BACKGROUND:

On September 17, 2018, Governor Jerry Brown signed Senate Bill 946 (SB 946), which establishes statewide governance of vending in the public right-of-way and parks. The purpose of this bill is to create entrepreneurial and economic development opportunities for certain individuals, by removing barriers to selling food and merchandise on public sidewalks and in parks. The bill went into effect on January 1, 2019.

The new law requires that cities allow sidewalk vending, and restrictions may only be imposed when directly related to objective public health, safety, or welfare concerns. Local jurisdictions that wish to regulate sidewalk vending are required to first adopt a program with rules and regulations consistent with SB 946. On January 8, 2019, the City Council adopted Urgency Ordinance 2019-006, establishing the Sidewalk Vending Program. The Urgency Ordinance went into effect immediately and is valid for 45 days after adoption. Staff is recommending that the City Council extend the Urgency Ordinance an additional 10 months and 15 days, as authorized by Government Code (GOV) Section 65858(a) with a four-fifths vote of the City Council.

Since the Urgency Ordinance was adopted, the Community Planning and Building Department has issued 13 sidewalk vendor permits; 10 commercial/residential and 3 Devendorf Park.  The majority of the applications were submitted the day after the Ordinance was adopted.  Most of the applicants are local business owners, primarily restaurateurs. The City has not been accepting any additional applications because we are at the allowed cap.

STAFF ANALYSIS:

Program Modifications

Staff made several modifications to the program in response to feedback from the first draft.  The following is a list of the most significant modifications:

• Modified so that the permits expire with the Urgency Ordinance, in 10 months 15 days, rather than 6 months.
• Added a requirement that sidewalk vendors operate a minimum of 40 hours per month, weather permitting.
• Modified so that the 10-foot wide sidewalk requirement only applies to the Commercial Districts and recognizes that the sidewalk vendor must ‘pass through’ narrower portions of a sidewalk in order to reach their destination.
•  Added a new definition of City parks and defines Devendorf Park as the park grounds excluding the surrounding sidewalks.
• Modified the allowed dimensions by reducing the width from 36 inches to 32 inches, and included an allowance for an umbrella or cover no larger than what is required by the Monterey County Health Department (see Attachment 5 for cart dimensions).
• Modified to allow the use of propane for heating food.
• Added a requirement that sidewalk vendors comply with CMC 8.96, which prohibits the use of polystyrene packaging and plastic straws and utensils.
• Added a prohibition on noise making devices, such as megaphones, bells, whistles, and the like.
• Modified to allow a maximum of one sign per receptacle.
• Modified and simplified the setback standards. Among other things, staff added a 25-foot setback from the monuments in Devendorf Park, eliminated the 200-foot setback standard from the Police and Fire Departments, reduced the setback between the vendors from 100 to 50 feet, and included provisions that the sidewalk vendor not obstruct a business entrance, Police or Fire Department entrance or driveway, trashcan, etc., rather than prescribing a defined setback standard.

Initial Permit Life

The Sidewalk Vending Program currently places a numerical cap (total 13) on the number of allowed permits and states that they are to be approved in the order they are received.  All 13 permits have been approved and issued.  Sidewalk vendors must make an initial investment, that includes paying the City’s permit and business license fees, purchasing a cart, obtaining a Health Department Permit, and obtaining general commercial liability insurance with a limit of one-million dollars per occurrence and two-million dollars in aggregate with the City named as an additional insured. In the original version of the program the permits were set to expire in 6 months, however, staff is now recommending that the first round of permits expire with the Urgency Ordinance, in 10 months and 15 days to give the permit holder a sufficient amount of time to operate and receive a return on their investment. The City Council may consider granting additional time to the original 13 permit holders, as several permit holders have indicated to staff that the approximate 11-month time-frame is not sufficient to offset the initial investment, which could range from $7,000-10,000.

Permitting Issuance

Because there is a numerical cap on the allowed number of permits, staff is seeking direction from the City Council on how to equitably issue permits once the first batch expire. Below is a list of potential options for issuing sidewalk vendor permits with a staff analysis. The permits under any of these systems could be issued with an expiration date, which staff would recommend be 1-5 years. Placing an expiration date on the permits would help ensure that there is equal opportunity for individuals wishing to operate in the City. A waiting list would be maintained should one of the permit holder choose not to operate or should the permit be revoked.  One of the permit issuing systems identified below would be incorporated into the permanent ordinance, which will be considered at a future date in the next 10 months.

Permit Re-issuance – Under this scenario, the first 13 permit holders would have their permits re-issued upon expiration of the Urgency Ordinance, and continually thereafter. While this is the simplest system of issuing future permits, and includes the benefit of continuity, staff is concerned with the equity of granting the permits to the original 13 permit holders in perpetuity.

Permit Lottery – Under this scenario, permits would be issued based a lottery draw. This is staff’s preferred option, as it would be fairest way of allocating permits. As an example, staff has included a section from the Pacific Grove Municipal Code that establishes a lottery system for short-term rental permits (see Attachment 6).

Criteria Based System – With this system the City would establish criteria and approve applications based on a score of how well they meet the criteria.  While this system provides the benefit of allowing the City to screen and make discretionary decisions on permits, it would involve considerable staff time and resources to screen applications, and could lead to the perception of impropriety.

Order Received – The first batch of permits were issued in the order received. Staff has concerns regarding the fairness of this system.  It can lead to a disorderly process as applicants compete to be the first to submit an application. 

Permit Ownership

The City Council requested that staff research whether a permit decision could be based on ownership.  Staff has identified several court cases establishing that a land-use decision cannot be based on ownership.  Additionally, using such criteria would be a violation of both the fourth and fourteenth amendments to the Constitution as a denial of "Due Process".  While the City cannot approve or deny an application based on ownership status, it could potentially require that the owner, or principal in the case of a corporation or company, be the operator. If the Council is in support of this provision, then it should direct staff to incorporate this into the permanent ordinance.

Additional Sidewalk Study

At the January 2019 City Council meeting, staff presented a sidewalk study that included 24 sidewalk width measurements, primarily along Ocean Avenue. Based on this study, it was determined that the average sidewalk width is 6’ 8”, with only 29% of the sidewalks being 10 feet or wider. This data was used to support the recommendation that there be a limit of 10 permits issued for the Commercial District.

Since the first meeting, staff has collected an additional 32 sidewalk width measurements, primarily along the Ocean Avenue side streets in the downtown (see Attachment 4). The measurements from the second data set are consistent with the first. When factoring in the additional measurements, the study indicates that the average sidewalk width is approximately 6’9”, with 32% being 10 feet or wider.

POLICY CONSIDERATIONS:

The Sidewalk Vending Program has been modified to address several of the issues identified in the first draft.  Staff recommends that the City Council extend Urgency Ordinance 2019-006, for an additional 10 months and 15 days. However, staff is seeking guidance from the City Council on the following policy questions:

• Should the original 13 permit holder be granted more than 1 year to operate?

• How should future permits be issued, once the original permits have expired?

• Should the program be amended to require that the owner or principal also be the operator?

ENVIRONMENTAL REVIEW:

The proposed Zoning Ordinance Amendment is not subject to the California Environmental Quality Act (CEQA) pursuant to the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, sections: 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment); 15060(c)(3) (the activity is not a project as defined in Section 15378); and 15061(b)(3), because the activity is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment. The proposed ordinance maintains the status quo and prevents changes in the environment.  Because there is no possibility that this ordinance may have a significant adverse effect on the environment, the adoption of this ordinance is exempt from CEQA.