Before they got to that issue, though, commissioners had a few other questions for him.

"You already have a business in Los Gatos?" Phil Micciche, commission chairman, asked.

Kelley replied that he did.

"Then you already have a conditional-use permit?" Micciche asked.

"No," the store owner said. He opened his business at 59 N. Santa Cruz Ave. in November.

"Why didn't you go through due process?" the chairman asked.

Kelley said that he had made a mistake--he opened the business in a rush before the busy holiday season without realizing that his store needed the permit. Because Kelley owns Sports Gallery Authenticated stores in Palo Alto and Carmel, his is considered a "formula retail business" under Los Gatos regulations and requires planning commission approval.

"We knew nothing about formula retail," Kelley said. "Formula retail to me is Wal-Mart."

He said he first learned of the town's requirements after inquiring about placing an awning over the store entrance. Kelley told the commission that since he began paying rent in November, he and family members that operate the business had been working toward obtaining the permit. Community Development Director Bud Lortz later said that a permit application was not filed until Jan. 26.

Commissioner Michael Burke asked Lortz to explain the process a business owner goes through when opening a store in Los Gatos. Lortz said that usually someone comes to the planning department to apply for a business license. Then a dialogue begins about a number of issues, including whether a conditional-use permit will be necessary. But he said that Kelley did not even apply for a license before opening.

"In this particular case, the cart got before the horse," Lortz said.

Micciche asked Kelley if he knew he would need to get a business license.

"It got overlooked," Kelley said. "It was a non-event with the other locations."

Commissioner Joanne Talesfore said she was "dumbfounded" and asked if there were fines associated with this type of situation. Lortz said fees are usually doubled.

After more discussion of the unusual order of operations, Micciche said that issue was irrelevant to the discussion. He explained that the commission's charge was simply to decide whether the business plan met the requirements for obtaining a use permit.

Kelley's son Mark, who is the company's vice president of finances, explained some of the shop's practices and apologized for any mistakes made in the first few months of its existence. He said the store has been doing well, making more money than the other two stores did during their early days.

Some commission members said they wondered why small-business merchants such as Kelley should even be required to appear before the commission and asked that the town's formula-retail regulations be brought forward for future discussion and possible revision.

"If you've got a four- or five-store chain, you really shouldn't have to go through the same process that a Wal-Mart should," said Burke.

The town's formula-retail regulations are currently being discussed by the General Plan committee, which could recommend policy revisions that would be forwarded to the commission and ultimately the town council.

In the end, the commission voted 6-1 to approve the permit, with Lee Quintana dissenting on the grounds that there were too many similar businesses in the same block.