SR-208-008
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SEP 2 2 1987
CA:RMM:jwh2djhpadv
city council Meeting 9-22-87
Santa Monica, California
;ZC lJ-tt?o'Z5
STAFF REPORT
TO:
Mayor and city Council
FROM:
City Attorney
SUBJECT:
Ordinance Adding Section 4814 and Amending sections
6120 and 6122 of the Municipal Code To Require a
Police Permit and Bond For Health Clubs.
At its meeting on September 8, 1987, the City Council
introduced for first reading an ordinance requiring health clubs
in Santa Monica to obtain a police permit and a bond as a
condition of operation.
The accompanying ordinance is now
presented to the City Council for adoption.
RECOMMENDATION
It is respectfully recommended that the accompanying
ordinance be adopted.
PREPARED BY: Robert M. Myers, City Attorney
Jeffrey w. Holtzman, Deputy city Attorney
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SEP 2 2 1987
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BEFORE DISTRIBUTION CHECK CONTENT OF ALL
DISTRIBUTION OF RESOLUTION ,
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FOfltITY ~ERK'S ACTION
ORDINANCB' /W 7
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Adopte'd: ef/d~ /,? , _
AU~S PUBLISH MX>PTEO Oltr>INAN:FS*
"'Cross out Attorney I S approval
Council Meeting Date
Introduced:
. . .
Agenda Item I
Was it amended?
VOTE: Affirmative:
Negative:
Abstain:
~-~/
Absent = ~,
PROOF vOtE~ WITH ANOTHER PERSON ~EFORE ~NYTHTNG
DJ:SIK1Buiiui"oi; uKJ.Gii"oiA:L; ~o oe signeo., sea.lea ami "filed in Vault.
NEWSPAPER PUBLICATION (Date:
)
I
Department originating staff report ( * )
*Clty Attorney does not want copies of his ~s or resol.utJ.ons.
J4anagement SerVJ~~eJ Lynne Ba~rette .urdinances only
Agency mentioned in document or staff report
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...
(certified?)
Subject file (agenda packet) 1
Counter file 1
Others,: (Review for depw:"Ul-.ents who need to knew).
.
Airport
Auditorum
Parking Auth.
Personnel
Building Dept.
Planning
Police (en-
forcement?)
Purchasing
Recr/Parks
Cuu:uunity and Econani.c Dev'.
Finance
I
.
Fire
en
General Servo
Transportation
Library
Treasurer
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Manager
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SEND FOU~ COPIES OF ALL ORDINANCES- TO:
CODFD SYSTEMS, At:1:n pe"ter MaCl'earie
1 :'.9 Afilin~ :"tr~et ....
" A"'1~" !'-!ffw Jersey.02711
SEND FOUR COPIES OF ALL O1HHNANf'FS :1'0:
'gPtfK ifo5fe"t MUNIer'PAL COURT
" 725 MAIN STREEl;. Room 118
SAnTA MON~CA, CA 90401
*Check COde Sections before serrl
TOTAL COPIES
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CA:RMM:health2jhpadv
City Council Meeting 9-22-87
Santa Monica, California
ORDINANCE NU}fBER l4l7(CCS)
(city Council Series)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY
OF SANTA MONICA ADDING SECTION 4814 AND
AMENDING SECTIONS 6120 AND 6122 OF THE MUNICIPAL
CODE TO REQUIRE A POLICE PEa~IT AND BOND FOR HEALTH
CLUBS OPERATING IN SANTA MONICA
THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES ORDAIN
AS FOLLOWS:
SECTION 1.
section 4814 is added to the Santa Monica
Municipal Code to read as follows:
SECTION 4814. Health Clubs
(a) Purpose. The purpose of this Section
is to provide consumers of health club services
with an effective and expedient method of
obtaining refunds when their health club is closed
and the business fails to provide prompt and
equitable refunds.
(b)
Definitions:
For purposes of this
Section, the following words or phrases shall have
the following meanings:
(1) Health club. Any business which
offers or provides to the public on a membership
basis, services, facilities, instruction, training
or assistance in body building I exercising,
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reducing, figure development, aerobics, or any
other similar physical activity.
(2) Health Club Contract. A contract
in the form and manner prescribed by California
civil Code sections 1812.80 et seq., between a
health club and consumer for health club services.
(3)
Health
Club
Closure.
The
discontinuation on a permanent basis of health
club services in the manner and location specified
in the health club contract.
This shall not
include temporary closures for a period of two
weeks or less or for closures of a longer duration
in order to make repairs or alterations to
existing facilities.
(4) Refund. An amount equal to the
pro-rated value of the remaining time on a health
club contract at the time of a health club
closure. Initiation and processing fees, if any,
shall be included if such fees were paid within
two (2) years of the date of the health club
closure.
(5)
Bond.
A surety bond from a
company approved by the CitZ Attorney in favor of
the City of Santa Monica for the benefit of
consumers whose health club closes and fails to
provide refunds within thirty (30) days of such
closure.
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(c) ,Police Permit Required. Every person
in the City of Santa Monica who operates a health
club or who solicits members for a proposed health
club shall obtain a police permit as a condition
of operation. The police permit shall be obtained
in accordance with the provisions of sections 6120
and 6122 of this Code.
(d) Bond Requirements. No police permit
shall issue or be renewed for a health club unless
the applicant first provides the City Attorney
evidence of a surety bond meeting all of the
fallowing requirements:
(1) The bond is in the amount of
Seventy Five Thousand Dollars ($75,000.00) or Five
Percent (5%) of the applicant I s previous fiscal
year gross, whichever is greater.
(2) The bond shall be enforceable
upon the failure of the applicant to provide to
the City Attorney proof of refunds within thirty
(30) days of the date of the health club closure.
(3) The bond provides for payment of
administrative costs to the City of Santa Monica
in an amount equal to ten.. percent ( 10%) of the
total monies refunded to health club consumers.
(e) Bond Exemption. A bond shall not be
required for the issuance or renewal of a health
club permit if the Chief of POlice, after
consul tation with the City Attorney, determines
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the applicant is eligible for an exemption based
upon anyone of the following criteria:
(1) The applicant is a non-profit
organization eligible for a tax exemption pursuant
to California Revenue and Taxation Code Section
23701d.
(2) The applicant charges consumers
on a monthly fee basis and does not charge as an
initiation fee an amount greater than the amount
of the monthly fee.
(3) The applicant has provided health
club services continuously during the three (3)
year period immediately prior to the date of the
permit application: and has unsecured and
unencumbered assets in excess of One Million
Dollars ($1,000,000.00); and warrants to the City
in a form approved by the City Attorney that any
subsequent sale or transfer of the health club
shall be conditioned upon the applicant either
providing refunds to consumers or requiring the
successor to honor in
full the terms and
conditions of the applicant's existing health club
contracts. An applicant ~_ qualifying for an
exemption pursuant to this subsection shall
annually file,
concurrent vlith its business
license renewal, a statement certifying that the
applicant continues to maintain unsecured and
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unencumbered assets in excess of One Million
Dollars ($1,000,000.00).
(4) The applicant, subject to the
approval of the City Attorney, establishes an
alternative account in the amount of Seventy Five
Thousand Dollars ($75,000.00) or Five Percent (5%)
of the health club's previous yearly gross,
whichever is greater, exclusively for the payment
of refunds which names the City of Santa Monica as
the trustee of such funds.
(f) Bond Enforcement Stayed. The operator
of a health club shall be afforded a period of
thirty (30) days from the date of a health club
closure to provide refunds to affected consumers
prior to the City taking action to enforce the
refund provisions established by paragraphs (d)
and (e) of this Section.
(g) Administration of Refunds. Upon the
City's receipt of funds from the bond or other
secured interest, the City shall provide refunds
to the extent such refunds are made possible given
the amount of the proceeds from the bond or other
security and the amount ~~ refunds claimed by
consumers. The administration of consumer refunds
shall be the responsibility of the City Attorney
who shall:
(1) Cause the Director of Finance to
establish a Health Club Refund Account for the
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deposit of all proceeds from the bond or secured
interest into such account.
(2) Receive and review claims for
consumer refunds.
(3) Determine the validity of and
appropriate amount for each consumer refund.
( 4 ) Deduct from the bond or secured
interest as administrative costs an amount equal
to ten percent (10%) of the amount of refunds
provided to consumers.
(h)
Deadline for Refund Claims.
Unless
good cause is shown, no claim for a refund shall
be accepted by the City Attorney after six (6)
months from the date of the health club closure.
Nothing in this section shall affect the rights of
consumers to alternatively pursue civil remedies
which may otherwise be available under state or
federal law.
(i) Term of Health Club Contract. No
health club operating in the city of Santa Monica
shall contract to provide health club services for
a period of time beyond which the health club has
an ownership or leasehold interest to operate such
health club.
(j) Disclosure statement. All health club
contracts entered into in the City of Santa Monica
shall have prominently displayed in bold type upon
such contract the following disclosure:
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NOTICE TO CONSUMERS: In the event
of a health club closure, you may
have additional protections
afforded by local law beyond those
provided to you under state law.
For more information, contact the
Santa Monica City Attorney's
office, consumer Affairs, 1685 Main
street, Santa Monica, california
9040 l.
(k) All health clubs shall comply with this
section on or before July 1, 1988.
SECTION 2. Section 6120 of the Santa Honica Municipal
Code is amended to read as follows:
SECTION 6120. Permits Required.
A. Any person required to obtain a license
to engage in any business, calling or pursuit
mentioned in Sections 4814, 6204A, 6204C,
6204D, 6204E, 6204F, 6204H, 6204J, 6204K,
6204M, 6204N, 6204P, 6204Q, 6204R, 6204T,
6204U, 6204W, 6207, 6208, 6208A, 6210, 6218, 6220,
6221, 6222, 6224, 6231, 6233, 6233A, 6233B, 6233C,
6233D, 6239, 6240 (6), 6240 (8), 6240 (20), 6240 (23) ,
6241, 6244, of this Code shall first obtain a
permit to conduct such business from the Chief of
Pol ice. In order to obta in such a permit, a
written application shall be filed with said Chief
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of Police, which application shall contain a
statement of intention as to the location and
extent of the premises, if any, to be occupied,
and in addition such application for a permit to
engage in any of the businesses requiring a permit
shall contain the name of any person financially
interested in the business in any manner.
B. The Chief of POlice, within a reasonable
time after submission of such application, shall
conduct an investigation, in such manner as he or
she deems appropriate, in order to ascertain
whether such permit should be issued as requested.
The Chief shall issue such permit as requested,
unless, as a result of said investigation, he or
she finds by a preponderance of the evidence, any
of the following:
(1) The conducting of the business or
profession
in
the
location
stated
in
the
application vIi11 be in violation of any latofs or
ordinances; or
(2) That any applicant, including but
not limited to the applicant's employees directly
engaged in the subject actiyity, bas, within five
(5) years of the date of application, been
convicted of any crime which is substantially
related to the qualifications, functions, or
duties of the business or prOfession for which
application is made.
A conviction within the
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meaning of this action means a plea or verdict of
guil ty or a conviction following a plea of nolo
contendre; or
(3) That any such person has, within
five (5) years of the date of application,
committed an act which, if done by a licensee or
permittee under this Chapter, would be grounds for
suspension or revocation of a license or permit:
or
(4) That any such person has, within
five (5) years of the date of application,
conun.i t ted an act involving di shanes ty , fraud, or
deceit with the intent to substantially benefit
himself or another or substantially to injure
another, or an act of violence, which act or acts
are substantially related to the qualifications,
functions, or duties of the business or profession
for which application is made; or
(5) That the applicant has knowingly
and with the intent to deceive made a false,
misleading or fraudulent statement of fact to the
city in the application process.
C. The Chief of Polic~ may develop criteria
to aid him or her, Hhen considering the denial,
suspension or revocation of a license or permit,
to
determine
\vhether
a
crime
or
act
is
substantially related to the qualifications I
functions, or duties of the business or profession
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for which application is made Such criteria, if
developed, shall contain provisions for granting
the application of any person convicted of a
felony, provided the applicant has obtained a
certificate of rehabilitation under Penal Code
Sections 4852.01 et seq., or if a misdemeanor,
that
the
applicant
establishes
to
the
satisfaction of
rehabilitated.
D. The Chief shall be authorized to
the
Chief he
or she
is
condition the issuance of any permit to insure
compliance with this Chapter and other applicable
laws.
E.
When
the
Chief
finds
from
the
investigation that any of the facts specified
above are present, he or she shall decline to
issue the requested permit within 30 calendar days
from the date of the permit application. Any
decision of the chief with respect to the denial
or conditional approval of any such permit shall
be subject to an appeal by the aggrieved
applicant, provided that said appeal is taken
within the time and in th~_ manner set forth in
sections 6124 et seg., of this Code.
F. Upon approval of an application by the
Chief of police, it shall then be submitted by the
applicant with the amount of the license fee
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required hereunder to the city Clerk, who then
shall issue the license provided for in this Code.
G. Permits issued hereunder shall be
effective for the same period as the license
issued pursuant to such permi t.
Upon the
expiration of the permit, an application for
renewal thereof shall be filed in a like manner as
an application for an original permit, and such
renewal permi t shall be granted only when the
requirements for the issuance of an original
permit are met.
permi ts issued hereunder shall
not be assignable.
SECTION 3.
Section 6122 of the Santa Monica Municipal
Code is amended to read as follows:
SECTION 6122.
permi t Fees.
The Chief of
Police shall not accept any application for any
permit required to be obtained by Section 6120 of
this Code or for the rene'..,ral of such a permit
unless the application be accompanied by the fee
prescribed in the following schedule:
Business or
Activity For Which
Fee is Required
original
Fee
section of Code
Renewal Requiring
Fee License
Ambulance $ 5.00 $ 1. 00 6207
Amusement & Entertainment
Enterprises
Arcade 25.00 10.00 6204A
Miniature Rides 10.00 2.00 6204P
Rides of Magnitude 10.00 2.00 6204N
Shows 25.00 10.00 6204R
Skill Game
1 Prize only 25.00 10.00 6204T
Skill Game 5.00 1. 00 6204U
Machines 25.00 10.00 6204J
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Auctioneer
Auction House
Auto Parks
Auto wrecking
Bath Treatment
Boxing
Carnival Merchandise
Circus
Dance Hall
Dancing Academy
Dancing Entertainment
in Bar
Drive-In Restaurants
Figure studio
Firearms
Fortune Teller
Health Club
Herb Doctor
Itinerant Vendor
Junk Dealer
Junk Collector
Masseur or Masseuse
Medicine Show
Merchandise Club
Organ Grinder
Pavmbroker
Peddler,
Candid Camera
Peddler, Flowers
Peddler, General
Peddler, Jewelry,
Clothing
Peddler, Medicine
Physical Culture
Second Hand Clothing
only
Second Hand Dealer,
General
Shooting Gallery
Soliciting Business
Soliciting--Interstate
Taxicab
25.00
25.00
10.00
25.00
5.00
5.00
5.00
25.00
5.00
5.00
2.00
5.00
100.00
10.00
25.00
100.00
5.00
5.00
25.00
5.00
5.00
25.00
25.00
25.00
400.00
25.00
5.00
5.00
25.00
5.00
10.00
5.00
25.00
5.00
5.00
3.00
25.00
10.00
10.00
10.00
10.00
1. 00
1. 00
1. 00
10.00
1. 00
1. 00
2.00
1.00
25.00
5.00
10.00
25.00
1. 00
1. 00
10.00
1. 00
1. 00
10.00
10.00
10.00
400.00
10.00
1. 00
1. 00
10.00
1. 00
2.00
1. 00
10.00
1. 00
1. 00
3.00
10.00
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6208
6208A
6210
6240 (6)
6240(8)
6204C
6204D
6204E
6204F
6240(20)
6714
6121
6237F
3505
6204H
4814
6218
6220
6222
6221
6240(23)
6204K
6224
620411
6231
6233A
6233B
6233
6233C
62330
6240(20)
6239
6239
6204Q
6241
624 1E
6244
SECTION 4. Any provision Qf the Santa Honica Municipal
Code or appendices thereto inconsistent vii th the provisions of
this ordinance, to the extent of such inconsistencies and no
further, are hereby repealed or modified to that extent necessary
to affect the provisions of this ordinance.
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SECTION 5. If any section, subsection, sentence, clause,
or phrase of this ordinance is for any reason held to be invalid
or unconstitutional by a decision of any court of competent
jurisdiction, such decision shall not affect the validity of the
remaining portions of the ordinance. The city council hereby
declares that it would have passed this ordinance and each and
every section, subsection, clause or phrase not declared invalid
or unconstitutional without regard to whether any portion of the
ordinance
would
be
subsequently
declared
invalid
or
unconstitutional.
SECTION 6. The Mayor shall sign and the city Clerk shall
attest to the passage of this ordinance.
The city Clerk shall
cause the same to be publ ished once in the official ne\-lspaper
within 15 days after its adoption.
APPROVED AS TO FOffi1:
~ ~. :----er---
ROBERT H. HYERS
city Attorney
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Adopted and appr
~
Mayor
I hereby certify that he foregoing Ordinance No. 1417 (CCS)
was duly and regularly intruu.u~ at a meeting of the city
Council on the 8th day of September 1987; that the said Ordinance
was thereafter duly adopted at a meeting of the city Council on
the 22nd day of September 1987 by the fOllowing Council vote:
Ayes: councilmembers: Finkel, Jennings, A. Katz, H.
Katz, Zane and Mayor Conn
Noes: councilmembers: None
Abstain: councilmembers: None
Absent: councilmembers: Reed
ATTEST:
CZn /7;, ~~
ci ty CIE!rk