CC 2024-02-27_09e Ord re Formula BusinessItem 9.e.
MEMORANDUM
TO: City Council
FROM: Brian Pedrotti, Community Development Director
SUBJECT: Consideration of Adoption of an Ordinance Amending Title 16 of the
Arroyo Grande Municipal Code Regarding the Definition of Formula
Business
DATE: February 27, 2024
SUMMARY OF ACTION:
Adopting the Ordinance will amend the definition of a Formula Business.
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:
No financial impact is projected.
RECOMMENDATION:
1) Adopt the Ordinance amending Section 16.04.070 of the Arroyo Grande Municipal
Code regarding the definition of a Formula Business; and
2) Find that the Ordinance is exempt from the California Environmental Quality Act
(CEQA) because the Ordinance does not qualify as a “project” under CEQA and because
the Ordinance will not result in a direct or reasonably foreseeable indirect physical change
in the environment. (State CEQA Guidelines section 15060, subd. (c)(2), (3), section
15378).
BACKGROUND:
In response to public comment, the City Council directed staff to research and propose
formula business restrictions applicable to the Village Core Downtown (VCD) and Village
Mixed Use (VMU) districts of the Historic Character Overlay District (the “Village”)
commercial area. Upon approval by the City Council, the 2005 Ordinance identified that
“the potential proliferation of formula businesses would diminish the unique ch aracter of
the VCD and VMU/HCO districts by offering standardization of architecture, interior
design and décor, uniforms and the like, and which are required to be virtually identical
to other such businesses in other communities.” Specifically, the Ordinance prohibited
formula businesses in the VCD and Village Mixed Use/Historic Character Overlay
(VMU/HCO) districts.
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Item 9.e.
City Council
Consideration of Adoption of an Ordinance Amending Title 16 of the Arroyo Grande
Municipal Code Regarding the Definition of Formula Business
February 27, 2024
Page 2
On October 10, 2023, the City Council held a study session to discuss potential revisions
to the regulations related to formula businesses and directed staff to return with an
amendment to the definition of formula business, inclu ding (1) an increase to the six-
establishment threshold, (2) that the definition apply to all business types, and (3) the
removal of the two criteria in the definition.
The Planning Commission reviewed the draft Ordinance at its meeting on January 16,
2024. The Commission was supportive of the Ordinance as proposed and recommended
that Council adopt the Ordinance as drafted. At the introduction and public hearing on
February 13, 2024, the City Council introduced the ordinance, read by title only, and
waived further reading of the Ordinance. During discussion, the City Council expressed
concerns with how the City’s existing legal non -conforming use provisions in Section
16.48.110 of the municipal code would apply to formula businesses in the Village. The
Council agreed to move the ordinance forward and directed staff to consider the
applicable district boundaries associated with the Historic Core, and by extension the
limits on formula businesses, as part of the General Plan Update.
ANALYSIS OF ISSUES:
The Ordinance amendments are now ready for adoption. The Ordinance amendments
will become effective thirty (30) days after adoption.
ALTERNATIVES:
The following alternatives are provided for the Council’s consideration:
1. Adopt the Ordinance as proposed; or
2. Modify the Ordinance amendments and direct staff to return at a future public
hearing to introduce the modified amendments; or
3. Provide other direction to staff.
ADVANTAGES:
Revisions to the Ordinance are supported with objectives and policies from the General
Plan because the revisions strengthen the regulatory requirements for formula
businesses, ensuring that the architectural design and style of the Village are preserved.
DISADVANTAGES:
The proposed amendment will limit the type of businesses that can occupy commercial
spaces within the VCD and VMU districts.
ENVIRONMENTAL REVIEW:
The Ordinance does not qualify as a “project” under CEQA and because the Ordinance
will not result in a direct or reasonably foreseeable indirect physical change in the
environment. (State CEQA Guidelines section 15060, subd. (c)(2), (3).) Section 15378
of the State CEQA Guidelines defines a project as the whole of an action, which could
potentially result in either a direct physical change, or reasonably foreseeable indirect
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Item 9.e.
City Council
Consideration of Adoption of an Ordinance Amending Title 16 of the Arroyo Grande
Municipal Code Regarding the Definition of Formula Business
February 27, 2024
Page 3
physical change, in the environment. Here, the Ordinance will not result in any
construction or development, and it will not have any other effect that would physically
change the environment. Approval of the proposed Ordinance therefore does not qualify
as a project subject to CEQA.
PUBLIC NOTIFICATION AND COMMENTS:
The Agenda was posted at City Hall and on the City’s website in accordance with
Government Code Section 54954.2.
ATTACHMENTS:
1. Proposed Ordinance
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65501.00002\41296594.1
ATTACHMENT 1
ORDINANCE NO. ____
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
ARROYO GRANDE AMENDING SECTION 16.04.070 OF
THE ARROYO GRANDE MUNICIPAL CODE REGARDING
THE DEFINITION OF FORMULA BUSINESS AND FINDING
THE ORDINANCE EXEMPT FROM THE CALIFORNIA
ENVIRONMENTAL QUALITY ACT
WHEREAS, on April 26, 2005, the City Council held a study session to discuss
alternatives for the regulations for chain businesses; and
WHEREAS, on August 23, 2005, the City Council adopted an ordinance to amend
Title 16 of the Arroyo Grande Municipal Code (AGMC) regarding the definition of formula
business; and
WHEREAS, on May 23, 2023, the City Council directed staff to review the
definition of “Formula Business” in the municipal code and return with a study session to
determine if ordinance revisions were warranted; and
WHEREAS, on October 10, 2023, the City Council discussed potential revisions
to the definition of “Formula Business,” and directed staff to proceed with an ordinance
amendment; and
WHEREAS, on January 16, 2024, the Planning Commission conducted a duly
noticed public hearing to consider the staff report, recommendations by staff, and public
testimony concerning the ordinance. Following the public hearing, the Planning
Commission voted to forward the ordinance to the City Council with a recommendation in
favor of its adoption; and
WHEREAS, on February 13, 2024, the City Council introduced the ordinance and
conducted a duly noticed public hearing to consider the ordinance, including: (1) the
public testimony and agenda reports prepared in connection with the ordinance; (2) the
policy considerations discussed therein; and (3) the consideration and recommendation
of the Planning Commission; and
WHEREAS, all legal prerequisites to the adoption of the ordinance have occurred.
NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF ARROYO GRANDE DOES
ORDAIN AS FOLLOWS:
SECTION 1. Incorporation. The above recitals are true and correct and are
incorporated herein by this reference.
SECTION 2. Environmental. The City Council finds that this ordinance is exempt
from the California Environmental Quality Act ("CEQA") because the ordinance does not
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ORDINANCE NO.
PAGE 2
qualify as a “project” under CEQA and because the ordinance will not result in a direct or
reasonably foreseeable indirect physical change in the environment. (S tate CEQA
Guidelines section 15060, subd. (c)(2), (3).) Section 15378 of the State CEQA Guidelines
defines a project as the whole of an action, which could potentially result in either a direct
physical change, or reasonably foreseeable indirect physical change, in the environment.
Here, the ordinance will not result in any construction or development, and it will not have
any other effect that would physically change the environment. The ordinance therefore
does not qualify as a project subject to CEQA.
SECTION 3. Required Findings. In accordance with section 16.16.040(E) of the
Arroyo Grande Municipal Code, the City Council hereby makes the following findings:
1. General Plan. The ordinance’s amendments to the AGMC are consistent
with the general plan and necessary and desirable to implement the provisions thereof.
Specifically, economic development objective ED2 and policies ED 3-4 and ED 5-4
support the small-town character and maintaining the Village as a vibrant downtown core.
Land use element objective LU6 also supports maintaining the Village core as a
“symbolic, functional and unique business center of the City” which can be achieved by
the adoption of the amendment to the definition of formula business and its
implementation. Thus, disallowing formula businesses, as defined, will ensure that current
residents, visitors, and future generations may enjoy the unique and historic character,
culture, and architecture of the Village, as contemplated by the above objectives and
policies of the General Plan.
2. Health, Safety, and Welfare; Illogical Land Use Pattern. Adoption of the
ordinance will not adversely affect the public health, safety, and welfare as it simply
updates the definition of “formula business” in the AGMC to ensure that the AGMC is
consistent with the City’s general plan. Finally, this ordinance will not result in an illogical
land use pattern as it is not amending the City’s zoning map.
3. Consistency with Title 16. This ordinance is consistent with the purpose and
intent of AGMC Title 16 because it removes an internal inconsistency therein and ensures
that the provisions thereof are consistent with the City’s economic development and land
use elements.
4. Environmental. There will be no environmental impact by amending the
definition of a formula business because doing so authorizes no construction or
development, nor could the definitional change of a formula business indirectly result in
a physical impact on the environment. See Section 2 “Environmental” above.
SECTION 4. Code Amendment. Subsection (C) of Section 16.04.070 of the
Arroyo Grande Municipal Code is hereby amended to read as follows (additions shown
in underline and deletions shown in strikethrough):
“Formula business”. Shall mean a business, limited to retail trade uses and
restaurants, that is required by contractual or other arrangement to maintain
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ORDINANCE NO.
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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:
a. 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;
b. It is a fast food restaurant.
SECTION 6. Publication. A summary of this ordinance shall be published in a
newspaper published and circulated in the City of Arroyo Grande at least five days prior
to the City Council meeting at which the proposed ordinance is to be adopted. A certified
copy of the full text of the proposed ordinance shall be posted in the office of the City
Clerk. Within 15 days after adoption of the ordinance, the summary with the names of
those City Council members voting for and against the ordinance shall be published
again, and the City Clerk shall post a certified copy of the full text of such adopted
ordinance.
SECTION 7. Effective Date. This ordinance shall become effective 30 days after
adoption.
SECTION 8. Severability. Should any provision of this ordinance, or its
application to any person or circumstance, be determined by a court of competent
jurisdiction to be unlawful, unenforceable or otherwise void, that determination shal l have
no effect on any other provision of this ordinance or the application of this ordinance to
any other person or circumstance, and, to that end, the provisions hereof are severable.
The City Council declares that it would have adopted all the provisions of this ordinance
that remain valid if any provisions of this ordinance are declared invalid.
SECTION 9. Records. The documents and materials associated with this
ordinance that constitute the record of proceedings on which the City Council’s findings
and determinations are based are located at 300 E. Branch Street, Arroyo Grande, CA
93420. The City Clerk is the custodian of the record of proceedings.
On motion by Council Member ______, seconded by Council Member _______, and by
the following roll call vote to wit:
AYES:
NOES:
ABSENT:
the foregoing Ordinance was adopted this ____ day of _______, 2024.
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ORDINANCE NO.
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___________________________________
CAREN RAY RUSSOM, MAYOR
ATTEST:
___________________________________
JESSICA MATSON, CITY CLERK
APPROVED AS TO CONTENT:
___________________________________
MATTHEW DOWNING, CITY MANAGER
APPROVED AS TO FORM:
___________________________________
ISAAC ROSEN, CITY ATTORNEY
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