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RPVCCA_CC_SR_2012_03_06_03_Regulatory_Framework_For_Operating_City_BusinessesCITY OF MEMORANDUM RANCHO PALOS VERDES TO: FROM: DATE: SUBJECT: HONORABLE MAYOR & M M JOEL ROJAS,DIRECTOR 0 CWllnlvl DEVELOPMENT ~ DENNIS MCLEAN,DIRECTOR OF FINANCE AN~ INFORMATION TECHNOLOGY MARCH 6,2012 REGULATORY FRAMEWORK FOR OPERATING CITY BUSINESSES REVIEWED BY:CAROLYN LEHR,CITY MANAGER c£.:L-. Project Manager.Ara Mihranian.Deputy Director of Community Developmen~ Kathryn Downs,Deputy Director of Finance &Information If 11\ Technology 'lAU RECOMMENDATION Receive and file a report on the current regulatory framework for operating a business in the City and provide Staff with direction on whether to pursue any changes to the current regulatory framework. BACKGROUND At the January 3rd workshop,the Council discussed its top goals,one of which included how the City can support local businesses.As a result of this discussion,the Council directed Staff to provide a report on the regulatory process for operating a business in the City to first understand the City's c~urrent regulatory framework.The Council requested this report be given within 90 days. DISCUSSION According to the City's business license records,there are a total of 1,900 businesses in 3-1 REGULATORY FRAMEWORK FOR CITY BUSINESSES MARCH 6,2012 the City that pay an annual Business License Tax.Of the 1,900 total businesses,200 are actual brick and mortar businesses,500 are home occupied businesses and 1,200 are businesses located outside the City but provide trade services in the City,such as, construction,landscaping,and technician services to name a few.The brick and mortar businesses are primarily restaurants and professional offices with some retail establishments.Included in this category are the large ticket establishments of Terranea Resort and Spa and the Trump National Golf Course (both of which have restaurant and retail components among other things).Home occupied businesses are primarily home offices that provide professional services such as accounting or consulting services.For purposes of this report,the following discussion will focus primarily on the brick and mortar businesses and the process relating to business taxes and regulatory permits issued by the City. Business Licenses and Commercial Permits Business License Tax One of the many responsibilities of the City's Finance and Information Technology Department is managing the City's Business License Tax.According to Chapter 5.04 of the Rancho Palos Verdes Municipal Code (RPVMC),all business activity performed within the City requires a business owner to annually pay a City Business License Tax.This includes any business activity occurring within a residential area (home occupations)and any service providers such as contractors,gardeners,or service technicians,.whether based in the City or not.For existing businesses on file with the City,annual renewals are mailed in December for the upcoming year and due by January 31 8 •No documentation is required other than the application with a statement of estimated gross receipts (if applicable).For new businesses that begin operating mid-year,the business license tax is pro-rated quarterly (i.e.a business starts in November pays only a %ofthe annual license tax).In either case,a business owner is responsible for correctly calculating and paying the business license tax.Delinquent payments are subject to a 5%late penalty fee per month up to a maximum of 50%.A failure to pay the business license tax is considered a misdemeanor.As a convenience,businesses may apply and pay for a business license online on the City's website via credit card,in person at City Hall,or by mail.A business license is generally processed within 7 to 10 days. Business Permits Various sections of the RPVMC require permits be obtained by the City to ensure the operation is adequately regulated to minimize impacts to surrounding land uses and to protect the public health and safety. •Massage Permit Section 5.24 of the RPVMC requires a business permit be obtained for massage establishments or massage technicians.An application can only be submitted in person at City Hall,and is renewable on an annual basis.In order to obtain a 3-2 REGULATORY FRAMEWORK FOR CITY BUSINESSES MARCH 6,2012 Massage Permit,the proprietor must provide the following documentation: ~Fingerprinting with the LA County Sheriff Department ~City Inspection of the establishment ~Photographs of technicians ~LA County Health Department Permit ~Identification A Massage Permit is typically processed within 1 day provided all information is submitted and accurate.The permit fee for a Massage Establishment is $465 and the permit fee for a Massage technician is $363.These permit fees must be paid in addition to the City's Business License Tax. •Film Permit Section 9.16 of the RPVMC requires a Film Permit when using public or private property,facility or residence for the purpose of producing,taking or making any motion picture or television production or engaging in still commercial photography. News reporting and filming for charitable causes are exempt from a Film Permit.A Film Permit is required for each shoot and must be accompanied with the following docu mentation: ~Application ~Proof of Insurance ~Hold Harmless Agreement A Film Permit is processed within 3 to 5 days provided all information is submitted and accurate.The permit fee ranges between $147 and $595. •Peddling Permit Section 5.28 of the RPVMC requires a Peddling Permit for persons engaging in activities involving carrying,conveying or transporting goods,wares,merchandise, or food and concurrently offering or exposing the same for sale (Le.food trucks). The purpose of this permit is to mitigate potential adverse impacts to surrounding properties,private property and to preserve the peace and tranquility of the City.A Peddling Permit is renewable each calendar year and must be accompanied with the following documentation: ~Application ~County Health Department Permit (for food vendors) ~Drivers License ~Vehicle Insurance ~Vehicle Registration A Peddling Permit is processed within 2 to 3 days provided all information is submitted and accurate.The permit fee is $196. 3-3 REGULATORY FRAMEWORK FOR CITY BUSINESSES MARCH 6,2012 •Home Occupation Permit Section 17.08.030 requires a Home Occupation Permit when any person,firm or corporation requests to establish,cause,permit or maintain any type of business, profession or other commercial occupation in any residential zoning district. A Home Occupation Permit is issued only after the City's Planning Department verifies the zoning and reviews the application to ensure all the criteria to operate a home business is met,such as posting no signs or advertisement to ensure the residential character of the neighborhood and dwelling unit are not adversely impacted.A Home Occupation Permit is processed within 1 to 2 days.The permit fee is $17. Zoning Approvals and Building Permits Planning Division Review Brick and mortar businesses in the City are generally located in areas that are zoned for commercial uses.There are five commercial zoning districts in the City that permit specific commercial uses,either by-right or through the approval of a Conditional Use Permit. When a new business proposes to locate in the City,the Planning Division is responsible for confirming whether the commercial use is allowed within the respective commercial zoning district.If the proposed business is to occupy an existing building and the commercial use is permitted by-right,no planning application is necessary,the business is approved over the counter,and the business owner is directed to the City's Building and Safety Division to obtain any necessary permits to perform interior tenant improvements.If a new business proposes to occupy a new building or if a conditionally allowed use is proposed, then an approval of a Conditional Use Permit (CUP)or a CUP-revision is necessary.A new business may also need a CUP revision is it intends to occupy a site that is governed by an existing CUP.In addition,if an existing business wishes to expand by adding 500 square feet or more of new usable floor area,a CUP or CUP-revision is also required. A CUP is a discretionary planning application that evaluates a use on its potential impacts to neighboring properties in areas such as traffic,parking,lighting,noise,and landscaping to name a few.A CUP is reviewed by the Planning Commission (appealable to the City Council)and involves public notification,public participation,and a public hearing.A decision on a CUP includes conditions of approval for operating the requested use and/or allowing the expansion that is intended to minimize potential impacts to neighboring properties.According to the Council adopted fee schedule,a CUP costs $7,222 for a new application or $4,730 for a revision to an existing CUP.The time to process a CUP application typically takes approximately 6 months,but can be significantly lengthier based on the degree of potential impacts that need to be evaluated based on concerns raised by surrounding residents. The vast majority of new business approvals or existing business expansions are processed by Planning Staff over the counter in just a couple of days.For example,the 3-4 REGULATORY FRAMEWORK FOR CITY BUSINESSES MARCH 6,2012 City's Western Avenue commercial corridor contains approximately 70 separate businesses (not including professional offices).While there have been numerous new business openings along Western Avenue in the last five years,none ofthem necessitated the processing of a CUP or CUP revision application.As such,new businesses,such as Denny's restaurant,Think Prime Restaurant,Pavich's Brick Oven Pizzeria,and Amalfitano Bakery all received over the counter approvals with no planning application or fee payment required.The only Planning Department approval that all new businesses are required to obtain is a sign permit for their new signage,as discussed later in this report. Building and Safety Division Review A new business or an existing business expansion may require some form of construction ranging from construction of a new building to renovating an existing retail space or office. Projects involving new construction (including additions to existing buildings)or interior tenant improvements (commonly referred to as a "T.I.")require plans to be submitted and reviewed by the Building and Safety Division prior to building permit issuance.These construction plans typically include architectural,structural,grading,electrical,mechanical and/or plumbing plans.The type of plans submitted and the cost of the building permit depends on the nature ofthe construction.Typically,the permits for a T.I.involving a new business occupying an existing space costs .86 per square foot for the Plan Check review and $1.05 per square foot for the permit fee.These fees are based only on the square footage of improved area,and not the square footage of the overall business unit space. As part of the Building and Safety review process,all plans are reviewed and comments provided to the applicant within a maximum 1O-day turn-around time from the submittal date.Upon the issuance of a building permit,the City's Building Inspectors will conduct inspections at certain construction milestones to ensure construction follows the permitted project plans.City inspections are scheduled based on requests.At the end of construction,a final inspection is conducted and a Certificate of Occupancy is issued allowing the new/added building or renovated space to be occupied. Signs Signs serve primarily to identify the general nature of an establishment or to direct attention to a product,activity,place,person or organization.The City's Development Code establishes sign regulations that attempt to improve the appearance of buildings and neighborhoods,while also enhancing the economic viability of an establishment.Both the Planning and Building and Safety Divisions are involved in reviewing a sign permit request. In the Planning Division,the City's Planners review a sign permit request for compliance with Section 17.76.050 of the RPVMC that contains the City's sign criteria. A sign permit, such as a change out from an old sign to a new sign,is typically approved over the counter and the fee for this sign permit is $340.A sign permit for a new shopping center or office complex sign program requires a public hearing at the Planning Commission level,and the fee for this sign permit $1,932.The Building and Safety Division reviews the structural component of a Planning Division approved sign and issues a permit to install a sign.The permit process for a sign change-out is issued over the counter,while a permit for a new monument sign may take up to 10 days to review,but are typically approved over the counter as well.The fee for this sign permit is $131 (the permit fee for a monument sign is 3-5 REGULATORY FRAMEWORK FOR CITY BUSINESSES MARCH 6,2012 based on the square footage). ADDITIONAL INFORMATION One-Stop Public Permit Counter In 2008,the Community Development Department office underwent an interior renovation of its public counter to accommodate a one-stop permit center.The purpose of this was to locate typical City permit and cashier services in one central location to better serve the public.As a result,a new business owner can apply and pay for planning entitlements, building permits,and business licenses at one location at City Hall.Moreover,the framework of this one-stop permit center is designed so that in most cases the public is greeted by and interacts with the same City Staff members affording a more personalized experienee and a higher level of service at City Hall. ALTERNATIVES The following alternatives to Staff's recommendation are available for the City Council's consideration: 1.Direct Staff to provide more information about existing businesses in the City and continue the discussion to a future City Council meeting;or, 2.Direct Staff to identify potential Code Amendments to remove some of the regulatory hurdles that may exist for businesses that are required to obtain an approval of a Conditional Use Permit. CONCLUSION Staff recommends that the City Council receive and file this status report on the City's regulatory framework for operating a business in the City and provide Staff with direction on whether to pursue any changes to the current regulatory framework. 3-6