Item 7-A
Council Mtg:
November 11, 2003 Santa
Monica, California
TO: Mayor
and City Council
FROM: City
Staff
SUBJECT: Formula Business Restrictions on the Third
Street Promenade
INTRODUCTION
This report
provides for City Council introduction and first reading of an interim ordinance
requiring any new or expanded formula retail establishment proposed for the
Third Street Promenade to obtain a Use Permit pursuant to special findings.
On September
9, 2003, the City Council held a study session regarding a variety of matters
related to the Promenade Uses Task Force, including regulation of “formula”
businesses, commonly known as “chain stores.” Following the discussion of
formula businesses, Council directed staff to draft legislation providing for
regulation of formula retail businesses on the Promenade. The Council also introduced an interim
ordinance limiting new or expanded retail frontages on the Third Street
Promenade to no more than 50 linear feet.
As discussed in the September 9, 2003 staff report, a
number of cities have considered or enacted legislation targeting formula
businesses, ranging from outright bans on formula restaurants to caps on the
number of permitted formula restaurants to special review requirements for
formula retail and restaurants. The
public hearing and Council discussion articulated several reasons in support of
formula business regulation on the Promenade, including:
·
Maintaining the
distinctive and diverse character of the Third Street Promenade, which has been
impacted by the loss of unique businesses;
·
Promoting diverse and
inviting retail storefronts that impart a sense of streetscape continuity to
the pedestrian environment of the Promenade;
·
Protecting the
Promenade from an over-abundance of certain types of businesses that detract
from the street’s overall pedestrian appeal;
·
Promoting the long-term
economic viability of the Promenade, as the appeal of the Promenade to tourists
and regional visitors diminishes when merchants on the Promenade are located in
most other communities;
·
Promoting a strong and
diverse retail base as a cornerstone of the Promenade’s long-term economic
viability;
·
Promoting businesses
that target their goods and services to the needs of Santa Monica residents;
·
Maintaining a mix of local,
regional and national businesses, and small, medium, and large businesses;
·
Maintaining local
influence in the content of products and merchandise; and
·
Promoting greater
recycling of business revenues and profits into the local economy.
Definition
of Formula Business
Formula
retail is generally defined as a type of retail activity or retail sales
establishment which is required by contractual or other arrangement to maintain
any of the following standardized elements: array of services or merchandise,
business name, décor, architecture, layout, uniform, or similar standardized
feature. Movie theaters, hotels, drug
stores, grocery stores, and automobile service stations are typically excluded
from formula business regulations.
The proposed interim ordinance would require proposed
new or expanding formula businesses with frontage on the Third Street Promenade
to obtain a Use Permit. In order to
grant the Use Permit, the Zoning Administrator, or the Planning Commission on
appeal, would be required to make the following findings:
·
The formula retail
establishment has been designed and will be operated in a manner to preserve
the unique character and ambiance of the Promenade;
·
The formula retail
establishment is consistent with the goals, objectives and policies of the
Bayside District Specific Plan;
·
The formula retail
establishment will contribute to an appropriate balance of local, regional and
national-based businesses on the Third Street Promenade; and
·
The formula retail
establishment will contribute to an appropriate balance of small, medium and
large-sized businesses on the Third Street Promenade.
In addition, the granting authority would be required
to make general Use Permit findings regarding the compatibility of the proposed
use. The ordinance requirements apply
to general retail uses, but not to restaurants, cinemas or other permitted
non-retail uses.
The proposed regulatory review requirements and
findings are similar to those enacted by the City of Coronado, California in
January 2001. The Court of Appeal
recently upheld the ordinance and rejected a constitutional challenge based
upon the commerce clause of the federal constitution. That clause limits state and local power to regulate interstate
commerce. The decision in the Coronado
case is unpublished and therefore could not be cited in defense of any similar
ordinance. Moreover, the outcome in the
case may have been based on Coronado’s particular facts or upon the limited
record before the Court of Appeal.
Thus, the decision does not establish cities’ authority in the area of
regulating formula retail. Nonetheless,
the decision provides some indication of how a similar ordinance might fare in
court.
The Council may wish to contemplate regulatory
approaches other than that contained in the proposed ordinance. Other potential approaches, as well as
general considerations with respect to the regulation of formula retail, are
discussed below.
Moratorium or Cap
During its September 9 discussion of this matter,
Council members remarked that certain formula businesses are important members
of the local community, offering goods and services that are affordable, valued
by local residents, and otherwise unavailable in the local market. The proposed ordinance provides a means for
monitoring the proliferation of formula retail businesses on the Promenade
while providing applicants with an opportunity to articulate how the proposed
use would contribute to the diversity and ambiance of the Promenade.
A moratorium on additional formula retail on the
Promenade or limits on the total Promenade frontage or square footage of
formula businesses would risk eliminating all opportunities for formula
businesses that could add to the diversity, character and economic strength of
the Promenade (i.e. a formula retailer that the community perceives
as very desirable for the Promenade could be automatically blocked by the
limits).
Application to Restaurants
The Council and public discussion regarding the
proliferation of formula businesses has largely focused on formula retail
establishments. The proposed ordinance
would require a use permit of formula retail establishments, but not of formula
restaurants. Formula restaurants could
be included in the ordinance if Council wishes to implement safeguards against
formula restaurant proliferation.
Currently, the Promenade includes a variety of independent and formula
restaurants. Unlike the retail
landscape, the Promenade has not experienced a recent proliferation of formula
restaurants. Restaurants that have recently opened or are planned for the
Promenade include independents and chains. The Promenade Uses Task Force
articulated a principal goal of attracting and retaining restaurants on the
Promenade and recommended reducing regulatory burdens to encourage the
establishment of restaurants in furtherance of this goal. New regulatory hurdles could hinder
restaurant development. In addition,
several area restaurants that are generally perceived as independent and valued
members of the community are actually part of small chains and desirable
restaurants of this sort would likely be subject to the special requirements of
the ordinance, unless the definitions were altered.
Geographical Target Area
The Council and public discussion regarding the
proliferation of formula retail has focused on the incidence of this phenomenon
on the Third Street Promenade.
The proposed interim ordinance requires use permits of new or expanded
formula retail only on the Promenade. The ordinance could be broadened to
include other Bayside District streets.
No proliferation of formula retail has yet occurred on other District
streets. Still, the Council may wish to
broaden the geographical limits of the proposed ordinance to ensure balanced
retail development in the remainder of the District. A counterargument is that the other District streets lack
the Promenade’s vibrancy and pedestrian appeal and thereby face greater
challenges in attracting highly appealing, pedestrian-oriented tenants for
ground-floor commercial space. Formula
retailers, who generally enjoy high levels of public recognition, may help to
enliven the other district streets by attracting more pedestrians and customers.
Additional regulatory reviews for proposed tenants could further challenge
leasing and associated vibrancy on those streets.
Type of Permit
The proposed ordinance contemplates that any new or
expanded formula retail business would be required to obtain a Use Permit. The
Zoning Administrator grants Use Permits if the relevant findings can be made.
The decisions of the Zoning Administrator may be appealed to the Planning
Commission. Alternatively, a Conditional Use Permit (CUP) could be
required of proposed formula retail. A
CUP may be granted by the Planning Commission if the relevant findings can be
made and decisions of the Planning Commission may be appealed to the City
Council for final determination. CUPs
are intended for cases where the potential effects of a proposed use on the
surrounding environment are considered to be of greater significance than those
subject to a Use Permit. The proposed
ordinance could be modified to require a CUP if the Council believes that the
severity of the formula retail issue warrants a higher level of review and
final determination by the City Council.
This process would likely add considerable time to the development
process due to agenda logistics for the Planning Commission and Council.
Workload Considerations
An additional
consideration with respect to the proposed ordinance is the expected impact to
City Planning Division workload.
Currently, new or expanded retail establishments on the Promenade are
generally approved administratively.
While the number of applicants that would be subject to the proposed new
requirements is unknown, the appeal of the Promenade to formula retailers
is expected to continue and the associated number of permit applications would
not be inconsequential. Use Permits
would entail additional staff analysis, preparation of staff reports, and
Zoning Administrator hearings. Given
the divergent opinions regarding formula businesses generally, it is likely
that many of the Zoning Administrator’s determinations would be appealed,
necessitating addition analysis and reports and further burdening the
substantial Planning Commission caseload. The additional workload is expected
to negatively affect the timeliness of the Council’s priority planning
projects.
The proposed
ordinance is categorically exempt from CEQA under Class 5, minor alterations in
land use limitations. Because the
ordinance would not alter current standards for the density or quantity of
permitted commercial development, it will not result in any new changes in land
use or density and is therefore categorically exempt from CEQA.
BUDGET/FINANCIAL IMPACT
Adoption of
the proposed ordinance will have no budget or financial impact.
RECOMMENDATION
It is
respectfully recommended that the Council consider the attached interim
ordinance for first reading.
Prepared by: Suzanne Frick, Director, Planning and Community Development
Jeff
Mathieu, Director, Resource Management
Attachments: