that was the basis for the project to pass CEQA requirements: a maximum of 8 truck trips per day. For 64 loading docks? Seriously? If this project had gone to the PC that would have never been accepted. The traffic analysis would have to be redone, with oversight, and whatever modified number of truck trips and overall traffic levels the PC agreed could be allowed would be listed as conditions in the CUP.

Just as importantly, if Shoe Palace violated the terms of a CUP, the City recourse to prevent public harm (i.e. traffic, noise, pollution) would be to revoke the permit. The ability to ENFORCE the conditions in the CUP is one main reason they are there! The Zoning Code defines the Permit Revocation process. And therein the “buried in the business park” decision lives on. Since the PC did not approve the permit, they do not have the authority to revoke it. For a Design Permit like the one issued to Shoe Palace, that authority rests with - guess who? The Zoning Code does explicitly state that “in instances where the Community Development Director was the approval authority, the Community Development Director may choose to refer any action to revoke a permit to the Planning Commission for review and final decision”.

THIS IS SOMETHING WE MUST INSIST ON! All future decisions regarding the SP permit must be taken away from the Community Development Director and given to the Planning Commission.

Q7. When is the City going to take responsibility for this debacle?

By running a huge project with no oversight, no transparency and based on deceitful claims both the City and Shoe Palace now have exactly what they deserve – a big mess. And yet I have not ever heard a single person admit that any mistakes were made.

In the City's “Information bulletin" they say “If a future use exceeds the number of trips studied under the environmental review for Shoe Palace or creates another impact outside of what was studied and approved, it would represent a change which would likely trigger the need for a use permit and/or the site review”. If? Likely? We guess the City Attorney is still expecting those dock doors to magically turn into windows. Did they LOOK at the Commercial Listing that Shoe Palace is using to find tenants for the new building?

The building’s "56 Dock-Hi Truck doors" and "8 Grade Level truck doors" are being used like neon lights. Does the City think the SP leasing agent is going to tell a prospective tenant “yes this is a state-of-the-art building and those 64 truck docks were designed to support modern high-volume distribution operations. You will love it here and the price is right. But, I hope you don’t expect to generate more than 8 truck trips a day.”

What is Shoe Palace’s position with all of this? After hearing the new building was up for lease, I wrote the City and the Shoe Palace CEO. Let’s take a wild guess – the City and Shoe Palace would rather everyone just forget about little details and are figuring out how to make the 8 Trips per day go away without having to spend too much money on lawyers.

Everyone now knows the original CEQA review was a complete SHAM so why is the City waiting to do a new one? If Shoe Palace wants to lease the building tell them to pay for a new Traffic Analysis conducted by an independent consultant that has no connection with David J Powers or Hexagon.

This has direct implications for the Trammell Crow project – which the City also is fully aware of but has not been willing to address at all. What baseline Traffic Levels is the Trammell Crow Traffic Impact Analysis using? With a legitimate Traffic Analysis, the SP 500,000 square foot Distribution Center is going to generate a LOT of traffic.

Is the City purposely delaying updating the SHAM Shoe Palace analysis until after the TC EIR is complete to make the congestion estimates at the key intersections and 101 ramps look better than they would if any reasonable model for Shoe Palace was being used as a baseline?

The City needs to explain exactly what is going on with Traffic modelling for BOTH Shoe Palace and Trammel Crow and how expected Traffic levels for a fully leased Shoe Palace building have been taken into account in the TC EIR.

ENOUGH IS ENOUGH!!!

If you are just getting involved because it has become obvious how big of an eye sore Shoe Palace will be, remember that the Trammell Crow Distribution Center will be twice as big. Even after many months of residents speaking out loudly it is clear the City still doesn’t get it. The Shoe Palace ‘Information’ bulletin answers NOTHING.

Unfortunately, we now know there is no practical way to stop the Shoe Palace Distribution Center but let’s at least use it as a reminder of why we MUST stay engaged. It is critical we don’t let Shoe Palace go back to being “buried in a business park”. The City must explain exactly how they will modify the permit to allow the building to be leased and how the impact of truck traffic from 64-Docks is going to be accounted for. And if there was even the slightest of doubt, we hope you now understand why it is so urgent that you join our effort to stop the Trammell Crow Distribution Center.


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