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ADMINISTRATIVE REPORT

TO: Planning Commission

FROM: Katrina Rice Schmidt, AICP, City Planner

REPORT DATE: July 11, 2007

MEETING DATE: July 18, 2007

SUBJECT: New Ordinance Regulating Formula Retail Businesses in the City of Ojai (TA 07-02)


RECOMMENDATION

Staff recommends that the Planning Commission recommend to the City Council that they:

1. Conduct a public hearing to review the draft ordinance that amends the Ojai Municipal Code adding Section 10-2.1713 (Formula Retail Businesses In Historic Commercial Downtown) and Renumbering Existing Section 10-2.1713 (Applicable Regulations) to Section 10-2.1714 and adding the HCD (Historic Commercial Downtown) Overlay District to Section 10-2.202 (Zoning Map) and to Table 2-1 (Zoning Districts)” (Attachment A of the staff report).
2. Accept the CEQA Categorical Exemption (Attachment B of the staff report).
3. Conduct the first reading of the Ordinance by title only, and pass to second reading.


BACKGROUND AND DISCUSSION

Community Uniqueness
One of the qualities of this community that is most treasured is its uniqueness; no other place looks quite like Ojai and most residents are passionate about retaining that uniqueness. Part of that uniqueness is the natural setting of the town, and part is the built environment, especially the historic center of town, including the Arcade, Post Office Tower, and Libbey Park. Of special interest, noted by many, is the relative absence of chain stores from the retail mix.

What is significant about Ojai is that it is clearly a visitor destination, and one activity in which many visitors engage is what is called “recreational shopping.” It is not shopping for items needed for the household, but rather for gifts, for personal enjoyment, or as mementoes of the visit. It is important to understand that it is the atmosphere and the experience of shopping that makes it desirable for the visitor, with goods that are different than can be found in the hometown shopping mall. However, if chains become prevalent, we risk creating the perception that downtown Ojai is merely a different-looking version of a suburban shopping mall, and we lose one of the foremost traits that makes our town unique, and thus an attractive visitor destination.

On May 1, 2007 the City Council adopted Ordinance No. 794, an urgency measure adopting an interim ordinance prohibiting the approval or issuance of building or other development permits for formula retail businesses in the City, because of the threat that too many formula retail businesses could detract from Ojai’s unique small town character. The interim ordinance is effective for one year from the adoption date. However, the City Council directed staff to prepare and submit to Council for review and approval a permanent ordinance related to formula retail businesses by the end of summer.

Approach
In analyzing the multiple options for the creation of the permanent ordinance, staff has identified several approaches to formulating a permanent ordinance. The three major approaches are: 1) Regulation, 2) Number, and 3) Location.

Regulation
The regulatory approach to an ordinance may include having applicants conduct evaluations and studies of the new business in relation to what exists in the City. For example, one approach that has been suggested through the voter initiative process includes several procedures including, but not limited to, the following:

1) The business must conduct an evaluation of aesthetic appearance in relation to other places of business by evaluating size, color and scale; and
2) Applicant must evaluate with quantifiable data how the establishment will effect employment in Ojai; and
3) Applicant must conduct noise level evaluations with quantifiable data; and
4) Applicant must conduct and prepare a traffic report; and
5) Applicant must provide quantifiable data of waste generation, water usage, garbage, trash and litter impacts within the City.

This approach is problematic because there are no identified thresholds for significance. It requires the applicant to spend money and time on reports that result in quantifiable data, but there are no guidelines for staff and decision makers to determine if the quantifiable data presented results in a significant impact. The pressure would be on the decision makers to determine, on a subjective basis, that the reports presented by the applicants are acceptable. This may lead some to believe that the decision makers are arbitrary and capricious in the way that decisions are made.

In any case, outside of the formula business ordinance, the City already requires the applicant to satisfy the requirements of the California Environmental Quality Act, city policies and regulations, which include the preparation of the appropriate environmental studies based upon adopted guidelines (Initial Study Assessment Guidelines, October 2002). Also, the City’s commercial design review process has resulted in relatively few buildings with a “corporate look”, and the signage regulations have successfully kept out overbearing signs. For these reasons, staff does not find that the regulatory approach, without thresholds of significance and a clear, objective measurement of impact, is the approach that the City should take.

Number
One method that other cities have employed is limiting the total number of formula retail establishments. This approach might be viewed as protecting existing businesses and excluding new businesses. Also, determining the maximum number of formula businesses is problematic. One could count the number of existing formula businesses in the City limits and either set the maximum number at that amount, stating that any more formula retail businesses than exists today would somehow negatively impact the City, or arbitrarily select some other number.

If the City were to take this approach, setting a maximum number of formula businesses as a way to protect the character of the City, then the “character” determination could be easily refuted. It can be easily argued that placing a new formula business next to Vons at the “Y” would not have an impact on the character of the town. As one resident quipped, “The well has already been tainted at the “Y”. If one or two more chain stores at the “Y” shopping center were to be established, the character of the town would not be significantly changed. However, if one or two more formula establishments were to go into the downtown area, where there are not many formula establishments, there would be a significant impact to the character of the area.

Location
Another approach to regulating formula businesses is to define an area where the formula business may locate. Staff has not found any cities that have regulations to completely eliminate formula businesses, which regulations would likely be ruled unconstitutional under a variety of challenges. However, several cities have developed ordinances that do not permit such businesses within a defined area, as a specific exercise of zoning power. This approach is the most desirable for the City of Ojai for several reasons.

First of all, in addition to statements within the City’s policy documents, Ojai’s downtown has been identified by several sources (e.g. CNN, Sunset Magazine, New York Times, Los Angeles Times), as a unique place, with small, local stores and a historic feel. There is a clear need and desire to keep Ojai’s downtown unique as both a visitor destination and a place for locals.

Secondly, by protecting the existing unique downtown and by allowing formula businesses elsewhere in the City (e.g., the “Y”, where several retail establishments exist), the City would not be restraining trade, which would be considered unconstitutional.

For these reasons, and for the reasons stated in the attached ordinance language, staff finds that this approach would work the best for the City of Ojai in its efforts to regulate formula retail businesses.

Taking this approach requires that the City define the downtown area. Although residents and visitors have a general idea of what comprises downtown Ojai, there is no official document that places a boundary of the downtown commercial area. However, on July 9, 2007, the Historic
Preservation Commission considered and established a boundary defining the historic commercial downtown based upon historic use of the area since at least 1887, the time of the original mapping of the Town of Nordhoff. The Historic Commercial Downtown map identified by the Historic Preservation Commission is located as an attachment to the Ordinance (Attachment A), and serves as the basis for staff’s recommended ordinance that aims to protect the downtown area. As part of the draft ordinance, staff is recommending that the Historic Commercial Downtown area be placed on the Zoning Map as an overlay district.

Combination of Approaches
Of the three options identified above, staff prefers the “location” approach, prohibiting formula businesses in a distinct area. However, the Planning Commission may determine that it would like to see a combination of the three different approaches.

There are many different components to the draft ordinance that the Planning Commission may wish to further refine or change entirely, including but not limited to:
1. The definition of a formula retail establishment;
2. The number of outlets (i.e. 10) that establishes a business as a “formula business”;
3. The determination that existing formula businesses affected by the Ordinance would be considered legal non-conforming uses;
4. The area defined as Historic Commercial Downtown;
5. Others?

ENVIRONMENTAL REVIEW

A Class 5 Categorical Exemption (Minor Alterations in Land Use Limitations) has been prepared pursuant to the California Environmental Quality Act. Class 5 consists of minor alterations in land use limitations in areas with an average slope of less than 20%, which do not result in any changes in
land use or density, including but not limited to minor lot line adjustments, side yard, and set back variances not resulting in the creation of any new parcel; issuance of minor encroachment permits;
and reversion to acreage in accordance with the Subdivision Map Act. This Exemption was selected because the Ordinance places limits on those land uses (formula retail establishments) that would affect the long-term economic impact of the City. Economic impacts are not considered a significant environmental effect pursuant to CEQA Sections 15064(e) and 15382.

ATTACHMENTS

A: Draft Ordinance (with attached HCD map)
B: CEQA Categorical Exemption
ATTACHMENT A
PAGE 1 OF 7
ORDINANCE NO.
AN ORDINANCE OF THE CITY OF OJAI AMENDING THE OJAI MUNICIPAL CODE ADDING SECTION 10-2.1713 (FORMULA RETAIL BUSINESSES IN HISTORIC COMMERCIAL DOWNTOWN) AND RENUMBERING EXISTING SECTION 10-2.1713 (APPLICABLE REGULATIONS) TO SECTION 10-2.1714 AND ADDING THE HCD (HISTORIC COMMERCIAL DOWNTOWN) OVERLAY DISTRICT TO SECTION 10-2.202 (ZONING MAP) AND TO TABLE 2-1 (ZONING DISTRICTS)

WHEREAS, Ojai is a community with a very special environment, both natural and man- made, and the qualities of both must be respected so that the uniqueness of Ojai can flourish without inappropriate changes; and
WHEREAS, Ojai is a vital and active City that retains a small town atmosphere and a strong sense of community; and
WHEREAS, Ojai is both a tourist destination and a residential town, and the creation of a desirable living, working, and business environment that is responsive to residents will automatically provide a destination of interest to visitors; and
WHEREAS, regulating commercial development and formula retail serves to preserve the “small town character” of Ojai. A primary object of the General Plan is to maintain and enhance Ojai’s special character and small town atmosphere; and
WHEREAS, as stated in the Land Use Element of the General Plan: “It is the Ojai General Plan’s approach to preserve the community’s “small town” character by using the physical, environmental, and social aspects of the community that form its character as the criteria for determining the appropriateness of new development”; and
WHEREAS, Land Use Element Policy LU-17 states that it is important to balance small town life with a vibrant tourist economy by “Recogniz[ing] and support[ing] visitor serving uses as an integral part of community life, and ensur[ing] that visitor serving uses and activities are designed
and managed in such a manner that they are secondary to Ojai’s small town character and identity as a desirable place to live;” and
WHEREAS, formula retail businesses are, by their very nature, standardized (including their architecture, décor, color schemes and signage) and not unique, and therefore do not enhance the unique small town character that the City Council finds necessary to maintain a viable visitor industry in Ojai; and
WHEREAS, on July 9, 2007 the Historic Preservation Commission considered and defined the boundaries of the Historic Commercial Downtown, dominated by historic structures such as the Arcade, the Post Office, the Oaks Hotel, the Library and St. Thomas Aquinas Chapel, as shown in the map attached hereto as Attachment A, and incorporated herein by reference; and
WHEREAS, the Historic Commercial Downtown is a special and unique asset within the City, which would be negatively impacted by the presence of formula establishments that are out of harmony with the Historic Commercial Downtown and which do not contribute to the City’s small town atmosphere; and
WHEREAS, the City has a legitimate interest in seeking to maintain the ambience of its Historic Commercial Downtown because thousands of visitors each year are attracted to such district who come to enjoy and experience the unique character of the Historic Commercial Downtown. The character of the Historic Commercial Downtown is recognized throughout the State of California, and is a key component in the City's visitor economy. This ordinance advances this interest by limiting the location of formula retail businesses, thereby ensuring that their presence is consistent with the City’s land use goals.. Formula businesses have, by their nature, a greater potential to conflict with the City's small town character and atmosphere than unique one-of-a-kind businesses; and
WHEREAS, this ordinance is not premised on maintaining local ownership of businesses, or protecting existing business, or preventing formula retail business from doing business in the City. The purpose of this ordinance is to maintain Ojai’s unique, special character, the diversity and vitality of the City’s Historic Commercial Downtown and the quality of life of Ojai residents; and
WHEREAS, the approval of additional building or other permits within the Historic Commercial Downtown for new formula businesses that are contrary to the City's small town character would threaten the public health, safety and welfare; and
WHEREAS, the City Council finds, as support for carefully regulating formula retail, that other California small cities or towns that have significant tourist economies do not have a significant component of formula retail establishments or are not known as destinations for formula
retail business (for example, Calistoga, St. Helena, and Coronado); and
WHEREAS, the City Council finds as support that other cities have sought to regulate formula retail businesses to protect and preserve special characteristics of their city or town, including Bainbridge Island, Washington; Arcata, California; Bristol, Rhode Island; Calistoga,
alifornia; Carmel-by-the-Sea, California; Coronado, California; Pacific Grove, California; Port Jefferson, New York; and Port Townsend, Washington; and
WHEREAS, certain businesses that provide necessary services to the citizens of Ojai such as banks, health care and fitness establishments, professional services, and similar service establishments, when developed consistent with City's zoning and design guideline regulations, have
a positive impact on the community and are exempt from the provisions of this ordinance; and
WHEREAS, in light of the foregoing considerations, the City Council has determined that the public welfare of the City’s residential, retail, business and tourist based community character, as articulated by the principles upon which the General Plan is premised, will be best preserved by adopting regulations prohibiting building or other permits for the establishment of new formula retail stores within the Historic Commercial Downtown; and

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF OJAI, CALIFORNIA
DOES HEREBY ORDAIN AS FOLLOWS:
SECTION 1. The City Council determines that the above set forth findings are true and correct and are declared to be a part of this Ordinance and are incorporated herein by reference.
SECTION 2. Title 10, Chapter 2, Section 10-2.202 of the Ojai Municipal Code (the "Code") is hereby amended to add the HCD (Historic Commercial Downtown) Overlay District to the Zoning Map, as such district is depicted on Attachment A, attached hereto and incorporated herein by reference.
SECTION 3. Title 10, Chapter 2, Table 2-1 of the Code is hereby amended by adding the HCD Overlay District to Table 2-1 (Zoning Districts), as follows:
Zoning District Symbol: HCD
Zoning District Name: Historic Commercial Downtown
General Plan Land Use Designation Implemented by Zoning District: All

SECTION 4. Title 10, Chapter 2, "Zoning Regulations," of the Code is hereby amended by replacing existing Section 10-2.1713 with a new Section 10-2.1713 (Formula Retail Businesses), as follows:
"Sec. 10-2.1713. Formula Retail Businesses.
(a) Purpose. The purpose of this Section is to regulate the location of formula retail and restaurant establishments in order to maintain the tourist attracting small town character of the City’s unique Historic Commercial Downtown and quality of life for visitors and residents.
(b) Regulation. Formula Retail establishments are prohibited in the Historic Commercial Downtown.
(c) Applicability.
(1) This Section shall apply to Formula Retail establishments in the Historic Commercial Downtown.
(2) This Section is in addition to, and not in replace of, any other regulations set forth elsewhere in Title 10. In the event of a conflict between the provisions of this Section, and any other regulations in Title 10, , the provisions of this Section shall prevail.
(d) Definitions. "Formula Retail" means a type of retail sales or rental activity and retail sales or rental establishment, including restaurants, hotels and motels, which, along with ten or more other establishments, maintains two or more of the following features: standardized array of merchandise or standardized menu; standardized façade; standardized décor and color scheme; uniform apparel; standardized signage; trademark or service mark.
(1) “Standardized array of merchandise” shall be defined as 50% or more of in-stock merchandise from a single distributor bearing uniform markings.
(2) “Trademark” shall be defined as a word, phrase, symbol or design, or a combination or words, phrases, symbols or designs that identifies and distinguishes the source of the goods from one party from those of others.
(3) “Servicemark” shall be defined as word, phrase, symbol or design, or a combination or words, phrases, symbols or designs that identifies and distinguishes the source of a service from one party from those of others.
(4) “Décor” shall be defined as the style of interior finishings, which may include but is not limited to, style of furniture, wallcoverings or permanent fixtures.
(5) “Color Scheme” shall be defined as selection of colors used throughout, such as on the furnishings, permanent fixtures, and wallcoverings, or as used on the façade.
(6) “Façade” shall be defined as the face or front of a building, including awnings, looking onto a street or an open space.
(7) “Uniform Apparel” shall be defined as standardized items of clothing including but not limited to standardized aprons, pants, shirts, smocks or dresses, hat, and pins (other than name tags) as well as standardized colors of clothing.
(8) “Signage” shall be defined as business sign pursuant to Section 10-2.1607(c) of the Zoning Regulations.
(9) “Standardized” does not mean identical, but means “substantially the same.”
(e) Exemptions. Notwithstanding Section 10-2.1713(d), the following shall not be included within the definition of "Formula Retail":
(1) Banks.
(2) Health care and fitness centers.
(3) Establishments that primarily provide a service to the customer, including professional services, real estate offices, insurance offices, copy centers, and mail centers.
(4) The sale of goods in a service establishment described in (3), above, that is ancillary, subordinate and incidental to the provision of services to a customer.
(f) Existing Formula Retail Establishments. Formula Retail establishments located in the Historic Commercial Downtown existing on the date of adoption of this Ordinance are subject to Title 10, Chapter 2, Article 13 (Nonconforming Uses, Structures, and Parcels).
SECTION 5. Title 10, Chapter 2, "Zoning Regulations," of the Code is hereby amended by adding Section 10-2.1714, and moving existing Section 10-2.1713 (Applicable Regulations) to Section 10-2.1714.
SECTION 6. Ordinance Number 794, "An Urgency Measure Of The Ojai City Council Adopting An Interim Ordinance Prohibiting The Approval Or Issuance Of Building Or Other Development Permits For Formula Retail Businesses In The City" is hereby repealed as of the effective date of this Ordinance.
SECTION 7. Severability. If any section, subsection, sentence, clause, phrase or portion of this Ordinance is for any reason held to be invalid or unconstitutional by the final decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council declares that it would have adopted this Ordinance, and each section, subsection, sentence, clause, phrase or portion thereof, irrespective of the fact that any one or more sections, subsections, phrases or portions might be declared invalid or unconstitutional.
SECTION 8. The City Clerk shall cause this Ordinance to be published once, within fifteen (15) calendar days after its passage, in the Ojai Valley News, a newspaper of general circulation, printed, published and circulated in the City, and shall cause a copy of this Ordinance and its certification, together with proof of publication, to be entered in the Book of Ordinances of the City.
SECTION 9. This Ordinance shall become effective on the thirty-first (31st) day after its passage.

CITY OF OJAI, CALIFORNIA
___________________________
Carol Smith, Mayor


STATE OF CALIFORNIA )

COUNTY OF VENTURA )

CITY OF OJAI )



I, Carlon Strobel, City Clerk of the City of Ojai do hereby certify that the foregoing Ordinance was introduced at a regular meeting of the City Council of the City of Ojai held on __________________________ and adopted at a regular meeting held on __________by the following vote:
AYES:
NOES:
ABSTAIN:
ABSENT:

________________________________
Carlon Strobel
City Clerk for the City of Ojai

ATTACHMENT A


ATTACHMENT B
PAGE 1 OF 1
CEQA EXEMPTION
FORMULA RETAIL ORDINANCE
TEXT AMENDMENT (TA 07-02)

To: ____ Office of Planning and Research
1400 Tenth Street, Room 121
Sacramento, CA 95814
____ County Clerk
County of Ventura
800 S. Victoria Ave.
Ventura, CA 93009

From: The City of Ojai
401 S. Ventura St.
P.O. Box 1570
Ojai, CA 93024

Project Title: New Ordinance Regulating Formula Retail Businesses in the City of Ojai

Project Location – Specific: Historic Commercial Downtown of the City of Ojai

Project Location – City: Ojai Project Location – County: Ventura

Description of Nature, Purpose, and Beneficiaries of Project: New Ordinance Regulating Formula Retail Businesses in the City of Ojai

Name of Public Agency Approving Project: City of Ojai

Name of Person or Agency Carrying Out Project: Jere A. Kersnar, City Manager

Exempt Status (check one):
__ Ministerial (Sec. 15073)
__ Declared Emergency (Sec. 15071(a))
__ Emergency Project (Sec. 15071 (b) and (c))
XX Categorical Exemption. State type and section number: This project is considered a Class 5 categorical exemption from environmental review per the California Environmental Quality Act, Section 15305. Class 5 consists of minor alterations in land use limitations in areas with an average slope of less than 20%, which do not result in any changes in land use or density, including but not limited to minor lot line adjustments, side yard, and set back variances
not resulting in the creation of any new parcel; issuance of minor encroachment permits; and reversion to acreage in accordance with the Subdivision Map Act.

Reasons why project is exempt: This Exemption was selected because the Ordinance places limits on those land uses
(formula retail establishments) that would affect the long-term economic impact of the City. Economic impacts are not
considered a significant environmental effect pursuant to CEQA Sections 15064(e) and 15382.

Lead Agency Contact Person: Katrina Rice Schmidt, AICP Area Code/Tel./Extension: (805) 640-2555 x 113

If filed by applicant:
1. Attach certified document of exemption finding.
2. Has a Notice of Exemption been filed by the public agency approving the project?
__ Yes XX No
__________________________________________________
Jere A. Kersnar, AICP (signature) City Manager and Community Development Director Date

XX Signed by Lead Agency __ Signed by Applicant

Date received for filing at OPR: