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SR 02-28-2023 10B City Council Report City Council Meeting: February 28, 2023 Agenda Item: 10.B 1 of 6 To: Mayor and City Council From: David Martin, Director, City Planning Subject: Introduction and First Reading of an Interim Zoning Ordinance Eliminating Prohibition of Certain Restaurants in Establishments with Frontage on the Third Street Promenade Recommended Action Staff recommends that the City Council: 1. Adopt a finding of no possibility of significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines; and 2. Introduce for first reading an Interim Zoning Ordinance eliminating the prohibition of certain restaurants with frontage on the Third Street Promenade. Summary The Third Street Promenade’s success has resulted from the creation of an authentic urban retail, dining, and cinema experience. As the economic recovery from COVID-19 continues and the retail landscape evolves, the Promenade’s competitive advantage will depend on the ability to deliver on a range of unique dining, retail, and entertainment uses with an emphasis on promoting a diverse base of eating establishments. It is not the intent to create a Promenade experience that could be found in any number of other Southern California cities. However, in light of current economic conditions and the high vacancy rate along the Promenade, staff recommends eliminating the prohibition of certain restaurants with frontage on the Third Street Promenade and restore the ability to allow a full range of Limited-Service and Take-Out Restaurants. This would increase flexibility of use and opportunities for economic recovery by enabling additional dining options on the Promenade for the duration of the interim ordinance. 10.B Packet Pg. 1586 2 of 6 Background In 2017, the City Council adopted the Downtown Community Plan (DCP) which set forth a vision for the continued vitality of the Third Street Promenade as a major public space framed by retail and restaurant uses that form unique experiences enjoyable to both residents and visitors. The DCP values the retention of the Downtown’s authenticity, encourages local uses, and promotes unique visitor experiences not found in every neighborhood. The IZO adopted in November 2019 created a new land use classification for “Restaurant, Fast Food” applicable only to the BC (Promenade) zone as establishments having the following: (a) More than 100 locations nationwide at the time that the application for the establishment is deemed complete by the City; and (b) Characteristics, including but not limited to, orders placed at a walk-up window, counter, or machine; payment prior to food consumption; and food served with disposable, one-time, or limited-use wrapping, containers, or utensils. Typically, such establishments utilize standardized signage or décor, and permit consumption of food and beverages on the premises within a short period of time or taken off the premises. The IZO prohibited fast food restaurants in establishments with frontage on the Third Street Promenade. In addition, the land use classification for “Restaurant, Limited-Service and Take-Out” was modified to not include Fast Food Restaurant uses. The IZO was subsequently extended in January 2019. On January 26, 2021, Council made permanent the interim prohibition on fast food uses with frontage on the Promenade. However, to facilitate the ease in identifying these types of establishments and implementing the regulations, creating new or modifying existing land use definitions that would only be applicable to one specific zoning district were not created as was done with the IZO. Instead, the criteria identifying these types of Restaurant, Limited-Service and Take-Out uses were added as a Specific Limitation #22 to the land use regulations table in Zoning Ordinance Section 9.10.040. In addition, 10.B Packet Pg. 1587 3 of 6 in order to provide additional flexibility in light of the economic conditions due to COVID- 19, the applicability threshold for establishments prohibited from occupying locations with frontage on the Promenade was increased from 100 to 150 locations nationwide at the time that the application for the establishment is deemed complete by the City. The Third Street Promenade has long served as a local, regional, national, and international destination, attractive for its blend of retail, dining, services, outdoor atmosphere, entertainment, and proximity to the beach. The ongoing COVID-19 pandemic and subsequent economic recovery has been difficult for many segments of the economy, and Santa Monica’s Downtown area, including the Promenade, is experiencing the same uncertainty with the vacancy rate along the Promenade recently rising to 27%. In addition to economic impacts that threaten the health, safety and economic welfare of its citizens and businesses, high vacancy rates may lead to public safety impacts, including, but not limited to, increase calls for emergency services. The Council, staff, and community stakeholders continue to be concerned about the health and vitality of Downtown overall and the Third Street Promenade area in particular. Past Council Actions Meeting Date Description 11/27/18 (attachment A) Introduction and First Reading of an Ordinance to Amend Santa Monica Municipal Code Section 9.10.040 to Prohibit Certain Fast Food Restaurants in Establishments with Frontage on the Third Street Promenade 01/08/19 (attachment B) Introduction and Adoption of an Urgency Interim Ordinance Extending Urgency Interim Zoning Ordinance 2594 (CCS) Prohibiting Fast Food Restaurants on the Third Street Promenade 01/26/21 (attachment C) Second Reading and Adoption of an Ordinance of the City Council of the City of Santa Monica Amending Santa Monica Municipal Code Section 9.10.040 to Prohibit Certain Fast Food Restaurants in Establishments with Frontage on the Third Street Promenade 10.B Packet Pg. 1588 4 of 6 Discussion The Promenade’s success has resulted from the creation of an authentic urban retail, dining, and cinema experience. As the economic recovery from COVID-19 continues and the retail landscape evolves, the Promenade’s competitive advantage will depend on the ability to deliver on a range of unique dining, retail, and entertainment uses with an emphasis on promoting a diverse base of eating establishments. It is not the intent to create a Promenade experience that could be found in any number of other Southern California cities. However, in light of current economic conditions and the high vacancy rate along the Promenade, staff recommends eliminating the prohibition of certain restaurants with frontage on the Third Street Promenade and restore the ability to allow a full range of Limited-Service and Take-Out Restaurants. This would increase flexibility of use and opportunities for economic recovery by enabling additional dining options on the Promenade for the duration of the interim ordinance. Currently Specific Limitation #22 in the land use regulations table in Santa Monica Municipal Code Section 9.10.040 reads as follows: (22) Restaurant, Limited-Service and Take-Out establishments with frontage on the Third Street Promenade and the following characteristics shall be prohibited: (a) More than 150 locations nationwide at the time that the application for the establishment is deemed complete by the City; and (b) Characteristics, including but not limited to, orders placed at a walk-up window, counter, or machine; payment prior to food consumption; and food served with disposable, one-time, or limited-use wrapping, containers, or utensils. The proposed Interim Zoning Ordinance would eliminate the applicability of Specific Limitation #22 which applies to establishments with frontage on the Promenade. An interim ordinance is effective 30 days after second reading of the ordinance. Pursuant to SMMC Section 9.46.090(C), an interim ordinance shall be of no further force and effect 60 days from its effective date. The City Council may extend the interim ordinance up to 60 months or adopt a permanent ordinance. 10.B Packet Pg. 1589 5 of 6 Alternative Action Should Council decide not to eliminate the prohibition of certain Restaurant, Limited- Service and Take-Out establishments with frontage on the Promenade, an alternative action could be to amend the applicability threshold for establishments prohibited on the Promenade (Specific Limitation #22) and increase the number of locations from 150 to 500. This amendment would provide increased flexibility for dining options while still retaining the Promenade’s authenticity, encouraging local uses, and restricting establishments that have more than 500 locations nationwide. Environmental Analysis The proposed ordinance is categorically exempt from the provisions of the California Environmental Quality Act (CEQA) pursuant to Section 15061(b)(3) of the State Implementation Guidelines (common sense exemption). Based on the evidence in the record, it can be seen with certainty that there is no possibility that the proposed ordinance may have a significant effect on the environment. Neither the general plan land use designations nor zoning designations for the properties within the Third Street Promenade Area will be changed. Therefore, no further environmental review under CEQA is required. Financial Impacts and Budget Actions There is no immediate financial impact or budget action necessary as a result of the recommended action. 10.B Packet Pg. 1590 6 of 6 Prepared By: Tony Kim, Principal Planner Approved Forwarded to Council Attachments: A. City Council Meeting - November 27, 2018 (Web Link) B. City Council Meeting - January 8, 2019 (Web Link) C. City Council Meeting - January 26, 2021 (Web Link) D. CDD--IZO re Fast Food on Promenade 022823 10.B Packet Pg. 1591 1 City Council Meeting: February 28, 2023 Santa Monica, California ORDINANCE NUMBER _____ (CCS) (City Council Series) AN INTERIM ZONING ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA AMENDING SANTA MONICA MUNICIPAL CODE SECTION 9.10.040 ELIMINATING THE PROHIBITION ON CERTAIN RESTAURANTS WITH FRONTAGE ON THE THIRD STREET PROMENADE WHEREAS, on July 25, 2017, the City Council of the City of Santa Monica (the “City Council”) adopted the Downtown Community Plan (“DCP”) which sets forth a vision for the continued vitality of the Third Street Promenade as a major public space framed by a mix of retail, restaurants, and services that form unique experiences enjoyable to both residents and visitors; and WHEREAS, the DCP supports activities that enrich the Promenade, including street performances and events that enliven the street and provide memorable experiences for visitors, while also seeking to expand cultural opportunities including live music venues and upgraded state-of-the art cinemas; and WHEREAS, the DCP acknowledges that the Promenade is an essential component of the Downtown’s economic sustainability and emphasizes the importance of reevaluating and refreshing the Promenade so that it remains attractive and exciting to residents and visitors alike; and WHEREAS, DCP Goal LU3 contemplates that the Downtown will continue to be the economic center for the City, providing a diverse and flexible mix of uses that can meet future resident, business and visitor demand; and 10.B.d Packet Pg. 1592 Attachment: CDD--IZO re Fast Food on Promenade 022823 [Revision 2] (5603 : Interim Zoning Ordinance Modifying Third Street Promenade 2 WHEREAS, fast food chains are formula establishments with numerous locations and standardized features, such as façade, décor, color scheme and signage, dependent on brand recognition created through repetition of the same characteristics for each store in multiple locations; and WHEREAS, the DCP permits fast food chains on the Third Street Promenade; and WHEREAS, on November 27, 2018, the City Council adopted Urgency Interim Zoning Ordinance Number 2594 (CCS) (“Interim Zoning Ordinance 2594”), which created new use classifications for Restaurant, Fast Food and Restaurant, Limited-Service and Take-Out for the BC (Promenade) District and prohibited Restaurant, Fast Food with more than 100 locations nationwide in establishments with frontage on the Promenade; and WHEREAS, Interim Zoning Ordinance 2594 was designed to preserve the authentic character of the Third Street Promenade and provide visitors with a distinctive experience not found in most downtown shopping districts while the City evaluated current zoning regulations for opportunities to retain the Promenade’s authenticity, encourage local uses, and promote unique visitor experiences through the “Promenade 3.0” planning process; and WHEREAS, on January 8, 2019, in accordance with Santa Monica Municipal Code Section 9.46.090(D) and Government Code Section 65858(b), the City Council adopted Urgency Interim Zoning Ordinance 2600 (CCS) (“Interim Zoning Ordinance 2600”) extending Interim Zoning Ordinance 2594 for 10 months and 15 days to November 26, 2019; and 10.B.d Packet Pg. 1593 Attachment: CDD--IZO re Fast Food on Promenade 022823 [Revision 2] (5603 : Interim Zoning Ordinance Modifying Third Street Promenade 3 WHEREAS, on November 12, 2019, in accordance with Santa Monica Municipal Code Section 9.46.090(D) and Government Code Section 65858(b), the City Council adopted Urgency Interim Zoning Ordinance 2625 (CCS) (“Interim Zoning Ordinance 2625”) extending Interim Zoning Ordinances 2594 and 2600 for 12 months to November 26, 2020; and WHEREAS, on March 13, 2020, the City Manager, in his role as the Director of Emergency Services, (“Director of Emergency Services”) proclaimed the existence of a local emergency pursuant to Chapter 2.16 of the Santa Monica Municipal Code to ensure the availability of mutual aid and an effective the City’s response to the novel coronavirus (“COVID-19”) and this local emergency was restated on March 14, 2020, through a revised declaration of local emergency to ensure compliance with all digital signature requirements (the “Executive Order”); and WHEREAS, on March 16, 2020 the Director of Emergency Services issued a Third Supplement to the Executive Order, requiring the closure of a wide range of businesses including bars, nightclubs, on-premises restaurant service, movie theatres, live performance venues, gyms, fitness centers, spas, hair salons, massage parlors, and nail salons; and WHEREAS, on March 19, 2020, California Governor Gavin Newsom issued Executive Order N-33-20 directing all residents of the State of California to heed directives issued by the State Health Officer on the same date instructing all Californians to stay home except as needed to maintain continuity of operations of the federal critical infrastructure sectors; and 10.B.d Packet Pg. 1594 Attachment: CDD--IZO re Fast Food on Promenade 022823 [Revision 2] (5603 : Interim Zoning Ordinance Modifying Third Street Promenade 4 WHEREAS, on March 19, 2020, the Los Angeles County Department of Public Health issued an enhanced Health Officer Order, the Safer at Home Order for Control of COVID-19, amending and superseding its earlier March 16, 2020, Order, closing all nonessential businesses, and limiting gatherings to 9 people or less; and WHEREAS, since March 19, 2020, the Los Angeles County Department of Public Health has on multiple occasions amended and modified its Health Officer Order, recognizing the issues posed by existing community transmission of COVID-19 in Los Angeles County, and in response maintaining public health measures that have, at differing times, included strict limitations on public gatherings, required closures of certain businesses, and strict limitations and protocols for the operations of businesses permitted to remain open; and WHEREAS, the economic impacts of the COVID-19 closures of and limitations on businesses have been devastating to the local Santa Monica economy; and WHEREAS, the hardest hit sectors in Santa Monica include retail and arts/entertainment/leisure, initially representing the temporary closure of over approximately 1,300 businesses employing approximately 11,000 people; and WHEREAS, the City’s business improvement districts have reported that at least 70 small businesses have permanently closed across many sectors, including retail, leisure, and restaurants; and WHEREAS, some of the actions that the City has taken during this state of emergency to support local business are: commercial eviction protections; suspension of late fees for City-imposed bills and taxes and parking restrictions in green zones; a website with business resources; and assistance for restaurants and food retailers by 10.B.d Packet Pg. 1595 Attachment: CDD--IZO re Fast Food on Promenade 022823 [Revision 2] (5603 : Interim Zoning Ordinance Modifying Third Street Promenade 5 allowing sales of alcohol via delivery and takeout, providing flexibility for restaurants to sell groceries, and allowing curbside pickup; and WHEREAS, the City is also building upon the existing Buy Local program and providing free marketing support through an interactive map showing available essential services providers that are open providing an avenue for Santa Monica residents to support local businesses; and WHEREAS, the City is also building upon the existing Buy Local program and providing free marketing support through an interactive map showing available essential services providers that are open providing an avenue for Santa Monica residents to support local businesses; and WHEREAS, on April 14, 2020, the City Council directed that restructuring City services be prioritized on foundational services, emergency response, and economic recovery; and WHEREAS, on January 26, 2021, the City Council adopted Ordinance Number 2661 (CCS) amending the text of the Zoning Ordinance to prohibit certain restaurants with more than 150 locations nationwide in establishments with frontage along the Third Street Promenade while Promenade planning efforts and economic recovery continued; and WHEREAS, the City has continued to engage in an economic recovery strategy that involves a multi-pronged approach focusing on five areas: business retention and reopening; business process and permitting; publicity and marketing, community economic development, re-employment, and local hiring; and federal and state resources; and 10.B.d Packet Pg. 1596 Attachment: CDD--IZO re Fast Food on Promenade 022823 [Revision 2] (5603 : Interim Zoning Ordinance Modifying Third Street Promenade 6 WHEREAS, the Promenade’s past success has resulted from the creation of an authentic urban retail, dining, and cinema experience; and WHEREAS, as the commercial and economic landscape evolves, the Promenade’s economic recovery and competitive advantage will depend on its ability to deliver on a diverse range of unique dining, retail, and entertainment uses; and WHEREAS, the ongoing COVID-19 pandemic and subsequent economic recovery has been difficult for many segments of the economy, even in light of economic efforts that are currently underway, the Downtown area is experiencing economic uncertainty, with the vacancy rate along the Promenade recently rising to 27%; and WHEREAS, the City has an important government interest in maintaining a thriving business community and protecting the health, safety, and economic welfare of its citizens and businesses; and WHEREAS, vacancy rates, in addition to economic impacts that threaten the health, safety and economic welfare of its citizens and business, may lead to public safety impacts, including, but not limited to, increased calls for emergency services; and WHEREAS, as restaurant environments across the region and country continue to evolve, there is a need to adjust allowed uses and dining options to enable economic recovery and provide increased flexibility to minimize vacancies on the Third Street Promenade; and WHEREAS, recent inquiries have been made to potentially enable additional dining options on the Promenade; and WHEREAS, due to the continued economic uncertainty arising out of the COVID- 19 pandemic, the high vacancy rate along the Promenade, the City Council desires to 10.B.d Packet Pg. 1597 Attachment: CDD--IZO re Fast Food on Promenade 022823 [Revision 2] (5603 : Interim Zoning Ordinance Modifying Third Street Promenade 7 eliminate the prohibition on restaurants with more than 150 locations nationwide in establishments with frontage on the Promenade to increase flexibility of use and opportunities for economic recovery; and WHEREAS, the City Council finds and declares that a current and immediate threat to the public health, safety, and general welfare exists due to the devastating impact the COVID-19-mandated closures and limitations have had on the local economy, including, but not limited to, the high vacancy rate on the Third Street Promenade, and the approval of additional subdivisions, use permits, variances, building permits or any other applicable entitlement for use which is required in order to comply with the prohibition on restaurants with more than 150 locations nationwide in establishments with frontage on the Third Street Promenade would result in a threat to public health, safety, and welfare. NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES HEREBY ORDAIN AS FOLLOWS: SECTION 1. Interim Zoning Regulations. Notwithstanding anything to the contrary in Santa Monica Municipal Code Section 9.11.040, Specific Limitation 22 shall not apply. SECTION 2. Any provision of the Santa Monica Municipal Code or any appendix 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 3. 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 10.B.d Packet Pg. 1598 Attachment: CDD--IZO re Fast Food on Promenade 022823 [Revision 2] (5603 : Interim Zoning Ordinance Modifying Third Street Promenade 8 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. SECTION 4. 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: _________________________ DOUGLAS SLOAN City Attorney 10.B.d Packet Pg. 1599 Attachment: CDD--IZO re Fast Food on Promenade 022823 [Revision 2] (5603 : Interim Zoning Ordinance Modifying Third Street Promenade