REPORT TO PLANNING COMMISSION
SUBJECT
Title
Action on an Appeal (PLN25-00562) of the Community Development Director’s Denial of a Zoning Clearance (PZC25-00381) for a Smoke Shop Located at 770 Kiely Boulevard.
Report
REPORT IN BRIEF
Applicant: Xiangqiong Wu
Owner: 770 Kiely LLC Et Al
General Plan: Neighborhood Mixed Use
Zoning: Mixed-Use Neighborhood Commercial (MU-NC)
Existing Site Conditions: Existing commercial building with a surface parking lot
Surrounding Land Uses:
• North: Gas station, Mixed-Use Neighborhood Commercial (MU-NC)
• East: Existing commercial uses, Mixed-Use Neighborhood Commercial (MU-NC)
• South: Single-family residence, Single-Family Residential Zone (R1-6L)
• West: Single-family residence, Single-Family Residential Zone (R1-6L)
BACKGROUND
The applicant, Xianqiong Wu, has appealed a decision of the Planning Division to deny an application for a Zoning Clearance to operate a smoke shop at 770 Kiely Boulevard. According to the applicant’s appeal form, she seeks to overturn the decision based on “vested rights” and the date that she submitted her application. Given these claims, it is necessary to provide a legislative timeline.
Prior to 2024, the property located at 770 Kiely Boulevard was zoned Neighborhood Commercial (CN). A discrete list of commercial uses were allowed in the CN zone, including clothing stores, pharmacies, groceries, hardware stores, and restaurants Classic Code § 18.34.030. The intent of the zone was to provide “retail goods and services for the convenience of the immediately adjacent residential neighborhood.” A broader list of commercial uses was allowed in the Community Commercial (CC) zone, which was described as a “general shopping center zone district,” including, notably, “pipe and tobacco shop[s]” Classic Code Chapter 18.36. Uses not listed in the Code were prohibited, unless a special application was made to the Planning Commission for a determination that the use was similar to a listed use. Because pipe and tobacco shops were listed in CC, but not in CN, they were not allowed in the CN zone, and would not have been allowed at 770 Kiely Boulevard under the Classic Code.
On January 9, 2024, the City Council adopted the Comprehensive Zoning Code Update, and it took effect on February 8, 2024. Because the Council had not yet adopted a Zoning Map, some sections in the Code did not immediately become effective. But importantly, the Zoning Code Update did implement new procedures that went into effect in February 2024. One of these was the requirement to obtain a Zoning Clearance before the initiation or commencement of any new land use, and importantly, prior to the issuance of a business tax certificate. Updated Code § 18.126.020. The Zoning Clearance procedure is used to verify that a proposed land use or structure complies with the list of uses allowed in the applicable zone and the development standards applicable to the use or
structure. The Zoning Clearance requirement applies to the proposed business at 770 Kiely Boulevard. Importantly the Zoning Clearance is a consistent method that is applied to all businesses and uses City wide.
On July 16, 2024, the City Council adopted a new Zoning Map for the City, which took effect on August 15, 2024. One of the effects of the adoption of the new map was that the zone for 770 Kiely Boulevard was changed from CN to MU-NC, Mixed-Use Neighborhood Commercial. Under the Updated Zoning Code, “pipe and tobacco shops” were no longer listed as a permissible use in any zone, including MU-NC. The Updated Code provided that if a use was unlisted, it was not allowed, but the Code did provide a procedure for seeking authorization from the Director to operate the use if the Director made certain findings that the use was equivalent to listed uses in the zone. Updated Code § 18.04.040.
On August 20, 2024, the City Council adopted a first “cleanup” ordinance for the Zoning Code, which implemented necessary changes due to new state and federal laws, clarifications to eliminate ambiguities, and corrected errata. There were no changes in the first “cleanup” ordinance relevant to the current application.
On June 10, 2025, the Council adopted a second “cleanup” ordinance, which became effective on July 10, 2025, and which made similar minor changes to the Updated Code. One of those changes was to add “smoke shops” to the Code as a listed use, and to make them conditionally permitted in five zones: R6, C-C, C-R, MU-CC, and MU-RC. Notably, the ordinance did not authorize smoke shops in the MU-NC zone, where 770 Kiely is located, which means they are prohibited.
The business owner applied for a business tax certificate in early 2025. (According to City records, the business license application and fee were received on May 8, 2025; according to the business owner, this took place in April 2025.) Although the owner’s correspondence implies that the business tax certificate was approved, the City has not yet approved the certificate. On May 8, 2025, the City assigned an account number to the business after receiving the filing fee, and directed the applicant to submit a copy of a state seller’s permit. But as required by the January 2024 Updated Zoning Code, the applicant must also obtain a Zoning Clearance from the Planning Division before the City can legally issue the business tax certificate, and no certificate has been issued in this case.
In September 2025, the applicant contacted the Planning Division, which informed her that a smoke shop use is a prohibited use at the subject location, because of the MU-NC zoning. City staff explained that her business fell within the definition of “smoke shop”, and provided her with the Santa Clara City Code (SCCC) definition. As an alternative solution, staff suggested that the applicant modify the business from a smoke shop to a convenience store, as a convenience store is a permitted use at the subject site. Per the SCCC, a convenience store allows for the selling of tobacco products as an ancillary use. Staff noted that should a Planning application be filed, a floor plan would be required demonstrating how the store would operate as a convenience store.
Following the September outreach, the applicant filed a formal application for a Zoning Clearance with the Planning Division on October 2, 2025, proposing a convenience store with ancillary tobacco sales. The Applicant also submitted a proposed floor plan. However, on October 31, 2025, the applicant informed staff via email of their intention to operate as a smoke shop and not as a convenience store. A smoke shop is a prohibited use at the subject site, and therefore, staff could not approve the Zoning Clearance application.
The applicant requested a formal written denial letter on the Planning application and on December 15, 2025, Planning staff issued the letter of denial for the Planning application and emailed the letter to the applicant.
On December 17, 2025, the applicant filed and paid fees for an appeal of the Community Development Director’s decision to deny the Zoning Clearance application to allow a smoke shop at the subject site.
DISCUSSION
Pursuant to Section 18.160.190 of the Santa Clara City Code (SCCC), a smoke shop is defined as the following:
“Smoke Shop: Any premises dedicated to the display, sale, distribution, delivery, offering, furnishing, or marketing of tobacco, tobacco products, or tobacco, vaping, compressed gas (i.e. nitrous oxide), or cannabis paraphernalia. Any grocery store, supermarket, convenience store or similar retail use that only sells conventional cigars, cigarettes or tobacco as an ancillary sale shall not be defined as a “smoke shop”” and is not subject to the restrictions in this chapter.”
The proposed use falls within the scope of this definition.
Pursuant to Section 18.126.020.D of the SCCC, a Zoning Clearance with the Planning Division must be obtained before the issuance of a business tax certificate. The purpose of a Zoning Clearance is to verify whether a proposed use is allowed at the subject site and in the applicable zoning district. The Community Development Director delegated the decision whether or not to issue a Zoning Clearance to Planning staff. A Zoning Clearance cannot be issued and approved unless the request complies with the Zoning Code. While an application for a business tax certificate was submitted in May 2025, the application for a Zoning Clearance was not submitted until October 2, 2025. In addition, if the City has not acted upon a business tax certificate application within 180 days of the application date, the application is deemed denied. SCCC § 3.40.080(d). The 180 days elapsed on November 4, 2025, and so the application for this business has been denied.
As discussed above, the City adopted a second “cleanup” ordinance for the Zoning Code in June 2025, and which became effective in July 2025. The second cleanup ordinance added a definition for Smoke Shop and explicitly listed Smoke Shop throughout the use tables in the Zoning Code, including as a prohibited use in the Mixed Use Neighborhood Commercial zone. However, even prior to the second cleanup, a Smoke Shop was not an allowed use in Mixed Use Neighborhood Commercial zone; nor was it allowable under the Classic Code under the prior zoning for the property, Neighborhood Commercial (CN).
For the subject Zoning Clearance, Planning staff reviews an application with the Zoning Code in effect at the time of planning application submittal. The applicant is claiming that the City should nevertheless approve the Zoning Clearance because “[t]he application was submitted in April, prior to the July ordinance amendment,” and because of “vested rights.” The Code allows for legal nonconforming uses in two circumstances. First, an existing legal use can continue, if it began prior to the effective date of the Zoning Code (or an update) and complied with all applicable requirements at the time that the use started. SCCC § 18.90.030.B. But, as discussed above, smoke shops have never been authorized at the subject property, and the shop has not yet obtained a business tax certificate. As such, it is not, and has never been, a legal use.
But, the Code also contains a clause for nonconforming uses that have not yet commenced, but that submitted applications prior to the effective date of the Zoning Code (or an update). Pursuant to Section 18.02.070 of the SCCC, all Planning applications (such as a Zoning Clearance) that are active and deemed complete prior to the effective date of the Zoning Code or any amendment, shall be processed in compliance with the requirements in effect when the application was deemed complete. But, a Business Tax Certificate is not a Planning application and therefore, is not subject to Section 18.02.070. As the Zoning Clearance, which is a Planning application, was submitted on October 2, 2025, the Zoning Code standards at the time of submittal were utilized. The Zoning Code in effect at the time prohibits smoke shop uses at the subject location, and therefore staff appropriately denied the Zoning Clearance.
The applicant retains the ability to apply for a new Zoning Clearance for a convenience store, which allows for ancillary tobacco sales, and the applicant would be required to demonstrate how the business satisfies the definition of a convenience store with ancillary tobacco sales.
Considerations
Appeal Process
Section 18.144.030 of the SCCC requires an appeal to be filed and fees paid within seven days following the actual date the decision was rendered. The appeal was filed, and fees were paid prior to the deadline. Pursuant to Table 6-1 contained in Section 18.112.020 and Section 18.144.030.G of the SCCC, the Planning Commission is the final review authority on this appeal.
Consistency with General Plan
The project site has a General Plan land use designation of Neighborhood Mixed Use. The General Plan land use designation of Neighborhood Mixed Use is intended for pedestrian-oriented development with a focus on ground-level neighborhood-serving retail along street frontages and residential development on upper floors. Properties with a General Plan land use designation of Neighborhood Mixed Use are generally located adjacent to single-family residential areas.
A smoke shop use does not meet the intent and purpose of the General Plan land use designation of Neighborhood Mixed Use.
Consistency with Zoning Code
The project site has a zoning district of Mixed-Use Neighborhood Commercial (MU-NC). The purpose of the MU-NC zoning district is to provide land areas for the construction, use, and occupancy for pedestrian oriented developments that focus on neighborhood-serving commercial uses (e.g., coffee shops, grocery stores, retail establishments). MU-NC zoning districts are generally located adjacent to single-family residential zoning districts.
Pursuant to Table 2-11 (Mixed Use Zones Allowed Uses and Permit Requirements) contained in Section 18.14.020 of the SCCC, a smoke shop use is listed as a prohibited use.
A smoke shop use does not meet the intent and purpose of the Mixed-Use Neighborhood Commercial zoning district, and therefore, it is prohibited. Smoke shops are allowed with a Conditional Use Permit in the Community-Commercial, Commercial-Regional, Mixed-Use Community Commercial, Mixed-Use Regional Commercial zoning districts, as these zoning districts are intended to serve larger regions and the broader population. For that reason, these zoning districts are typically located along major corridors (e.g. Stevens Creek Boulevard, San Tomas Expressway, El Camino Real).
Planning Commission Actions
The project is presented to the Planning Commission for consideration and action. Staff is recommending that the Commission overrule the Appeal and affirm the Community Development Director’s decision to deny the Zoning Clearance for a smoke shop to operate at 770 Kiely Boulevard as smoke shop use based upon the following findings:
• A Zoning Clearance can only be issued after determining that the request complies with all Zoning Code provisions applicable to the proposed land use or structure.
• A smoke shop is not permitted in the Mixed-Use Neighborhood Commercial zoning district as it is not listed in Table 2-11 of Chapter 18.14 of the Zoning Code.
• Although Section 18.02.070 of the Zoning Code recognizes a right to seek approval of planning applications that were deemed complete prior to the effective date of the Zoning Code or any amendment, in this case the Planning Application was filed on October 2, 2025, and the current regulations of smoke shops were effective prior to then, on July 10, 2025.
ENVIRONMENTAL REVIEW
The California Environmental Quality Act (CEQA) does not apply to projects that are disapproved, pursuant to CEQA Guidelines Section 15270. If the Commission were to sustain the appeal and approve the Zoning Clearance, the project would be exempt from CEQA pursuant to Section 15301 (Class 1 - Existing Facilities) as the project involves the leasing of a private tenant space for a private business with no physical alterations to the tenant space.
FISCAL IMPACT
There is no fiscal impact to the City for processing the requested application other than administrative
time and expense typically covered by processing fees paid by the applicant.
COORDINATION
This report has been coordinated with the City Attorney’s Office.
PUBLIC CONTACT
Public contact was made by posting the Planning Commission agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov or at the public information desk at any City of Santa Clara public library.
On January 29, 2026, the notice of public hearing for this item was mailed to 196 property owners and tenants within 300-feet of the project site. At the time of this staff report, one public comment has been received by the Planning Division in opposition to the project and has been provided as an attachment to this report.
RECOMMENDATION
Recommendation
Overrule the appeal and affirm the Community Development Director’s decision to deny the Zoning Clearance for a smoke shop to operate at 770 Kiely Boulevard.
Staff
Prepared by: Tracy Tam, Associate Planner
Reviewed by: Sheldon S. Ah Sing, Development Review Officer
Reviewed by: Alexander Abbe, Assistant City Attorney
Approved by: Lesley Xavier, Planning Manager
ATTACHMENTS
1. Vicinity Map
2. Resolution to deny the appeal
3. Appeal Application Form
4. Zoning Clearance- Letter of Denial
5. Email Correspondence
6. Public Comment