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CC 2024-02-13_10b Formula Business Amendments to Title 16 of the Arroyo Grande Municipal Code regarding the Definition of Formula Business 2/13/2024 1 Summary of Action Introduction of a proposed ordinance amending Title 16 of the AGMC regarding the definition of a Formula Business and finding that this action is exempt from review under CEQA. 2/13/2024 Introducing the ordinance will allow for adoption at a future City Council meeting following this noticed public hearing. 2 Background March 2005 – City Council directs staff to research alternatives April 2005 – City Council study session Proliferation of formula businesses Detract from character of architecturally distinct district Cause start-up independent retail businesses to be priced out August 2005 – City Council approves ordinance Prohibited formula business in VCD and VMU/HCO Included definition of formula business 2/13/2024 3 VCD & VMU/HCO 2/13/2024 4 Background “Formula business”. Shall mean a business, limited to retail trade uses and restaurants, that is required by contractual or other arrangement to maintain standardized services and the same or similar name, tradename, or trademark which causes it to be substantially identical to six (6) or more other establishments, regardless of ownership or location, and which satisfies one of the following two criteria: It has exterior design or architecture, signs, décor or similar features in a style which is distinctive to and standardized among the chain or group; It is a fast food restaurant. 2/13/2024 5 Background Includes retail trade and restaurant uses Excludes offices, hotels, or inns Allows opportunity for local start up stores or restaurants Fast food restaurants – more than 6 – prohibited Sit down restaurants and retail – more than 6 – prohibited unless: Exterior design or architecture, signs, décor, or similar features in a style which is distinctive to and standardized among the chain or group. 2/13/2024 6 Background 2023 – New application for ice cream shop Five other store locations – did not meet formula business definition May 23, 2023 City Council Expressed concerns about formula businesses in the Village Directed staff to review the definition and return with study session 2/13/2024 7 Background October 10, 2023 – City Council Study Session City Council directed staff to return with an amendment to the definition: Increase the six (6) establishment threshold; and Definition should apply to all business types; and Removal of the two criteria in the definition. 2/13/2024 8 Background January 16, 2024 – Planning Commission Recommended approval of the ordinance amendment as proposed and forwarding to City Council for adoption. 2/13/2024 9 Analysis Definition of Formula Businesses: Inclusive of both retail and restaurants, AND Is required by contractual or other arrangement to maintain standardized services and the same or similar name, tradename, or trademark which causes it to be substantially identical to six (6) or more other establishments, regardless of ownership or location. In addition, must meet one of the following: It as exterior design or architecture, signs, décor, or similar features in a style which is distinctive to and standardized among the chain or group, or It is a fast food restaurant 2/13/2024 10 Proposed Revisions Expansion to All Businesses Currently limited to retail and restaurants Would remove categories and apply to all businesses Qualifying Criteria Removes “a” and “b” criteria from definition Closes the “loophole” that would allow some formula businesses Number of Locations Increases allowed number of establishments from 6 to 10 Maintains identify of Village without stifling economic development 2/13/2024 11 Proposed Revisions “Formula business”. Shall mean a business, limited to retail trade uses and restaurants, that is required by contractual or other arrangement to maintain standardized services and the same or similar name, tradename, or trademark which causes it to be substantially identical to six (6) ten (10) or more other establishments at the time of application submittal, regardless of ownership or location., and which satisfies one of the following two criteria: It has exterior design or architecture, signs, décor or similar features in a style which is distinctive to and standardized among the chain or group; It is a fast food restaurant. 2/13/2024 12 Legally Non-Conforming 2/13/2024 Expansion to all businesses creates legal non-conforming businesses Non-Conforming uses would be discontinued if: Use is changed to a conforming use Use discontinued for a contiguous period of 180 days or more Non-Conforming uses can continue through: Change of ownership, tenancy, or management if the building, land use, or activity is substantially unchanged. 13 General Plan Consistency 2/13/2024 Supported by General Plan policies Economic Development Policy ED-2, 3-4, and 5-4 support small-town character and maintaining Village as a vibrant downtown core Land Use Element Policy LU6 supports maintaining the Village core as a “symbolic, function and unique business center of the City”. 14 Alternatives Introduce the attached Ordinance; or Modify as appropriate and introduce the modified Ordinance; or Do not introduce the Ordinance and provide direction on specific revisions; or Provide other direction to staff. 2/13/2024 15 Recommendation Introduce, ready by title only, and waive further reading of an Ordinance amending Section 16.04.070 of the AGMC regarding the definition of Formula Business; Find the Ordinance exempt from CEQA because the Ordinance has no potential to result in either a direct, or reasonably foreseeable indirect, physical change in the environment. 2/13/2024 16