The Carpinteria City Council today is expected to approve the first reading of an ordinance amending the city’s zoning regulations to establish permanent formula business regulations to protect existing businesses.
The proliferation of formula businesses can have long-term economic consequences for a community, according to staff.
“Low-margin businesses that meet the basic needs of surrounding neighborhoods, such as grocers and pharmacies, may be pushed out as rents rise and the area attracts more formula restaurants and stores,” staff said.
“Perhaps of greatest concern, formula businesses tend to be fair-weather friends and can disappear quickly when the economy contracts or their corporate strategy shifts.
“The risk of formula businesses resulting in a downtown or neighborhood business district losing its distinctive appeal and no longer offering opportunities for independent entrepreneurs could result in loss of customers, fewer business opportunities and a decline in locally-generated tax revenue.”
The council will meet in chambers, 5775 Carpinteria Ave., starting at 5:30 p.m.
In other business, the council is scheduled to evaluate the performance of City Manager Dave Durflinger, who will be retiring at the end of the year, extend the emergency proclamation in response to the January 2023 storms and related emergency response, and adopt a resolution approving the Measure A five-year local program of projects for Fiscal Years 2023-24 through 2027-28.
The ordinance pertaining to formula businesses would apply to any commercial business operating as a retail sales, restaurant/food service, and/or hotel or motel establishment which has more than seven locations anywhere in the United States; and has two or more of the following features common to all or substantially all of its locations: standardized array of services or products for sale, facade, architecture, decor or color scheme, uniform or other employee apparel, signage or trademark/servicemark.
The ordinance would not apply to the commercial parcels fronting the portion of Casitas Pass Road from Carpinteria Avenue to Highway 101, including the entirety of Casitas Plaza Shopping Center and the Shepard Place Shops.
Additionally, the ordinance would not apply to office space, professional services, banks or credit unions, grocery stores, nonprofit businesses, pharmacies, gas stations or theaters/performing arts spaces.
The ordinance does not prohibit the relocation of an existing formula business in operation at a location within the city to another location within the city.
Per the recommendation from the Planning Commission, the ordinance would provide an exemption for the transfer of ownership, provided that the operation of the formula business remains substantially the same, and an exception to allow establishment of a formula business, if found to be in the public interest.
Upon approval of the first reading of the ordinance, city staff requests that the council direct staff to submit the draft ordinance to the California Coastal Commission (“CCC”) as a local coastal program.
The CCC will review the contemplated amendments to the city’s zoning regulations to address formula businesses for consistency with the policies of the California Coastal Act and the city’s certified local coastal program.
Upon certification, the ordinance would be returned to the council for acceptance of any modifications required by the CCC and adoption of the ordinance upon a second reading.
Depending upon the extent and manner in which the CCC completes the review and certification of the city’s local coastal program, the entire ordinance adoption process could take between four to 18 months. Meanwhile, the current temporary moratorium can remain in place for up to two years (until June 26, 2024), or until the ordinance for the (permanent) formula business regulations takes effect, whichever occurs first.
Regulating formula businesses could have an impact on potential city revenues generated from sources, including but not limited to: sales taxes, property taxes (related to new development/tenant improvements), transient occupancy taxes (for hotel/motel uses), business license taxes and permit fees, staff said.
The extent to which such revenues would be impacted is dependent upon the scope and breadth of any regulations on formula businesses, and the degree to which such regulations limit or reduce the establishment of new businesses in the city. Enforcement of formula business regulations would be expected to require a nominal amount of additional staff time.
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