If adopted by the town council May 3, prospective personal-service businesses in the downtown area would have to apply for a conditional-use permit from the town. CUPs are currently required for businesses such as restaurants and provide the town with more discretion in deciding which businesses can occupy certain locations.

Although recommending the use of CUPs, commission members made a concession to Village Lane, asking the town council to review the proposal for this side street. John Lochner, who owns a building on Village Lane, has previously argued that this location attracts fewer tenants than N. Santa Cruz Avenue and that the moratorium on personal-service businesses placed him and other landlords on the lane at a hardship disadvantage.

Commissioner Thomas O'Donnell agreed. "My impression of small side streets is that they are not and never will be prime attractors of business," he said.

Outside council chambers, community members expressed their frustration with the decision.

"They're shooting themselves in one foot while trying to protect the other," said Brian Battisti, who has been trying to move his business from Cupertino to Los Gatos for the past year. Battisti blamed the loss of retail stores on Santana Row, which opened last year in San Jose, and not on the proliferation of personal-service businesses in Los Gatos. He credited such businesses with bringing more foot traffic downtown rather than hurting the area.

Jennifer Miloqlav also criticized the planning commission, saying that the review process of the moratorium has been too slow. Miloqlav works at Les Chattes, a hair salon on N. Santa Cruz Avenue. Owner Gabrielle Oliveira has wanted to expand the hair salon to a neighboring building, but has been unable to do so for the past year under the moratorium.

"In our case, with the empty building in back, it supports us and the city and the landlords. It really benefits everyone. So why the delays?" Miloqlav asked.

In another action, the planning commission voted to allow the Community Hospital of Los Gatos to begin an extensive renovation project. Commissioner Lee Quintana was the only member to vote against the project, citing concerns about parking availability at the hospital.

"Hospitals have very unique operating systems," said Quintana. "Just relying on the number of beds does not reflect the reality of how hospitals are used." Parking is partially determined by the number of beds a hospital contains.

"My concern here is that the hospital building by the end of phase three will increase by 125 percent. Hospitals have parking demands that are different than other places," she later added.

Community Hospital plans to renovate its facilities in three phases, the first two receiving approval from the planning commission at the April 29 meeting. The hospital hopes to open four new operating rooms, a new outpatient surgery room and a new dining facility as well as renovate the hospital's façade during these two stages. The estimated cost of phase one and two is $52 million, paid by the hospital's parent company, Tenet Healthcare.

Phase three is still largely in a conceptual phase.

Construction on the hospital is not expected to begin for at least 18 to 24 months, as plans must still be reviewed by the California Office of Statewide Health Planning and Development.

Commissioner Michael Burke was absent from the meeting.

The planning commission's next meeting will be held May 12 at 7 p.m. at council chambers, 110 E. Main St.