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Home My WebLink About8.2 Attch 2 CCSR 04-17-2012C~~~ O~P DL~~~C- ~'lt~r-o~ti`~ DATE: TO: STAFF REPORT CITY COUNCIL CITY CLERK File #560-90 April 17, 2012 Honorable Mayor and City Councilmembers FROM: Joni Pattillo, City Manager; ~•~~._.. T~~~~,-~.~?~, ~,...~~ SUBJECT: Report on Tobacco Retailers Ordinance Prepared by Roger Bradley, Assistant to the City Manager & Martha Aja, Environmental Coordinator EXECUTIVE SUMMARY: A Fiscal Year 2011-2012 City Council initiated work plan goal directs Staff to establish zoning restrictions for new tobacco retailers within the City. As directed by the City Council, Staff is presenting this item to re-cap the discussion from the January 17, 2012 City Council meeting. FINANCIAL IMPACT: There would be a financial impact associated with the preparation of an ordinance. The Fiscal Year 2011-2012 budget includes sufficient funds to cover the necessary legal review of the ordinance. If an ordinance is adopted that does not grandfather in existing tobacco retailers, it is likely that the City will face legal challenges which have financial implications for the City. RECOMMENDATION: Staff recommends that the City Council provide feedback and direction on developing a Tobacco Retailers Ordinance. %/. '~ Submitted By Assistant to the City Manager DESCRIPTION: BACKGROUND Reviewed By Assistant City Manager A Fiscal Year 2011-2012 City Council initiated work plan goal directs Staff to establish zoning restrictions for new tobacco retailers within the City. The ordinance would establish development standards and regulations for the siting of new tobacco retailers within the City of Dublin. A tobacco retailer is any person or business which sells, offers for sale, exchanges or offers to exchange for any form of consideration tobacco, tobacco products and/or tobacco paraphernalia. Page 1 of 7 ITEM NO. 7.4 ATTACHMENT 2 At the January 17, 2012 City Council meeting, the City Council received a presentation from Staff on possible ordinance provisions and had an initial discussion about this topic. The purpose of this report is to re-cap that discussion, provide relevant additional information on probable impacts, and seek direction from the City Council on how to proceed with an ordinance proposal. The January 17, 2012 Staff Report is included as Attachment 1. During the deliberations on this item, the City Council directed that Staff bring this item back for consideration before any additional work was done by Staff and before any meetings were held with the tobacco retailers. ZONING RECAP Minimum Distance to Maintain from Areas Where Children Are Present Decision Point: The City Council opined that the appropriate distance to maintain from a tobacco retailer to youth-oriented areas is 1,000 feet. The areas that should be included in the definition of youth oriented are schools, libraries, parks, playgrounds, youth-centers, arcades, licensed child care facilities/preschools, and City owned and operated recreational facilities. Consequences: Of the 25 existing tobacco retailers, seven (7) are located within 500 feet of areas where children are present and 16 are located within 1,000 feet of areas where children are present. Please refer to Attachments 2 and 3 for a map of the areas in the City where children congregate. Attachment 2 has a 500 foot buffer around the areas where children congregate and Attachment 3 has a 1,000 foot buffer around these areas. No future tobacco retailers would be allowed to be located within 1,000 feet of these areas. As illustrated in this map, many of the existing tobacco retailers are located within the buffers surrounding the tobacco retailers. Staff Recommendation: Staff would recommend that the minimum distance from youth- oriented areas be 1,000 feet. Should Residential Zones be Included in the Ordinance Decision Point: The City Council opined that tobacco retailers should be required to be located a minimum distance of 1,000 feet from parcels with a residential land use designation. Consequences: If the ordinance requires a minimum distance from a tobacco retailer to parcels with a residential land use designation, then no future tobacco retailers will be able to locate in the City. As shown in Attachment 4, all but one of the undeveloped/vacant parcels is located within 1,000 feet of a residentia- land use designation. This parcel has a land use designation of Business Park/Industrial, which does not allow retail uses. In addition, 24 out of the existing 25 retailers are located within 1,000 feet of a residential land use. Thus, there would be nowhere within the City that a new tobacco retailer could locate, and a conditional use process would be moot as every corner of the City would be prohibited from siting a tobacco retailer. Staff Recommendation: Staff would recommend that the City Council not require retailers to be a minimum distance from residential land-use designations. Limited Density of Tobacco Retailers Page 2 of 7 Decision Point: The City Council opined that a provision should be included in the ordinance to limit the density of tobacco retailers in cases where the retailer is a business that primarily sells tobacco products (i.e. Smoke Shops). For these types of uses, tobacco retailers should be a minimum of 1,000 feet from one another. Direction was provided that grocery stores, drug stores and gas stations are not subject to this requirement. Consequences: If the ordinance limits the density of tobacco retailers in the City that primarily sell tobacco products, then there would be fewer such uses in the City. There are currently three "smoke shops" in Dublin that primarily sell tobacco products. Two of these businesses are located within 1,000 feet of one another. Staff Recommendation: Staff would recommend that smoke shops be prohibited from siting within 1,000 feet of each other. Aparoval Process for New Tobacco Retailers Decision Point: The City Council opined that a provision be included in the proposed ordinance to require that the approval process be through the Zoning Clearance process. Consequences: The Zoning Clearance process takes much less time than a Conditional Use Permit. If an ordinance is adopted that requires a minimum distance of 1,000 feet from areas where children are present and 1,000 feet from residential, then the review process (either Zoning Clearance or Conditional Use Permit) is a moot point since there will be no areas in the City where a future tobacco retailer could be located. Staff Recommendation: Staff would recommend that a zoning clearance be used for the siting of new tobacco retailers. Existing Retailers - "Grandfatherinq" Decision Point: The City Council opined that a proposed ordinance should apply to all existing tobacco retailers within the City. Furthermore, any existing retailers that are in violation of the Ordinance shall be phased out within 1, 2, 3, or more years, depending on the legality of the timeframe. The City Attorney's office has preliminarily researched the issue of "grandfathering," and whether the City has the authority to restrict tobacco sales at existing sites. If the City wants to phase out existing tobacco retailers, it must establish an "amortization" process whereby retailers are given a period of time to operate such that they can recoup their investment in the business. In particular, the City is not required to allow existing uses to continue indefinitely. However, to the extent that the City would like to eliminate sales at existing sites, it will be necessary for the City to provide the "amortization" period as mentioned for existing uses. California case law clearly holds that while cities may validly provide for the eventual termination of nonconforming property uses without compensation, they must provide a "reasonable amortization period commensurate with the investment involved." The specific length of the amortization period is not established by law. Rather, the appropriate amortization period must be reasonable and commensurate with the investment involved, so the appropriate period should be determined on a case by case basis with respect to particular properties. Potential factors to be considered in establishing an amortization period might include, but are not limited to the amount of money invested in a leasehold or improvements, the length of time remaining on a lease, or additional evidence of undue financial hardship. It is expected that preparation for Page 3 of 7 and the actual conduct of amortization hearings would require a fair amount of additional legal and administrative work. Consequences: if the ordinance applies to existing tobacco retailers and if a 1,000 foot buffer is required from residential land uses, then all of the existing tobacco retailers (25) would be in violation of the ordinance and would be required to phase out the sale of tobacco products. Of the existing 25 tobacco retailers in the City, three businesses sell only tobacco products and related paraphernalia and/or liquor and therefore adoption of an ordinance that applies to existing tobacco retailers will most likely result in the closing of these businesses. For those businesses where tobacco sales are ancillary to the businesses primary focus, these business would, of course, be able to continue to operate, but would perhaps lose a revenue source. Staff believes that legal challenges are likely, resulting in significant staff time and financial resources. Staff Recommendation: Staff would recommend that existing retailers be grandfathered within the ordinance. Oation/Imaact Matrix Options Existing Tobacco Retailers Future Tobacco Retailers 500 feet from children Seven tobacco retailers are Future tobacco retailers would located within 500 feet of not be permitted to locate in children and would have to areas within 500 feet of areas phase out the sale of tobacco where children are present. products if the ordinance does not grandfather in existing tobacco retailers. Refer to Attachment 2 1,000 feet from children Sixteen (16) tobacco retailers Future tobacco retailers would are located within 1,000 feet of not be permitted to locate in children and would have to areas within 1,000 feet of areas phase out the sale of tobacco where children are present. products if the ordinance does not grandfather in existing Tobacco Retailers. Refer to Attachment 3 Apply Ordinance to Twenty-four (24} of the twenty- All undeveloped/vacant parcels Residential Land Use five (25) tobacco retailers are that are designated as located within 1,000 feet of a commercial are located within residential land use designation. 1,000 feet of a residential land These businesses would have use designation. Including a to phase out the sale of tobacco 1,000 foot minimum distance products if the ordinance does from residential land uses would not grandfather in existing result in no new businesses tobacco retailers. being able to sell tobacco Refer to Attachment 4 products in the City. Refer to Attachment 4 Apply Ordinance to existing All twenty-five (25) of the Not Applicable Tobacco Retailers existing tobacco retailers would be in violation of the ordinance and would have to phase out the sale of tobacco products. Three of the businesses only sell Tobacco/Alcohol products and would most likely go out of Page 4 of 7 business. Refer to Attachment 5 8~ 6 Limit Density of "Smoke There are currently three Any future "smoke shops" that Shops" tobacco retailers in the City that primarily sells tobacco products primarily sell tobacco products. would not be permitted to locate Two of these retailers are within within 1,000 feet of an existing 1,000 feet of one another. tobacco retailer. Attachment 7 shows all of the various restrictions. As illustrated in Attachment 5, there are no future areas in the City where tobacco retailers could be sited and all of the existing tobacco retailers (25) would be required to phase out the sale of tobacco products in the specified amount of time, if the ordinance requires that all tobacco retailers be located 1,000 feet from residential land uses. If the City Council were to adopt an ordinance that phases out the sale of tobacco products and retailers, it is likely that lawsuits would be filed challenging the legality of the ordinance, which would have financial implications for the City. Therefore, Staff recommends that the Tobacco Retailers ordinance include a minimum distance of 1,000 feet from future tobacco retailers to areas where children are present, but that it does not require a minimum distance from residential districts. Staff also recommends that existing businesses be grandfathered in and allowed to continue to sell tobacco products. Staff has already received significant interest and concern from local and regional retailers, as well as national organizations, that support tobacco retailing. TOBACCO RETAILER LICENSING RECAP In addition to the Conditional Use Permit, the City Council also discussed the establishment of a licensing provision for the sale of tobacco products. A retailer licensing ordinance would provide greater local control over the illegal sale of tobacco products and would provide a sustainable funding mechanism for program enforcement and administrative oversight. Establish a Tobacco Retailer Licensing System Decision Point: The City Council opined that there should be a retailer licensing system for all existing as well as any future tobacco retailers. Consequences: Provide greater enforcement and local control of tobacco related infractions. An additional burden would be placed upon local businesses to apply for the license. Also, additional staff time will be required to review, approve, and manage the licensing program as well as to conduct hearings for possible license revocations; however, a licensing fee could be established to offset the additional costs to the City. Staff Recommendation: Staff would recommend establishing a Tobacco Retailer Licensing system. Establish a Fee to Obtain a Tobacco Retailer License Decision Point: The City Council opined that there should be a licensing fee should be established at full cost recovery. Page 5 of 7 Consequences: A license fee would provide funding to cover the cost of program management and enforcement. A fee would be an additional cost burden for the retailers. In particular, many retailers and consumers believe there are already significant costs and fees placed by government on the sale of tobacco products. If a funding fee is not included, compliance checks, ensuring that tobacco products are not being sold to minors, may need to be suspended should grant funding be unavailable during any given year. Staff Recommendation: Staff would recommend that a fee be established at full cost recovery. Revocation vs. Suspension for Violations Decision Point: The City Council opined that licenses should be revoked or suspended for a violation of the ordinance; e.g., selling tobacco products to minors. Consequences: Businesses will lose revenues from being unable to operate as a tobacco retailer. Reapplication fee would be required to obtain a license after revocation. Staff Recommendation: Staff would recommend that licenses be revoked for violations Determine Appropriate Revocation Period for Violations Decision Point: The City Council opined that the appropriate revocation/suspension period for violating ordinance provisions is: • 1St violation within a 60 month period: License revoked/suspended for 30 days. • 2nd violation within a 60 month period: License revoked/suspended for 90 days. • 3~d violation within a 60 month period: License revoked/suspended for 180 days. • 4 or more violations within 60 month period: License revoked/suspended for 1 year. Consequences: The more significant the penalties, the more likely a business will be in compliance with ordinance provisions. Additionally, the longer the revocation/suspension period, the more revenues that a business will lose, and the more sales tax the City may forfeit. Management of compliance and reapplication will have a staff impact, which could be offset by licensing fees. Staff Recommendation: Staff would recommend that revocations/suspensions be include as outlined. Fine In Lieu of Revocation/Suspension Decision Point: The City Council opined that a fine in lieu of a revocation/suspension is appropriate under the following conditions: 1. 1St violation within a 60 month period: an administrative penalty of at least one thousand dollars ($1,000). 2. After a second violation of this chapter at a location within any sixty-month (60) period: i. an agreement to stop acting as a Tobacco Retailer for at least seven (7) days; and ii. an administrative penalty of at least five thousand dollars ($5,000). Consequences: This option would allow a fine to be paid, which would provide additional revenue to the City. This would also provide an option for the business to determine how a penalty is applied; i.e., do they prefer to pay a fine or lose tobacco sales revenue for a period of Page 6 of 7 time as well as go through the reapplication process with its cost and time commitments. Allowing a fine in lieu of revocation would relieve the administrative workload for Staff in reviewing and approving reapplications for those businesses that would have had otherwise had their licenses revoked. Staff Recommendation: Staff would recommend that this item be included as outlined. NOTICING REQUIREMENTS/PUBLIC OUTREACH: The Public Meeting Notice was mailed to all existing Tobacco Retailers within the City in addition to other interested parties. ATTACHMENTS: 1. January 17, 2012 Staff Report without Attachments 2. Map of locations in the City where children congregate with a 500 foot buffer 3. Map of locations in the City where children congregate with a 1,000 foot buffer 4. Map of existing tobacco retailers in the city with a 1,000 foot buffer around residential land uses 5. Map of the existing tobacco retailers in the city with a 500 foot around the retailers 6. Map of the existing tobacco retailers in the city with a 1,000 foot around the retailers 7. Map that shows all of the restrictions Page 7 of 7