ACUs Divide Hayward City Council

During the January 27th Hayward City Council meeting, City Staff presented the Business-Friendly Hayward initiative which had recently been shown to the Planning Commission. The plan includes a number of ways to activate the City and make it easier for businesses to operate: streamlined permitting for entertainment and temporary uses, community/cultural centers, and easier permitting for certain uses like tattoo parlors and daycare centers. But two changes dominated City Council discussion: Accessory Commercial Units (ACUs) and data centers.

What Is An ACU?

Accessory Commercial Units are small commercial units that would be attached to a single-family residence. Sort of like an Accessory Dwelling Unit (ADU) or in-law unit, these are small commercial spaces that anyone would be able to operate in order to serve their local community. They would not only be a low-cost option for starting a brick-and-mortar business, they would also bring amenities like cafes, small grocery stores, pubs, and more to residential neighborhoods where people usually have to drive to get anything.

However, Staff's proposal only included a pilot area that focused around Downtown and Mission Blvd--areas already high in amenities and commercial businesses. Councilmembers who commented on that, expressed a desire to expand the area, though most focused on expanding to different commercial corridors--like Tennyson and Hesperian--as opposed to expanding into residential areas.

Brick-And-Mortar Restaurants Still Struggle

The tension came in the form of a group of organized restaurant owners who spoke during pubic comment against unlicensed street vendors. Four restaurant owners, some speaking through interpretation, blamed street vendors for reduced sales. Some alleged that street vendors were organized in some way, implying some form of gang-like structure or outside guiding influence.

Inflation has also surged post-pandemic, over 20% since 2019 according to the Bureau of Labor Statistics. At the same time, pork prices are surging--almost 20% higher just for the hogs since January 2024--and many grocery staples have seen increases of between 25% and over 100% since 2019. Between culling chickens for avian flue, Trump-imposed tariffs on imported goods, and climate change damaging crops--not to mention unemployment in both the tech sector and our increasingly-underfunded public sectors, and high commercial rents--things are more expensive and consumers have less purchasing power.

Commercial For All Income Levels

In the Staff proposal, restaurants would be explicitly prohibited from operating in ACUs. This is, according to Senior Planner Elizabeth Blanton, a direct response to the concern about street vendors. The only kinds of businesses that would be allowed are "low-impact uses": beauty salons, pet grooming, fitness studios, tutoring, and coffee shops. No seating would be allowed out of concern for too much traffic.

But some Councilmembers said the proposal "misses the mark" and were interested in having take-out restaurants possible in ACUs specifically because of street vendors. "I would like to make sure that we know where [street vendors] are located, they have a fixed location, we can license that location," Councilmember George Syrop said. "We just heard from a lot of business owners today that they want to make sure they're playing on a fair playing field and I think the purpose of an ACU is to create that pathway to make them play on a fair playing field."

Councilmember Ray Bonilla felt similarly, so long as rules are followed. "If these restaurants or businesses want to get the right permits, health licenses, food handling permits, why not?" he said. "If they want to go through the right process and they want to be a tax-paying business just like anybody else, they should have the right to set up shop in an ACU."

Councilmember Syrop later framed ACUs in similar terms as having housing for all income levels. He said that Casa del Toro on B Street pays $10,000 per month in rent. "There is no transitional pathway currently to get a sidewalk vendor into a brick and mortar," Councilmember Syrop said, due to high commercial rents. Councilmember Bonilla urged the Council to be "guided by the City's priorities, not by immediate pressure that we're getting today."

"Let's Be Careful What We Ask For"

Others on City Council were less excited, however. Councilmember Dan Goldstein was interested in using ACUs for "amenities" but was unsure about coffee shops, restaurants, and grocery stores--coffee shops and grocery stores were uses allowed in the proposal. "[I'm] concerned about the impact on businesses that are paying the bigger fees," he said, and worried it would become another fight about street vending.

"I'm also hesitant on the restaurants," Councilmember Julie Roche said. "We have this battle going on with street vendors and restaurants... Right now I don't want to go beyond a takeout coffee shop." She indicated she would only move forward once "[we] satisfactorily satisfy the businesses where the street vendors are concerned."

Councilmember Francisco Zermeño was only supportive of ACUs under one condition. "I want to make sure," he said, "that the ACUs do not badly affect the 352 eateries that we have in Hayward."

Mayor Mark Salinas drew a distinction between independent local street vendors and organized large external operations. He said he had no issues with "an abuelita making tamales or burritos to sell to the neighborhood," but worried about an outside person who "recruits 30 neighbors in a neighborhood... and have an entire network of illegal ACU vendors. That's what's going to happen."

Mayor Salinas worried about adding another difficult-to-enforce business. "We don't have a handle on what it is we're trying to regulate right now," he said. The Code Enforcement Division has made little impact on unlicensed street vendors, despite concerted enforcement at the expense of rental housing inspections. "Let's be careful what we ask for," Mayor Salinas said.

New Barriers For Hayward Data Centers

Among all the ways the City made things easier for businesses, one that will have a more difficult time is data centers. In the current codes, data centers are categorized as offices--despite having very different needs, if only in terms of parking. Many on City Council worried about the impact of the data centers already approved--especially Stack Data Center, which was approved by the Planning Commission in May.

"1/5th of all homes in Hayward. That amount of electricity is going to be used by this singular data center," Councilmember George Syrop said. Despite potentially bringing in up to $5,400,000 in revenue from Utility User's Tax, Councilmember Syrop expressed concern about water and electricity usage and how it could impact availability to residents. He pointed out that it was approved by the Planning Commission, which is a group of residents appointed by the Council. "The impacts [of a data center] are simply too large for an unelected body to be making on behalf of its residents," he said.

Other Councilmembers agreed. Councilmember Angela Andrews said, "I still have concerns about them." She was concerned about the use of the buildings if the data centers go under and the amount of water needed to run them. Councilmember Ray Bonilla didn't want to be "arbitrarily restrictive" but wanted them to be approved by the City Council. "We also need to create some pretty robust performance standards for our data centers," he said, and also wanted "pretty robust community benefits."

Councilmember Dan Goldstein wanted to be flexible in zoning, but also encouraged bringing them to Council for deliberation. "We do want to be careful," he said, "but open-minded."

Despite everyone wanting the Council to have final approval on data centers, differences of opinion about them were evident. "In my mind, they are the future," Councilmember Francisco Zermeño said. Councilmember Julie Roche agreed. "I don't think we should go around demonizing data centers," she said. "This is the way of the world."

Councilmember Syrop felt like Hayward should have gotten more. "The data center we're building now, I think they pulled a fast one on us," he said, in reference to the community benefits package. Hayward's package totaled $2,000,000 which he compared to a $30,000,000 package which was given to San Jose. Councilmember Roche disagreed. "There was no puling a fast one," she said. "This was allowed by what our code said."

Mayor Mark Salinas supported bringing data centers to the full City Council for approval, comparing it to the recent cannabis business approval. He pointed out that a 15,000 sq/ft dispensary was brought to the full City Council for approval while a 200,000 sq/ft, 77Mw data center was approved by the Planning Commission. "We put this 15,000 sq/ft retailer through the wringer up here," Mayor Salinas said. "At least when it comes to us, we can have these debates."