SR-410-001 (30)
PCD:SF:AA:f:\plan\admin\downtown task force\formula use permit.doc
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.
BACKGROUND
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.
DISCUSSION
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
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Promenade, including:
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Maintaining the distinctive and diverse character of the Third Street Promenade,
which has been impacted by the loss of unique businesses;
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Promoting diverse and inviting retail storefronts that impart a sense of
streetscape continuity to the pedestrian environment of the Promenade;
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Protecting the Promenade from an over-abundance of certain types of
businesses that detract from the street’s overall pedestrian appeal;
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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;
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Promoting a strong and diverse retail base as a cornerstone of the Promenade’s
long-term economic viability;
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Promoting businesses that target their goods and services to the needs of Santa
Monica residents;
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Maintaining a mix of local, regional and national businesses, and small, medium,
and large businesses;
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Maintaining local influence in the content of products and merchandise; and
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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.
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PROPOSED INTERIM ORDINANCE
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:
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The formula retail establishment has been designed and will be operated in a
manner to preserve the unique character and ambiance of the Promenade;
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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
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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
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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.
OTHER OPTIONS AND CONSIDERATIONS
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
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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
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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.
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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.
CEQA STATUS
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.
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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
Andy Agle, Assistant Director, Planning and Community Development
Attachments:
A. September 9, 2003 Study Session Staff Report
B. Proposed Ordinance
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Attachment A
PCD:SF:AA:f:\plan\admin\downtown task force\promenade uses study issues.doc
Council Mtg: September 9, 2003 Santa Monica, California
TO: Mayor and City Council
FROM: City Staff
SUBJECT: Promenade Uses - Study Session on Formula Business Regulation,
Bayside Assessment Formulas and Proposed Work Plan for
Implementation of Promenade Uses Task Force Recommendations
INTRODUCTION
This report provides background for the City Council’s study session on formula
business regulation, Bayside District assessments and a work plan for implementation
of the Promenade Uses Task Force recommendations.
BACKGROUND
As directed by the City Council, the Promenade Uses Task Force held a series of
meetings and workshops during late 2002 and early 2003. The Task Force reviewed a
series of issues and strategies related to maintaining and enhancing the character and
experience of the Third Street Promenade and Bayside District.
DISCUSSION
On June 10, 2003, the City Council reviewed the recommendations of the Promenade
Uses Task Force and directed staff to return with the following:
1. Background information on regulation of formula businesses and current Bayside
District assessments to facilitate a City Council study session on related issues;
2. A proposed work plan for implementation of the Task Force recommendations;
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and
3. An interim ordinance implementing the Task Force’s recommendation that retail
uses on the Third Street Promenade be limited to no more than 50 linear feet.
FORMULA BUSINESS REGULATIONS
From its initiation, Third Street Promenade has been characterized by a blend of
relatively small, locally owned unique retail shops and restaurants, and major chain
movie theaters. A recent trend occurring in Santa Monica and in other popular,
pedestrian-oriented downtown areas has been the gradual replacement of pioneering,
locally owned, entrepreneurial establishments with “formula” businesses (see definition
below) attracted by the productive commercial activity found in successful commercial
venues.
The Task Force considered various disincentives and restrictions on formula
businesses to better preserve independent and local retailers and restaurants.
However, the majority of Task Force members opposed creating regulatory barriers to
the commercial marketplace based upon the ownership character of the business.
Definition of Formula Business
Municipalities that have enacted regulations directed towards formula businesses have
generally focused on the following features to determine whether a restaurant, retail or
other commercial establishment falls within the definition of a formula business:
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Business name common to a similar business located elsewhere
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Standardized features, services or uniforms, including menus, ingredients and
food preparation, common to a similar business located elsewhere
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?
Interior décor common to a similar business elsewhere
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Architecture, exterior design elements or themes and/or signage and façade
treatment common to a similar business located elsewhere
?
Use of a trademark or logo common to a similar business located elsewhere, but
not including logos or trademarks used by chambers of commerce, better
business bureaus or rating organizations
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A name, appearance, business presentation or similar features which make a
business substantially identical to a similar business located elsewhere
Movie theaters, transient occupancy facilities (hotels, motels, hostels), drug
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stores, grocery stores and automobile service stations are typically excluded
from formula business regulation
Public Purpose of Formula Business Restrictions
Various municipalities have adopted or considered findings that cite local public benefits
that arise from instituting regulatory restrictions or outright bans on formula businesses
within their jurisdictions. Among the aforementioned findings of adverse impacts of
large-scale influx of formula businesses are:
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Contribution to traffic congestion and increased parking demand
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Increased commercial rents to the disadvantage of locally owned businesses
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Change in small town neighborhood character
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Loss of unique and/or essential neighborhood services
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Loss of non-traditional or unique goods
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Reduced pedestrian orientation
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Reduced recycling of business revenue and profits into the local economy
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Loss of local influence in content of products or merchandise available
Significant change to the physical scale of business facilities
?
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A key goal of formula business regulations is to promote a diverse retail base with a
unique retailing personality comprised of a mix of businesses. Such regulations
attempt to prevent a business district from being taken over by generic chain stores and
to create a commercial marketplace that is well-balanced in its appeal to the mixed
residential, employee and visitor markets.
A review of literature associated with anti-formula business organizations and the
alleged adverse impact on local economies by formula businesses purportedly arising
from reduced diversity of products or merchandise, diminution in local capital
reinvestment, hiring or spending, and detrimental change in community character
discloses it to be generally anecdotal and value-laden. There are instances where local
non-formula businesses in certain market segments are larger and more intrusive than
nearby formula businesses.
In Davis, California, a group of residents attempted to use the California Environmental
Quality Act (CEQA) to require the city to utilize its design review discretion to exclude
formula businesses from locating in a publicly supported redevelopment project. The
California Court of Appeal found that the city could not use its discretionary design
review ordinance to exclude formula businesses, that State constitutional provisions
delegating to cities the power to make and enforce local ordinances and regulations not
in conflict with general law did not obligate the city to utilize discretionary review, that
the ownership character was insufficient to require additional project review under
CEQA, and that the social and economic effects of the presence of formula business did
not constitute potentially significant change in the environment warranting additional
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CEQA review. (Friends of Davis v. City of Davis (2000) 100 Cal.Rptr. 413). However,
the case does not preclude formula business regulations generally.
The Court of Appeal recently upheld a Coronado, California ordinance requiring formula
businesses to obtain a special use permit. In granting a formula business special use
permit, the ordinance requires findings that the establishment contributes to an
appropriate balance of local, regional and national-based businesses and small,
medium and large-sized businesses.
Survey of Regulatory Policies
Following is a summary of approaches adopted by various municipalities to address
formula business proliferation and to preserve the character of neighborhood
commercial districts. Copies of pertinent zoning codes and ordinances are available for
Council review. Additionally, many communities, including Santa Monica, have adopted
building size restrictions to prevent development of “big box” retail centers unless
subject to special use permits. These size restrictions appropriately address design,
traffic and commercial district character issues while preventing an undue concentration
of retail activity. The restrictions generally range from 20,000 s.f. to 120,000 s.f., and
are not the focus of this discussion. Similarly, building design and massing are
commonly addressed through community design guidelines to minimize visual impacts
from large-format retail facilities.
As shown in the summary below, several communities have adopted caps or outright
bans on certain types of formula businesses, most typically formula fast food, while
others focus on restricting the size and amount of street frontage of businesses
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generally to maintain a desired scale and character of commercial development.
Arcata, CA (2002)
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Caps formula restaurants at 9
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No new formula restaurants except as replacement
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Considered but did not adopt restrictions on formula retail businesses
Calistoga, CA (1996)
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Bans formula restaurants and formula visitor accommodations
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Special use permit required for all new formula retail businesses and all new
visitor accommodations
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Special use permit required for all commercial structures or multiple structures in
a single development in excess of 20,000 s.f. gross floor area and all parking lots
or multiple parking lots in a single development in excess of 50 spaces
Carmel, CA (1986)
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Bans all fast food restaurants and all formula restaurants
Coronado, CA (2000)
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Caps formula fast food restaurants at 10
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Special use permit required for new formula retail and fast food restaurants
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Bans use of corner locations by formula fast food restaurants
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Caps commercial street frontage by single business at 50 feet and two floors
Pacific Grove, CA (1995)
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?
Bans formula fast food restaurants
San Francisco, CA (2001)
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Formula businesses are not regulated or restricted
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Size of commercial development in Central Business District not constrained
except by CEQA impact analysis
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Neighborhood Commercial Individual Area Districts (NCDs) created to maintain
appropriate scale of development, promote a balanced mix of retail and
restaurants, and preserve an equilibrium of neighborhood-serving specialty
shopping and dining
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Commercial size limits (movie theaters exempted) for each NCD as follows:
North Beach – 2,000 s.f.
Union Street, the Haight – 2,500 s.f.
Broadway, Upper Market – 3,000 s.f.
Other Districts – 4,000 s.f. to 6,000 s.f.
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Special use permit required for projects exceeding NCD thresholds, permissible
with finding that commercial activity is not such that allowing the use will
foreclose other needed neighborhood serving uses; proposed use will serve the
neighborhood in whole or in significant part; and structure is designed in discrete
elements which respect the scale of development in the NCD
Santa Cruz, CA (2000)
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Formula businesses are not regulated or restricted
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Special use permit required for all projects in excess of 16,000 s.f. in Central
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Business District, permissible with finding that use adds a new type of business
to CBD; proposed project contributes to an appropriate balance of local, regional
or national-based businesses with presumption that local and regional-based
businesses more effectively serve diversity (rebuttable by applicant); project
contributes to an appropriate balance of traditional and non-traditional
businesses; and contributes to an appropriate balance of small, medium and
large businesses with presumption that small and medium-sized businesses
more effectively serve diversity (rebuttable by applicant)
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Incentive program for community-based (local) businesses (not yet created)
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Adopted CBD Retail Specific Plan/Strategic Action Tasks to create recruitment
and retention strategy for local small businesses; develop guidelines for balance
of local, regional and national businesses; develop architectural design
guidelines and criteria; provide grants to existing businesses and low-interest
loans to new businesses for façade improvements; and develop list of targeted
uses and business types for recruitment, with three-year abatement of parking
district fees and permitting assistance for targeted business types
Solvang, CA (1994)
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Bans formula restaurants
Palm Beach, FL (1988)
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Formula businesses not regulated or restricted
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Identifies “town-serving” commercial zone
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Commercial use greater than 2,000 s.f. require special use permit, permissible
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with finding that at least 50% of customers will be persons living or working in city
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Regulation upheld in Florida court as reasonably in the public interest to limit
displacement of local businesses
Boulder, CO
Considered but did not adopt “Community Vitality Act” to cap number of formula
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businesses; ban leasing of public property to non-local businesses; and establish
a city purchasing preference for locally owned businesses
Summary
Relatively few cities have enacted regulatory restrictions on formula restaurants. None
have banned or differentially restricted formula retail businesses, although special use
permits are required in Calistoga and Coronado. Those jurisdictions that do restrict
formula restaurants typically utilize zoning ordinances as the means to control the
number or to ban them entirely. These restrictions have reportedly not yet been
challenged in a California court, and it is therefore unknown whether they may stand or
be overturned. Santa Monica has established preferences for local independent
businesses in the leasing of its owned real estate assets on the Pier and within Bayside
District. Formula business caps are also under preliminary consideration in Aspen, CO
and Banff, Alberta, Canada. The City of Palm Beach ordinance severely restricting
commercial size was tested in the Florida courts and upheld because it applied to
equally all commercial uses, and not narrowly to formula business.
It is interesting to note that the municipalities where formula business restrictions have
been adopted tend to be “boutique” communities that are physically isolated from
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commercial competition by distance from adjoining metropolitan areas, are
comparatively wealthy, do not possess diverse economies, tend to exhibit distinct
thematic character (e.g. historic spa community in Calistoga; arts and artisan
community in Carmel; Danish Village in Solvang) and/or are racially and ethnically
homogeneous. Preservation of a rural, small town character may be functionally viable
and economically sustainable in the communities that have enacted constraints on
formula businesses, while not viable where consumer spending may simply be shifted
to adjoining unrestricted taxing jurisdictions.
BAYSIDE DISTRICT ASSESSMENTS
A suggestion has been made that formula businesses in the Bayside District be levied a
differential (higher) mall assessment district fee and/or a disproportionate share of the
annual operations and maintenance assessment, or that the cap on the operations and
maintenance assessment be raised on the presumption that the increased levy would
disproportionately affect formula businesses. A finding of public benefit or necessity for
such a discriminatory levy may be difficult to sustain. Also, unilateral modification of
assessment levies may be legally and contractually problematic, if not impossible to
accomplish.
The Mall Assessment District, established in 1986, secures the debt that paid for
creation of the Third Street Promenade and adjacent Bayside District improvements in
1989. The public improvements funded by the bonds and paid for by the assessment
district include expanded public parking, streetscape and lighting enhancements, and
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certain alley, signage and circulation improvements. The Katz/Hollis Report, which the
City relied on to calculate the assessment rate, set forth a formula with rates that vary
depending on a “zone of benefit” concept depending upon where in the district a
property is located. Since use of assessment district funds is limited to securing the
bonded indebtedness, a differentiated levy based upon the ownership characteristics of
a business appears unsustainable.
The Third Street Promenade and Downtown District Maintenance Assessment, also
established in 1986, pays for supplemental public safety and maintenance costs
incurred by the City in its operations within the Bayside District, including partial funding
of the Bayside District Corporation (BDC) downtown marketing and promotional
activities. The assessment for retail businesses within the Bayside District is equivalent
to the annual business license tax or $0.13 per square foot per month, whichever is
greater. For non-retail businesses, the assessment is equivalent to the annual business
license tax. A maximum of $20,863.64 (effective 07-01-03) applies to both retail and
non-retail businesses, with the rate and cap escalating annually with CPI. It has not
been demonstrated that formula businesses place a disproportionate demand on public
safety and City maintenance services within Bayside District warranting a differentiated
levy.
It is also noted that some non-formula businesses within the Bayside District are
physically larger and generate higher gross sales than formula businesses in the same
commercial category, and these businesses would be adversely affected by a generally
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applied increase in assessment rates. Only two businesses within the Bayside District,
one formula and one non-formula, are currently at the assessment cap, and raising or
eliminating the cap would accordingly not have the effect of targeting formula
businesses. Finally, the assessment rate structure cannot be unilaterally modified by
the City and is subject to a vote among the assessed property owners.
PROPOSED WORK PLAN FOR TASK FORCE RECOMMENDATIONS
The following proposed approach for implementing the Task Force recommendations
considers completed actions, legislative changes, and programming / leasing / capital
improvements.
Completed Actions
Outdoor Dining
On June 10, 2003, the City Council adopted an interim ordinance implementing the
Task Force recommendation for administrative approval of outdoor dining.
Vending Carts and Kiosks
On July 8, the City Council adopted updated Bayside District leasing guidelines for
downtown vending carts and kiosks that broaden the types of incidental foods, goods
and services to be offered, as recommended by the Task Force. Requests for
Proposals (RFPs) for a master Promenade vending cart operating license and for
leasing of the southern Promenade kiosk were issued immediately thereafter. Vending
cart proposals were received on July 31, 2003, and a license agreement is being
completed in accordance with the updated guidelines. Kiosk proposals were received
on August 14, 2003, and a recommendation on award of kiosk leases is expected to
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come before the Council in October 2003.
Legislative Changes
Package of Amendments
To facilitate Planning Commission and City Council action on the Bayside Specific Plan
and Municipal Code amendments proposed by the Task Force, staff recommends that
most of the proposed changes move through the review process as a package of
legislative changes. The package would include the following Task Force
recommendations:
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Specific Plan and Code changes so that only a business license is required of
restaurants without alcohol service that conform to all existing standards;
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Code changes to allow alcohol-serving restaurants to open by administrative
approval, subject to pre-defined standard conditions, and to allow modifications
and expansions of existing CUPs by administrative approval, subject to pre-
defined standard conditions;
?
Specific Plan changes to allow signage for second-story restaurants to extend
more than 30” above the second-story floor line and to allow portable signs (such
as sandwich boards) on private property such as vestibules;
?
Code changes to allow for expansion and consolidated regulation and
management of vending carts in the downtown (Promenade, Transit Mall and
other downtown sites);
?
Specific Plan changes to allow for expanded outdoor dining opportunities along
the Promenade; and
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Code changes to limit retail frontages on the Promenade to no more than 50
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linear feet.
Though not considered by the Task Force, the City Council expressed its willingness to
consider the Bayside District Corporation (BDC) Board’s recommendation to broaden
the types of alcohol permits within the Bayside District to include alcohol sales incidental
to live theater and alcohol sales at specialty gourmet markets. As the current alcohol
restrictions in the Bayside Commercial District only permit alcohol sales associated with
restaurants, code changes would be necessary.
Resolutions of intention to initiate changes to the specific plan and municipal code are
necessary to begin the process of making the proposed legislative modifications and
are included later on the Council agenda. Staff anticipates that preparation and
Planning Commission and City Council review of the proposed amendments could be
completed over a six-month period. An interim ordinance limiting retail frontages on the
Promenade to no more than 50 feet is also proposed later on the Council agenda.
Other Legislative Changes
In the event other legislative measures are needed to help improve the balance of uses
on the Promenade, the City could consider the use of density bonuses and transfers of
development rights for deed-restricted restaurant space at a later date, if necessary.
Permit fee reductions for restaurants, independent businesses or community services is
not recommended at this time as these fees cover processing costs and the City is not
in a financial position to subsidize businesses. Revisions to the Bayside District
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assessments are discussed earlier in this report.
Programming / Leasing / Capital Improvements
The Task Force also made a series of recommendations related to programming,
leasing, and capital improvements, as follows:
Cinema Redevelopment:
City and Bayside District staff plan to meet with operators of
the cinemas to discuss the City’s openness to cinema redevelopment to enhance the
viability of the Downtown. Staff is soliciting expert assistance in exploring options to
encourage the development of contemporary movies theaters. Options may include
combining cinema development with the downtown parking structure reconstruction
program.
New Restrooms
: Staff will continue to explore opportunities to create new restrooms
on, or immediately adjacent to, the Promenade. If opportunities arise, staff will return to
the City Council for review.
Expansion of BDC Services
: Discussions among BDC staff, board and members are
ongoing.
Pedestrian and Ambient Lighting
: The City has received an MTA grant to pursue
ndth
streetscape improvements, including pedestrian lighting, on 2 and 4 Streets. The
project could consider installing infrastructure to support ambient lighting. The design
process is expected to commence in Fall 2003, with construction anticipated to begin in
Fall 2005.
Alley Demonstration Program
: Physical improvements to the district alleys could be
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considered as part of the downtown parking structure reconstruction program.
BUDGET/FINANCIAL IMPACT
Consideration of these items will have no budget or financial impact.
RECOMMENDATION
It is respectfully recommended that the Council conduct a study session regarding
regulating formula businesses, Bayside District assessments and a work plan for
implementation of the Promenade Uses Task Force recommendations.
Prepared by: Suzanne Frick, Director
Andy Agle, Assistant Director
Planning and Community Development Department
Jeff Mathieu, Director
Mark Richter, Economic Development Manager
Elana Buegoff, Senior Administrative Analyst
Resource Management Department
Attachments:
A. Promenade Uses Task Force Recommendations
B. June 10, 2003 Staff Report to the City Council
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ATTACHMENT B
F:\atty\muni\laws\barry\formula-1.doc
City Council Meeting 11-11-03 Santa Monica, California
ORDINANCE NUMBER _____ (CCS)
(City Council Series)
AN INTERIM ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA
MONICA ESTABLISHING RESTRICTIONS ON FORMULA RETAIL
ESTABLISHMENTS LOCATED ON THE THIRD STREET PROMENADE
Findings and Purpose. The City Council finds and declares:
(a) In 1965, the City Council sought to revitalize its declining downtown business
district by closing three blocks of Third Street to vehicular traffic and creating a
pedestrian shopping mall pursuant to the Pedestrian Mall Act.
(b)The Third Street Mall failed. It did not attract shoppers; and, as a result,
businesses on the mall continued to flounder, and the downtown business district
continued to decline.
(c) In 1986, the City Council again acted to revitalize the downtown by adopting a
specific plan for transforming the failing mall.
(d) The Specific Plan made variety the foundation of the mall’s future, mandating
a diverse mixture of uses and activities appealing to residents and visitors alike.
(e) Pursuant to this plan, the City embarked upon a substantial effort to transform
the moribund Third Street Mall into an innovative public space to attract visitors from
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near and far and reflect the City’s unique municipal character. The area was renamed
the Third Street Promenade.
(f) From the time of its conception, the Third Street Promenade was distinguished
from other shopping areas by the unusual and carefully balanced mix of opportunities it
afforded, including various entertainments, numerous restaurants, a mixture of shops,
large and small stores, traditional retail outlets, unique specialty shops and local and
non-local businesses.
(g) Thus, the Third Street Promenade was conceived and created not simply as a
shopping mall; it was a place to go for entertainment, company, strolling; a place where
one could watch jugglers and dancers, dine outdoors, argue politics, listen to music,
browse a bookshop, take in a movie and more.
(h) The plan succeeded and the Third Street Promenade flourished, becoming a
favored destination for local residents, Southern Californians and international travelers
alike.
(i) As such, it became, and remains, an engine which drives Santa Monica’s
economy.
(j) However, maintaining the delicate balance of entertainment, restaurants and
varied retail uses, which is the foundation of the Third Street Promenade’s success, has
been an ongoing challenge.
(k) Over the years, market forces have threatened the mix many times; and the
City has responded to preserve the Third Street Promenade’s economic success
through the adoption of laws and polices which promote the general welfare by
maintaining the Promenade’s unique character and diversity.
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(l) In 1996, the City revised the Third Street Mall Specific Plan through the
adoption of the Bayside District Specific Plan. A critical objective of this plan remained
to “[a]ttract and accommodate a mix of uses” serving residents, visitors and tourists
during both daytime and evening hours. To this end, the specific plan established a
ten-year projection and plan for facilitating controlled growth of retail outlets on the Third
Street Promenade.
(m) In the ensuing years, retail growth far exceeded expectations. This trend
threatened to convert the Third Street Promenade into an ordinary shopping mall.
(n) Therefore, in November of 2001, the City Council adopted Ordinance Number
2030 (CCS) establishing a moratorium on new and expanded ground floor retail use.
This moratorium was extended by Ordinances Number 2032, 2062, and 2082 (CCS) for
the reasons detailed in the findings of these ordinances and for the reasons given here.
The findings of these moratorium ordinances describe the threat to the Third Street
Promenade’s viability which the ordinances address.
(o) After adoption of Ordinance Number 2030 (CCS), the City Council
established a Promenade Uses Task Force to study Third Street Promenade issues, to
seek feedback and input from the community, and to make recommendations to the City
Council regarding the maintenance of the mix of uses on the Promenade.
(p) The Task Force met regularly between May 2002 and March 2003,
considering goals and objectives for the Third Street Promenade and the Downtown,
reviewing relevant City policies and regulations, conducting community workshops and
preparing a series of recommendations for review by the City Council.
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(q) 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” retail establishments, and based on the public hearing and Council discussion,
the City Council directed staff to draft legislation providing for special regulation of
formula retail establishments.
(r) At this hearing, the City Council and the public articulated several reasons for
regulating formula retail establishments including:
(1) Maintaining the distinctive character of the Third Street Promenade which has
been impacted by the loss of unique businesses;
(2) Promoting diverse and inviting retail storefronts that impart a sense of
streetscape continuity to the pedestrian environment of the Third Street Promenade;
(3) Protecting the Third Street Promenade from an over-abundance of certain
types of businesses that detract from the street’s overall pedestrian appeal;
(4) Protecting the long-term economic viability of the Third Street Promenade
against the risk that its appeal will diminish as retail merchants on the Third Street
Promenade become the same as those located in most shopping malls or areas in other
communities;
(5) Promoting a strong and diverse retail base as a cornerstone of the Third
Street Promenade’s long-term economic viability;
(6) Promoting businesses that target their goods and services to the needs of
Santa Monica residents;
(7) Maintaining a mix of small, medium, and large businesses and local and non-
local businesses and;
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(t) The unregulated and unmonitored establishment of additional formula retail
uses would unduly limit or eliminate business establishment opportunities for smaller or
medium sized businesses, many of which tend to be non-traditional or unique, and
would unduly skew the mix of businesses towards national retailers, thereby decreasing
the likelihood of diversity of retail activity of the type contemplated for the Third Street
Promenade.
(u) Adoption of this proposed interim ordinance will enable the City to maintain
the Third Street Promenade as a public space that provides open and inviting retail
storefronts that impart a sense of streetscape continuity to pedestrians that reflects the
City’s unique and eclectic character.
(v) Adoption of this proposed interim ordinance will also enable the City to
maintain the Third Street Promenade as a vibrant, vital, and inviting business
environment offering residents and visitors alike a diverse and special environment for
commercial and recreational pursuits.
(w) For these reasons, the City's zoning and planning regulations should be
revised as they pertain to formula retail establishments on the Promenade.
(x) Pending completion of these permanent revisions, in order to protect the
public health, safety, and welfare, it is necessary on an interim basis to change current
development standards as they relate to formula retail establishments on the
Promenade.
(y) As described above, there exists a current and immediate threat to the public
safety, health, and welfare should the interim ordinance not be adopted and formula
retail establishments be allowed consistent with these proposed revisions. Therefore,
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the City Council finds that the public health, safety and general welfare mandate that
any proposed new or expanding formula business with frontage on the Third Street
Promenade obtain a use permit subject to special findings. During this interim period,
the following development standards shall apply:
Formula Retail Establishments on the Third Street Promenade
(a) New or expanded formula retail establishments with frontage on the Third
Street Promenade shall only be authorized if a use permit is obtained in accordance
with Santa Monica Municipal Code Section 9.04.20.11.010 et seq. and the following
additional findings of fact are made:
(1) The formula retail establishment has been designed and will be operated in a
manner that preserves the unique character and ambiance of the Third Street
Promenade;
(2) The formula retail establishment is consistent with the goals, objectives and
policies of the Bayside District Specific Plan;
(3) The formula retail establishment will contribute to a balance of local, regional,
and national businesses on the Third Street Promenade; and
(4) The formula retail establishment will contribute to a balance of small, medium
and large sized businesses on the Third Street Promenade.
(b) For purposes of this Section, “Formula retail establishment” means a type of
retail sales activity or retail sales establishment which is required by contractual or other
arrangement to maintain any of the following: standardized (“formula”) array of services
and/or merchandise, decor, architecture, layout, uniform, or similar standardized
feature.
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(c) A formula retail establishment with frontage on the Third Street Promenade
shall also comply with the applicable property development standards for the BSC-1
portion of the BSC District as set forth in the City’s Zoning Ordinance except to the
extent inconsistent with this Section.
SECTION 3. This Ordinance shall apply to any business license or building
permit application filed after November 11, 2003.
SECTION 4. This Ordinance shall be of no further force or effect sixty days after
its effective date unless prior to that date, after a public hearing, noticed pursuant to
Santa Monica Municipal Code Section 9.04.20.22.050, the City Council, by majority
vote, extends this interim ordinance.
SECTION 5. Any provision of the Santa Monica Municipal Code or appendices
thereto inconsistent with the provisions of this Ordinance, to the extent of such
inconsistencies and no further, is hereby repealed or modified to that extent necessary
to effect the provisions of this Ordinance.
SECTION 6. 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 this Ordinance. The City Council hereby declares that it would
have passed this Ordinance and each and every section, subsection, sentence, clause,
or phrase not declared invalid or unconstitutional without regard to whether any portion
of the ordinance would be subsequently declared invalid or unconstitutional.
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SECTION 7. 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 published once in the
official newspaper within 15 days after its adoption. This Ordinance shall become
effective 30 days from its adoption.
APPROVED AS TO FORM:
_________________________
MARSHA JONES MOUTRIE
City Attorney
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