Planning Commission


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  3.       
Meeting Date: 01/11/2021  
Submitted By: Chris Schaefer, Senior Planner

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA):
This project was reviewed pursuant to the guidelines of the California Environmental Quality Act (CEQA) and determined to be Categorically Exempt pursuant to Section 15301(a), Class 1: Existing Facilities of the California Environmental Quality Act Guidelines. The project consists of a tenant improvement.
RECOMMENDATION:
CONDITIONAL USE PERMIT
A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF LA HABRA APPROVING CONDITIONAL USE PERMIT 20-10 TO ESTABLISH A CANNABIS DISTRIBUTION OPERATION WITHIN AN EXISTING INDUSTRIAL BUILDING AT 536 WEST MOUNTAIN VIEW AVENUE AS PER THE APPROVED PLAN, MAKING THE APPROPRIATE FINDINGS AND SUBJECT TO CONDITIONS.

DEVELOPMENT AGREEMENT
A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF LA HABRA
RECOMMENDING THAT THE CITY COUNCIL APPROVE DEVELOPMENT AGREEMENT 20-01 FOR A CANNABIS DISTRIBUTION OPERATION WITHIN AN EXISTING INDUSTRIAL BUILDING AT 536 WEST MOUNTAIN VIEW AVENUE AS PER THE APPROVED PLAN, MAKING THE APPROPRIATE FINDINGS AND SUBJECT TO CONDITIONS.
DISCUSSION:
The Applicant is requesting approval to operate a cannabis distribution facility within an industrial zone.  The property is located along the south side of Mountain View Avenue, to the west of Walnut Street (see Vicinity Map, attachment 1).  The General Plan land use designation for the site is Light Industrial.  The property is zoned M-1 (Light Manufacturing), which is consistent with the General Plan.

On November 8, 2016, the electorate of the State of California approved Proposition 64 (“Prop 64”) which enacted the Adult Use of Marijuana Act (“AUMA”), codified in California Health and Safety Code at various sections and in California Business and Professions Code at various sections. The AUMA allows adults 21 and over to use, possess, and cultivate limited amounts of marijuana, establishes a state licensing and regulatory scheme for marijuana businesses serving the recreational market.  Additionally, it allows local jurisdictions to prohibit outdoor cultivation of marijuana for personal use, to regulate indoor cultivation of marijuana for personal use, and to prohibit all non-medical and recreational marijuana businesses from locating and operating within their jurisdictions.
 
On March 12, 2018, the Planning Commission recommended that the City Council adopt an Ordinance repealing Section 18.08.140 (Cultivation of Marijuana Prohibited) of Chapter 18.08 (General Regulations) of Title 18 (Zoning) and adding Chapter 18.22 (Commercial Cannabis Activity) to Title 18 (Zoning) relating to commercial cannabis activities (see Planning Commission Minutes of 3-12-18, attachment 2) and adding Chapter 18.22 regulating commercial cannabis activity.
 
Chapter 18.22 “Commercial Cannabis Activity” provides City regulations pertaining to the permitted types of cannabis businesses as well as requirements to apply for and operate this type of business.  Per Chapter 18.22, cannabis distribution facilities are permitted with a Conditional Use Permit and Development Agreement in the M-1, M-1 (PUD), and PC-I zones, subject to distance requirements from schools, day care centers, youth centers, or public parks.  An extensive list of requirements are contained within this code section that must be met before an application may be filed as well as after the business has been approved for a Conditional Use Permit.  The City Council on April 2, 2018 concurred with the Planning Commission’s recommendation and adopted Chapter 18.22 “Commercial Cannabis Activity” (see City Council Minutes of 4-2-18, attachment 3).

On November 3, 2020, Measure W was approved by La Habra voters by a ratio of 67% (yes) to 32% (no).  This approval
authorizes the City to impose a gross receipts tax of up to 6% on commercial cannabis businesses until ended by voters and also authorizes up to four cannabis delivery licenses in addition to the four distribution and four testing licenses already authorized.  Staff will be developing a set of regulations and a proposed tax scheme which will be presented to the City Council in the near future.

The requirements for the application of a cannabis distribution business operation include the following:
  • Cannabis Business Permit Application
  • Corporate Documents
  • Business Plan
  • Security Plan
  • Floor Plan
  • Safety Plan
  • Community Benefits and Environmental Plan
  • Deposit of $30,000
These submittals are reviewed by the City’s Cannabis Review Committee and must be determined to be complete prior to a business being allowed to submit applications for Conditional Use Permit and Development Agreement.  The committee consists of representatives from applicable City departments including Police, Finance, and Community Development.  Due to the sensitivity and confidentiality of many of these documents, they are not included in the Planning Commission agenda package and not available for public review.  However, the application before the Planning Commission has been determined to be complete, therefore is being considered at this time.

Conditional Use Permit

The subject site is approximately 6,970 square feet in size and improved with a 4,005 square foot light industrial building.  Prior to the current owner purchasing the property in December 2019, the property had been used for light industrial uses.

 
The proposed cannabis distribution business will be located in the western portion of the building (see Project Plans).  The business will occupy 2,825 square feet of space which will be divided into a 400 square foot storage area, a 260 square foot reception area, and a 128 square foot office space.  A vehicle door located at the southwest portion of the building will allow delivery vehicles to enter the "sally port" portion of the building. More specifically, this will allow delivery vehicles to back into the building while still keeping the secured area closed off, similar to what occurs at sensitive facilities such as police stations, detention facilities, or power plants.

The operation of the business consists of purchasing cannabis products from growers and manufacturers and warehousing the products until they are purchased and then delivered to retail establishments.  The facility will be staffed with nine (9) individuals. The Applicant has requested to operate the business every day from 8:00 a.m. to 9:00 p.m.

Pursuant to LHMC Section 18.66.070.C, the Planning Commission must make the following findings in order to grant a Conditional Use Permit:

1.  The granting of the Conditional Use Permit will not be detrimental to the public welfare and will not unreasonably interfere with the use, possession and enjoyment of surrounding and adjacent properties and will not impair the character of the zone in which it is to be located.


On April 2, 2018, the City Council of La Habra adopted Chapter 18.22 “Commercial Cannabis Activity” with regulations that permit cannabis distribution facilities subject to a Conditional Use Permit within the M-1, M-1 PUD, and PCI zones.  Conditions of approval are placed on the project that comply with the requirements of Chapter 18.22 to include the installation and maintenance of a high-quality security system, implementation of specified security measures, implementation of adequate inventory control, the use of an odor-controlling ventilation system, and the prohibition of consumption of cannabis products on-site.  

The proposal is to operate a cannabis distribution facility within a light industrial area within an M-1 zoned designation.  The use itself is comparable to a wholesale and warehouse operation and will not generate any traffic above what is expected for these types of operations in this zone. Therefore, the use will not be detrimental to the public welfare, nor will it unreasonably interfere with any surrounding or adjacent properties.

 2.  The subject site is physically suitable for the type of land use being proposed.

The proposal will not physically affect the site. The use itself is comparable to a wholesale and warehouse operation and will not generate any traffic above what is expected for these types of business operations.  Therefore, the site is physically suitable for the type of land use proposed.  Currently, the site is not striped for parking to meet code requirements.   A condition of approval has been placed on the project to accomplish this requirement prior to the commencement of operations. 

3.  The use is conditionally permitted within the subject zone and complies with the intent of all applicable provisions.

Chapter 18.22 of the La Habra Municipal Code allows for cannabis distribution facilities within the M-1 Zone with the approval of a Conditional Use Permit, granted by the Planning Commission.

4.  The granting of this conditional use permit is consistent with the comprehensive general plan.

The proposal meets code requirements and therefore can be found to be consistent with the General Plan.  The projects implement Policies LU 11.1 (Diversity of Uses) and ED 2.1 (Business Attraction) of the General Plan 2035. 

Conditions of approval have been placed on the project requiring the Applicant to install landscaping where possible and to re-stripe the parking area to meet ADA requirements.  Staff recommends that the Planning Commission approve Conditional Use Permit 20-10.

Development Agreement
California Government Code Sections 65864 through 65869.5 allows cities to enter into contractual agreements with developers.  The proposed project includes a Development Agreement between the business operator and the City (see Development Agreement, attachment 5).  The purpose of a Development Agreement is twofold:  it ensures that certain improvements are implemented that promote the public health, safety and welfare of the community and it assures the developer of certainty for the development of the property.   
 
The Development Agreement (DA) for this project documents the deal points and commits the developer or business owner to specific requirements.  The initial period for the DA is for four years, however, it may be extended four times for five years, each time.  In this particular case, the DA stipulates that the business shall provide compensation for City services as well as community and charitable services.

The business owner shall be required to provide monetary compensation (referred to as “Payments by Developer”) for City services on a quarterly basis.  The business operator shall pay the City 3.75% on all gross receipts attributable to the business from that quarter.  The Quarterly Payment shall be paid to the City no later than within fifteen (15) days after the end of each quarter (March 31, June 30, September 30, and December 31) beginning on the date the facility begins operations (the first quarter payment will be made within 15 days after the end of the quarter following the date the facility begins operations and each quarter thereafter for the Term of this Agreement).  However, as previously described in the report, a set taxation scheme will be established in the near future which may override this tax rate.

Pertaining to the requirement for charitable service, the business owner is required to provide an annual payment to a local charity within La Habra as well as provide volunteer service in the form of four employees providing 24 volunteer hours on an annual basis.  The annual monetary payment for Community benefits is as per the following schedule:

                        First Year (2021) - $10,000
                        Second Year (2022) - $20,000
                        Third Year (2023 and thereafter) - $30,000

While Measure W will affect the payment of taxes, based on gross receipts, it did not affect the requirement for volunteer services which will remain in effect for this business as well as the two previously licensed cannabis distribution business in the City.


The agreement has been reviewed by the City Attorney’s Office for compliance with applicable laws. It is recommended that the Planning Commission recommend that the City Council approve the Development Agreement (see Attachment 4).

Code Compliance

 
Code Standard Requirement Proposed
Building Height 35 feet 18 feet
Front Yard 15 feet 0 feet*
Side Yard (north) 10 feet -3 feet*
Side Yard (south) 0 feet 6 feet
Rear Yard 10 feet 35 feet
Floor Area Ration 0.8 FAR 0.58 FAR
Parking 4 spaces 4 spaces

* Section 18.08.070.B allows buildings to be maintained that don't conform to setback requirements as a result of a public improvement.  In this case, the City widened Mountain View Avenue in 1986 which placed the northwest corner of the building approximately 3 feet into the public right-of-way.
FISCAL IMPACT/SOURCE OF FUNDING:
No City Funds will be expended specifically related to the development of the project.  However, the City will annually receive set amounts in “Payments by Developer” section of the Development Agreement as per the rate of 3.75% on all gross receipts.
NATIONAL POLLUTANT DISCHARGE ELIMINATION SYSTEM (NPDES):
The Applicant’s proposal has been reviewed pursuant to the requirements of the City’s National Pollutant Discharge Elimination System (NPDES) Municipal Permit, the Local Implementation Plan (LIP), and the Model Water Quality Management Plan (WQMP), Section 7.2.  Since no disturbance of soil will occur, this project is exempted by the Water Quality Ordinance from the preparation of a WQMP.
GENERAL PLAN RELEVANCE:
The La Habra 2035 General Plan outlines goals and policies that expresses the community's shared vision for the City's future.   Particularly, the Economic Development section of the General Plan is to foster a healthy environment where residents and businesses can flourish and provide revenue support for public services demanded in the community.   The proposed cannabis distribution operation will support that goal by providing revenues to the City's General Fund as well as provide community benefits through the approval of a Development Agreement.

The projects implement Policies LU 11.1 (Diversity of Uses) and ED 2.1 (Business Attraction) of the General Plan 2035.
Attachments
1. Vicinity Map
2. Resolution - Conditional Use Permit
3. Resolution - Development Agreement
4. Exhibit A
5. Project Plans
6. Application
7. Presentation


    

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