Over the past few years, the demand for such personal-service businesses has been so strong in Los Gatos that a rash of new massage parlors and nail and hair salons has cropped up in downtown. Between 2001 and 2003 alone, the number of hair and nail salons, barbershops and day spas jumped from 35 in the central business district to 40.

To address the proliferation, the town council placed a temporary moratorium on these services last October, preventing any new businesses from opening up on N. Santa Cruz Avenue and in the surrounding area.

The intent of the moratorium was to prevent an over concentration of personal services in the downtown area, allowing for a more diverse mix of retail shops and other types of business.

With the moratorium up for review, there is little consensus on what the planning commission and the town council should decide and whom they should protect.

On one side of the issue are owners of existing businesses who say that the stiff competition in town has hurt their businesses. But even among these individuals, there are mixed feelings about the moratorium.

Not all business owners think that the ban is in their best interests, arguing that it unfairly penalizes them. Gabriela Oliveira, who owns Les Chattes, said the ban has prevented her from expanding her existing business this year, making her less competitive with other newer hair salons in town. Under the moratorium, Oliveira cannot lease the open space next door to her business and expand her services.

"I have a very nice place, but you need to keep going and evolve in the business industry," Oliveira said. "Right now, I'm being stopped."

Oliveira has owned her business for the last eight years and estimated that she has lost at least two employees per year who have gone on to open their own shops in Los Gatos. She said new hair salons in town have the advantage of better facilities and newer services, something she cannot offer to her clients without renovating her business.

Newer owners also have mixed feelings on the subject. Brenda Carlozza, who recently purchased Trends salon with co-owner Gwen Pallat, said she could understand the frustration prospective personal-service-business owners felt under the moratorium. Carlozza and Pallat were able to open their shop in December 2003 even though the ban had already been passed, because they bought out an existing salon on N. Santa Cruz Avenue.

"I go back and forth with the moratorium because there are so many salons. But from the hairdresser's point of view, it makes it difficult to open your own place," she said. Carlozza worked as a hairstylist at another salon in town before striking out on her own last December and said she and Pallat looked at a number of options before deciding to purchase their space on N. Santa Cruz Avenue.

Others believe that, if anything, the moratorium should only apply to this main downtown street instead of encompassing several streets in the vicinity as it does now.

"I believe that the council's decision in creating the moratorium, their main concern appeared to be N. Santa Cruz Avenue," said former Los Gatos Mayor John Lochner. He said that he has been forced to turn away a number of prospective tenants for a space in his Village Lane property over the past year due to the moratorium.

While the planning commission has yet to make a recommendation on the issue, transcripts from a recent General Plan Committee meeting indicate the possibility that the moratorium will be changed to allow more flexibility in its application. Some members of the committee thought that personal-service businesses should be allowed on the arterial streets, as these services might bring more business to the surrounding areas; others saw the need to differentiate between different types of personal-service businesses.

One recommendation to come out of the General Plan Committee meeting was to require a conditional-use permit for new businesses. CUPs generally run around $3,500 and would require proposals for new personal-service businesses to be evaluated before final approval.

Lochner criticized this idea, saying that CUPs would hurt rather than help the situation because of the associated fee.

"That's pretty much driving the small person out of business. They talk about having mom and pop businesses in town instead of franchises, and this is not the way to do it," he said.

The planning commission will hear the personal-service-business item April 28 at 7 p.m. in council chambers, 110 E. Main St.