City Council Meeting - FINAL

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15.B.

Meeting Date:	03/18/2014
From:	Roger Eastman, Zoning Code Administrator

Information

TITLE:

Consideration and Adoption of Ordinance No. 2014-07 and Resolution No. 2014-10: Resolution No. 2014-10 Declaring the proposed amendments as a public record; and adoption of Ordinance No. 2014-07, Adopting Amendments to that certain document entitled “Division 8-03-002, Sidewalk Cafes, Sidewalk Vending Carts and Other Permitted Encroachments” (An ordinance deleting North Downtown Business District Encroachment Policy, and replacing it in its entirety with Sidewalk Cafes, Sidewalk Vending Carts, and Other Permitted Encroachments)

RECOMMENDED ACTION:

1) Read Resolution No. 2014-10 by title only
2) City Clerk reads Resolution No. 2014-10 (if approved above)
3) Read Ordinance No. 2014-07 for the first time by title only
4) City Clerk reads Ordinance No. 2014-07 for the first time by title only

At the April 1, 2014 Council Meeting:
5) Adopt Resolution No. 2014-10
6) Read Ordinance No. 2014-07 for the final time by title only
7) City Clerk reads Ordinance No. 2014-07 by title only (if approved above)
8) Adopt Ordinance No. 2014-07.

Policy Decision or Reason for Action:

The proposed amendments to City Code Division 8-03-002, Sidewalk Cafes, Sidewalk Vending Carts and Other Permitted Encroachments establish updated standards and review procedures for sidewalk cafes and sidewalk vending carts in the downtown and other certain commercial zones.

Subsidiary Decisions Points: A key policy decision will concern the establishment of a defensible procedure for calculating an appropriate lease rate that is fair and reasonable to business owners and that also reasonably compensates the City for the use, by private individuals, of City sidewalks.

Financial Impact:

The proposed amendments establish a new uniform fee for processing the application for a sidewalk café, vending cart, or other encroachment, as well as a uniform methodology for establishing a lease rate for the use of public sidewalks by a business owner for a sidewalk café or vending cart.

Connection to Council Goal:

11. Effective governance

Has There Been Previous Council Decision on This:

At the October 8, 2013 Work Session, the Council reviewed and discussed suggested amendments to Division 8-03-002 developed by staff, received public comment, and provided staff with specific direction on an appropriate path forward.

Options and Alternatives:

Please refer to the Expanded Options and Alternatives below.

Background/History:

Sometime in the early 1970’s, the City Council adopted the North Downtown Business District Encroachment Policy as Division 8-03-002 of the Flagstaff City Code. This ordinance, which was updated in 1996 and 1997, established standards and procedures for the review and approval of commercial encroachments (including sidewalk cafes and vending carts) as well as for permitted encroachments by certain structures (including, for example, overhead encroachments, excavations, and basement access) and encroachments by other activities and objects such as construction, bicycle racks, newspaper vending machines, etc.

Division 8-03-002 was specifically written to allow sidewalk cafes and sidewalk vending carts in downtown Flagstaff only, and hence no such encroachments may be permitted in other areas of the City, including the Southside. Many existing Southside businesses have been frustrated because of their inability to establish sidewalk cafes in public right-of-way.

Following Council discussion of this issue in October last year, staff from the City Attorney’s office and the Community Development Division has developed amendments to this Division. The draft ordinance incorporates ideas for simplifying and clarifying an approach for the review and issuance of permits for sidewalk cafes and sidewalk vending carts in most commercial zones within the City.

Key Considerations:

Staff has completed amendments to Division 8-03-002 of the Flagstaff City Code. Currently this Division is called “North Downtown Business District Encroachment Policy”, and it will be renamed as “Sidewalk Cafes, Sidewalk Vending Carts, and Other Permitted Encroachments”.

The amendments to this Division are based on some of the provisions in Division 8-03-002 which have been kept, as well as ideas from a variety of other cities, including Portland, OR, Seattle, WA, Salt Lake City, UT, Minneapolis, MN, and Redwood City, CA. In the narrative below, staff will describe the principal sections and provisions of the proposed draft ordinance.

Reorganization of the Division. This Division has been reorganized so that, for example, the definitions and appeals sections have been consolidated and certain sections have been rearranged so that the document is more logically organized. The definitions are also arranged alphabetically.

Illustrations. The Division includes illustrations to make it easier to understand key terms, such as “area of operation” and “clear pedestrian zone”.

Applicability. The proposed standards apply to all commercial zones in the City except for the Suburban Commercial (SC) Zone. This is an important difference from the current standards which apply only to the downtown area, currently designated as the Commercial Business (CB) Zone. The proposed ordinance, therefore, would allow business owners in the Southside neighborhood or elsewhere in the City to apply for a sidewalk encroachment permit.

Types of encroachments. The amendments provide standards for three types of encroachments. Permits for sidewalk cafes and sidewalk vending carts encroachments will be administered by Comprehensive Planning and Code Administration Program staff. Staff from the Development Engineering Program will continue to manage the encroachment permits required for work by public and private utilities in the right-of-way, driveway construction, and trash dumpsters placed in the right-of-way when there is no room on a property for them during construction.

Application fee. The amendments contemplate that all applications for sidewalk cafes and sidewalk vending carts will be required to pay an “application fee” to cover the administrative costs of accepting, reviewing and issuing a permit by staff. As changes to the City’s fee schedule are required by Arizona law to be posted to the City’s website for a minimum of 60 days before Council action on the fee, Council consideration of this application fee will be scheduled at a later date.

Annual lease rate: The amendments to Division 8-03-002 also contemplate an annual lease rate, the purpose of which is to compensate the City for use of public sidewalks for commercial purposes. The need for the lease rate arose when it was realized that sidewalk cafes located on Heritage Square were required to pay a license fee for the use of this public space as part of their lease agreements, whereas all other restaurants that had established seating areas on the sidewalks elsewhere in downtown were not required to pay for the use of the sidewalk.

Staff studied the methodology used by other US cities, including Seattle, WA and Corvallis, OR for establishing a defensible procedure for calculating an appropriate lease rate that is fair and reasonable to business owners and that reasonably compensates the City for the use by private individuals of its property. Staff recommends that a single aggregated lease rate should be applied City-wide rather than establish separate fees for different areas of the City. Staff created a matrix to analyze the property values of the parcels historically associated with applications for sidewalk cafes and sidewalk vending carts (see attached). Twelve such parcels were identified, including Heritage Square. Preliminary analysis suggests that the lease rate for use of a City sidewalk would be about $15 per sq. ft.; i.e., $1,800 annually for a 120 sq. ft. sidewalk café operating area. This is derived by taking the average full cash value established by the Coconino County Assessor’s Office for the 12 properties in the downtown and Southside areas, and dividing this value by the area of the parcel. The resultant average land value ($60 per sq. ft.) may then be multiplied by the operating area in sq. ft. and a rate of return value of 25% (i.e. 0.25 over 4 years). Similarly, the cost to the proprietor of a vending cart based on a maximum operating area of 24 sq. ft. would be $360 per year. Note that if the rate of return was calculated over a longer period of time, the annual lease rate would be lower. For example, if the rate of return was calculated over 6 years at 16.67%, then the lease rate for a 120 sq. ft. sidewalk café would be $1,195.

The lease rate proposed above, or as ultimately adopted by the Council, will be applied to business owners who lease sidewalk space for outdoor cafes or vending carts, and will also be applied to business owners who lease portions of Heritage Square for outdoor dining areas. This lease rate will not apply in addition to any established lease amounts (e.g., for Cuvee 928 or Monsoon's), and it would only apply once any current lease agreements terminate.

Permitting requirements and conditions of permits. The ordinance establishes the need for a permit for use of public sidewalks for sidewalk cafes and sidewalk vending carts, as well as other permitted encroachments consistent with existing City Code requirements. It also establishes minimum submittal requirements, including proof of liability and insurance, as well as procedures for review.

Denial, revocation or suspension of permits, and permit renewal. This section provides a procedure and standards for the denial, revocation or suspension of permits for sidewalk cafes and sidewalk vending carts. Note that the time frame for the renewal of a sidewalk café or vending cart permit has been changed. As the permit fee is for an annual permit, staff realized that applications for renewals of existing permits should be received from September 1^st through December 31^st. All applications received after December 31^st will be processed as a new application. Consistent with the existing ordinance, an appeal process to the City Manager is established.

Location rules. Sidewalk cafes permitted under the current Division have been successful over the past years that staff has administered sidewalk café encroachment permits. Not only do the sidewalk cafés add to the ambiance and character of downtown Flagstaff, the standards in place have ensured that the encroachments do not constrict the sidewalk such that it is difficult for pedestrians to use them, especially those individuals who are mobility impaired. The proposed amendments to this Division are based on lessons learned through the application of the current standards, as well as best practices from other American cities that also permit sidewalk cafes and sidewalk vending carts. The new Division therefore, more clearly prescribes standards for minimum sidewalk width and a clear pedestrian zone relative to a defined area of operation for a sidewalk café. Allowances are also provided for pinch points around elements such as poles or posts supporting signs.

Standards for barriers defining sidewalk cafes. Arizona liquor laws require that barriers are installed to define an area in which alcohol is served, and federal Americans with Disabilities Act (ADA) standards require that barriers in public places meet certain standards so that, for example, a blind person with a cane can reasonably locate and move around the barrier. There are no minimum standards in the current code regarding the design and placement of barriers. The amendments, therefore, include a provision that requires barriers to harmonize with adjacent building’s design, be moveable and not permanently attached to the sidewalk, and be constructed of high-quality durable materials. Appropriate standards to ensure compliance with ADA regulations are also included.

Sidewalk vending carts. The location and permitting regulations for sidewalk vending carts remain essentially unchanged from the existing regulations consistent with the Council’s direction provided at the October 8, 2013 work session. The operating area for a sidewalk vending cart has been increased to 32 sq. ft. as staff realized that the area of 24 sq. ft. proposed in the October 8^th draft was too small for a vending cart, operator, and trash receptacle.

Other Permitted Encroachments. This section remains essentially unchanged from the current regulations in Division 8-03-002, except that it has been updated and text has been clarified. Encroachments by such elements as bicycle racks, newspaper vending machines, potted plants, and mail boxes continue to be permitted, as do overhead encroachments, columns, and basement access. Similarly, permits will continue to be issued by the Engineering Section to allow construction activities in public rights-of-way, and to allow for the placement of waste containers in the right-of-way where there is no other location on-site for them to be placed.

Penalty for Violation and Abatement. Consistent with all City Code provisions, penalties are established for violations of Division 8-03-002, and authority is granted to the City to pursue summary abatement of a condition that creates “a risk of serious injury to persons or property”.

Expanded Financial Considerations:

As explained above, a key decision point for the Council will be the establishment of a defensible procedure for calculating an appropriate lease rate that is fair and reasonable to business owners and that also reasonably compensates the City for the use by private individuals of its property; i.e., sidewalks.

Community Benefits and Considerations:

The current standards in Division 8-03-002, North Downtown Business District Encroachment Policy, have allowed for the establishment of sidewalk cafes and sidewalk vending carts in the downtown area. Bars and restaurants who have taken advantage of these regulations to establish seating areas on the public sidewalk have reported that their sales have increased making their businesses more profitable. Owners of sidewalk vending carts have also reported similar results. While increased business activity is beneficial to individual business owners, it also results in increased sales tax revenues to the City. Perhaps more importantly, the character and ambiance of downtown is significantly enhanced by sidewalk cafes and sidewalk vending carts, a fact that has been noted by many downtown businesses and the Downtown Business Association. The proposed amendments to Division 8-03-002 are intended to continue to allow sidewalk cafes and sidewalk vending carts, so that the advantages described above may continue to be realized. However, other benefits result from these amendments, including the ability of business outside of the downtown area to also establish sidewalk cafes and sidewalk vending carts; the regulations have been clarified to eliminate confusing or contradictory regulations; enhanced protections for pedestrian use of sidewalks have been included; requirements for barriers around sidewalk cafes have been improved to assure architectural compatibility with buildings and to comply with ADA regulations; and, a mechanism to ensure the City is fairly compensated for private use of public rights-of-way is established. Furthermore, the existing regulations for other permitted encroachments that allow, for example, for the placement of a dumpster in public right-of-way when there is no space for it on a construction site, have been clarified.

Community Involvement:

INFORM, CONSULT, & INVOLVE - Prior to the October 8, 2013 Council work session, staff provided a letter to business owners in the downtown and Southside who have utilized a sidewalk café and vending cart, or who have expressed interest in applying for a permit for one. This letter was also provided to the Downtown Business Association (DBA) and the Flagstaff Chamber of Commerce. On February 18, 2014 an updated letter was hand delivered to 16 business owners in the downtown and Southside neighborhood, as well as to the DBA and Chamber of Commerce so that they would be informed of the proposed amendments and upcoming hearings/meetings with the Council.

City staff attended the DBA’s weekly meeting on February 24, 2014 to discuss the proposed amendments to Division 8-03-002. While the concept of permitting sidewalk cafes and sidewalk vending carts is supported by the DBA because, for example, they add to the ambiance and character of the downtown area, many members were concerned that the cost of the application fee and the permit fee was too high and that this would discourage businesses from applying for the permit. Staff explained why it was important and necessary to have a uniform fee for the use of public right-of-way by private businesses, and that ultimately the Council would decide on the amount of the fee (note the permit fee for a sidewalk café would apply to both Heritage Square and public sidewalks; however, no vending carts are permitted in Heritage Square).

City staff also presented the proposed amendments to a number of City Commissions and Committees, as summarized below:

Pedestrian Advisory Committee – December 12, 2013 and January 9, 2014. The Committee reviewed the proposed amendments to Division 8-03-002 and after some questions to staff and discussion the requirements for barriers around sidewalk cafes were supported, including the need for them to meet ADA standards. Further questions on potential obstructions, permitting requirements, and noise issues were answered by staff.

Transportation Commission – February 5, 2014. The Transportation Commission listened to staff’s presentation on the sidewalk encroachment amendments, and moved to support the ordinance and recommended approval to the Council. The Commission reviewed the minutes of the Pedestrian Advisory Committee’s last meeting, and they concurred with each of their points. The Commission also discussed the requirements for vending carts and were concerned that they were onerous, specifically the 100% approval requirement. Staff mentioned that a similar discussion had already taken place with the Council last year, and that the Council had directed staff not to change the requirements and standards for vending carts.

Disability Awareness Commission – February 25, 2014. After some discussion, during which staff answered questions, the Commission unanimously moved to support the proposed amendments to Division 8-03-002, and recommended their adoption by Council.

The public hearing/first reading of the ordinance to adopt the proposed amendments to Division 8-03-002 has been scheduled for March 18, 2014 with the ordinance’s second reading and possible adoption now scheduled for April 1, 2014. The effective date will, therefore, be May 1, 2014. Owners of interested bars, restaurants, and sidewalk vending carts may apply for a Sidewalk Café and Sidewalk Vending Cart Permit on April 2^nd, assuming Council adoption of the ordinance. However, permits will only be issued on April 30^th in advance of the May 1^st effective date.

Expanded Options and Alternatives:

Adopt Resolution No. 2014-10 declaring that the document entitled “Division 8-03-002, Sidewalk Cafes, Sidewalk Vending Carts and Other Permitted Encroachments” to be a public record
Do not adopt Resolution No. 2014-10 and, therefore, do not declare the proposed amendments to be a public record
Adopt Ordinance No. 2014-07 adopting amendments to that certain document entitled “Division 8-03-002, Sidewalk Cafes, Sidewalk Vending Carts and Other Permitted Encroachments”
Modify and adopt Ordinance No. 2014-07 adopting amendments to that certain document entitled “Division 8-03-002, Sidewalk Cafes, Sidewalk Vending Carts and Other Permitted Encroachments
Do not adopt Ordinance No. 2014-07 and, therefore, make no changes to the existing text in Division 8-03-002.

Attachments
Ord. 2014-07
Res. 2014-10.Amended
Analysis