Gary,

Thank you for sending the Association’s statement and summary of the September 1 meeting. We appreciate the time the Board and community members took to share their concerns, and we recognize the strong connection the neighborhood has to the Nob Hill Shopping Center.

I hope the talking points I provided in advance of the meeting were helpful in providing additional background on Heritage’s plans for the Center and the parking program. I also BCC’d you on several of my responses to community members so you could see firsthand the concerns being raised and the information we were providing in response. We have tried to maintain open and consistent communication throughout this process and appreciate the opportunity to continue that dialogue.

We would, however, like to provide some additional context regarding the parking program and several of the points raised in the Association’s statement.

Why Parking Management Was Implemented:

Prior to implementing parking management, the Center’s parking lot was regularly being used for purposes unrelated to the businesses at the property. This included employees and customers of surrounding businesses, nearby residents parking secondary vehicles, and vehicles being left in the lot overnight.
Those uses reduced the availability of parking intended to serve the Center’s tenants and their customers. The decision to manage the lot was intended to address those issues and better ensure that a privately owned and maintained parking facility was being used to support the businesses at the property.
The parking program was not implemented as a means of displacing existing tenants.

Changes Made in Response to Feedback:

The parking program has evolved since its initial implementation based on feedback from tenants and customers.

Initially, the program provided one hour of complimentary parking. However, even when parking was free, customers were required to scan a QR code and register their vehicle. We received considerable feedback that the registration process itself was creating frustration for customers.

In response, we worked directly with La Montañita Co-op on an alternative approach intended to make the customer experience easier. As a result, parking at the Center is now completely free until 11:00 am, with no QR code or registration required during that period. Paid parking applies after 11:00 am.

We believe this is important context when evaluating the current program. It has not remained static and Heritage has already made adjustments based on concerns raised by our tenants and their customers.

La Montañita Customer Parking:

We also want to clarify the Association’s reference to La Montañita Co-op’s request for 12 paid parking spaces.
The spaces discussed with the Co-op are not employee parking spaces. Heritage worked directly with La Montañita to offer up to 12 reserved spaces specifically for its customers at a cost of slightly over $1 per day per space.

These spaces provide the Co-op with dedicated customer parking in addition to the broader parking options available at the Center. We view this as another example of Heritage working directly with a tenant to develop a solution responsive to its particular business and customer needs.

Employee Parking:

Separately, Heritage offers employees of Nob Hill Shopping Center tenants parking at a reduced tenant rate of slightly over $1 per day. Businesses may elect to provide or cover that parking for their employees as part of their operations.

If an employee of a Center tenant elects not to participate in the program, or if an employer elects not to provide parking as an employee benefit, that is ultimately a decision between the business and its employees.

We also want to distinguish employees of Nob Hill Shopping Center tenants from employees of other businesses located throughout the broader Nob Hill district. The reduced tenant employee rate is a benefit offered specifically to businesses located within our Center and their employees.

Employees of surrounding businesses are also able to obtain monthly parking through Heritage; however, because those businesses are not tenants of the Nob Hill Shopping Center, a different rate applies. To date, we have not received significant concerns regarding the availability of that monthly parking option.

Accordingly, when discussing the impact of parking on “Nob Hill employees,” we believe it is important to distinguish between employees of our tenants, for whom a reduced parking rate is available, and employees of unrelated businesses in the surrounding district who elect to utilize the Center’s privately owned parking facility.

Impact on Existing Businesses:

We take seriously the reports regarding changes in customer traffic and concerns expressed by businesses. At the same time, we believe it is important to distinguish reported concerns from conclusions regarding their cause.

Your letter references reports from multiple businesses and specifically identifies La Montañita Co-op, Gecko’s, and other long-standing tenants as experiencing reduced patronage. With the exception of La Montañita, with whom we have been in direct communication regarding parking, we have not received similar concerns directly from our other Nob Hill Shopping Center tenants.

If other tenants of the Center raised concerns regarding customer traffic or the parking program during the meeting, we would appreciate knowing which businesses expressed those concerns so that we can follow up with them directly. We want our tenants to bring operational concerns to us, particularly if they believe something occurring at the property is negatively affecting their business, so that we have an opportunity to understand and address the issue.

Business closures, relocations, customer traffic and sales performance can be affected by numerous factors. We would therefore be cautious about attributing those outcomes solely to the parking program without supporting information.

We also want to directly address the perception expressed at the meeting that parking fees were designed to push out existing tenants. That is not the purpose of the parking program. Our tenants operate under existing lease agreements with Heritage and we continue to work directly with them regarding their operations and needs.

La Montañita Co-op is an important part of the Center and the neighborhood, and we have been in direct communication with its leadership regarding both parking and Heritage’s longer-term plans for the property.

Private Parking vs. City Street Parking
We understand the comparison being made between the Center’s parking rates and the City’s $1.00-per-hour meters. However, City-operated public parking and a privately owned, operated and maintained parking facility are fundamentally different and are not directly comparable.
Heritage’s parking lot was acquired as part of a significant capital investment exceeding $1 million; it was not provided to Heritage at no cost. In addition to that initial investment, Heritage remains responsible for the ongoing costs of maintaining, repairing, monitoring and managing the parking facility. As with any privately owned asset, we also have an obligation to our financial partners to responsibly manage the property and provide a return on the capital invested.
We believe this distinction is particularly important because Heritage also supports the position that City street parking in Nob Hill should be free. Public streets are part of the public domain and are supported by taxpayers. We do not believe visitors, residents, customers or employees in Nob Hill should be required to pay the City to park on public streets, particularly when other neighborhood districts, including Old Town, do not have comparable City street-metering requirements.
We encourage the Association to strongly advocate for the removal of City parking meters in Nob Hill. This is an issue the Association is well positioned to pursue on behalf of the broader neighborhood, and Heritage would strongly support those efforts.

Heritage’s Vision for the Center:

We also want to clarify the comments regarding Heritage’s vision for a thoughtful or curated tenant mix.

As we previously shared with you in our plans for the Center, our vision is not to transform the property into a tourism-focused destination or to replace neighborhood-serving businesses with concepts that do not serve the community. We recognize that Nob Hill is first and foremost a neighborhood and that the Center has served that neighborhood for generations.

Our goal, as reflected in the plans we shared with you, is to strengthen the property with a thoughtful mix of local businesses, services, food and beverage and other uses that serve the surrounding community while contributing to the long-term vitality of the Center and Nob Hill as a whole.

The Center’s history and connection to the community are among the reasons Heritage believes the property is worth investing in and preserving. Our planned improvements and leasing strategy are intended to build upon that history, not move away from it.

We appreciate your willingness to help communicate that vision, and as previously discussed, you are welcome to share the plans and information we have provided with the Association and broader community.

Community Partnership:

Finally, we appreciate the Association’s request that Heritage engage with the Neighborhood Association and Nob Hill Main Street and share our plans as they develop.

As you know, we have already shared information with you regarding Heritage’s plans and long-term vision for the Center, and you are welcome to share that information with the Association and the broader community. The talking points provided ahead of the September meeting, our prior conversations and the community correspondence I BCC’d you on were all intended to help maintain an open line of communication and provide accurate information as questions arose.

We welcome continuing that dialogue with both the Neighborhood Association and Nob Hill Main Street. We believe a broader conversation about the Center - including parking, tenant needs, planned investment, neighborhood concerns, and Heritage’s long-term vision - would be productive.

We appreciate the community’s passion for the Nob Hill Shopping Center and understand the desire to see it remain a vibrant neighborhood-serving destination. We share the goal of seeing the Center and its businesses succeed for the long term.

Thank you again for compiling the feedback from the September 1 meeting and providing the Association’s recommendations. We will take those comments into consideration as we continue evaluating the parking program and planning for the future of the property.

THIS MESSAGE CONTAINS INFORMATION, WHICH MAY BE CONFIDENTIAL AND PRIVLEDGED. UNLESS YOU ARE THE ADDRESSEE (OR AUTHORIZED TO RECEIVE FOR THE ADDRESSEE), YOU MAY NOT USE, COPY OR DISCLOSE TO ANYONE THE MESSAGE OR ANY INFORMATION CONTAINED IN THIS MESSAGE. IF YOU HAVE RECEIVED THIS MESSAGE IN ERROR, PLEASE ADVISE THE SENDER BY REPLY EMAIL TO dsherman@heritagerec.com AND DELETE THIS MESSAGE. THANK YOU VERY MUCH FOR YOUR ASSISTANCE.

• Go back to free parking which has succeeded for 79 years

·        If not, that then at least implement 1½ hour free parking to accommodate shoppers but prevent long term parking.

·        Provide free or reduced-rate parking for employees.

·        Meet with the Association and Main Street in the near term about parking and a successful environment for businesses and community.

• Sharp declines in customer traffic
• Employees paying substantial parking fees simply to work
• Customers avoiding the Center due to $4.95/hour parking
• A nearly empty parking lot during peak shopping hours

• Engage with the Association and Nob Hill Main Street soon.
• Share plans as they develop to demonstrate partnership and build trust.
• Consider the unique needs of a neighborhood-serving district.