Item 21 - Second Reading and Adoption of Zoning Ordinance Related to Smoke Shop Inspection Fees

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Smoke Shop Ordinance — Second Reading March 17, 2026 Page 2 DISCUSSION On March 3, 2026, City Council conducted a first reading of an ordinance, Zoning Ordinance Amendment No. 2026-01, to amend Chapter 41 (Zoning) of the Santa Ana Municipal Code relating to the location, permitting, development standards, and operational standards for smoke shops and related definitions. The ordinance, approved 7:0, requires a second reading and adoption to become effective April 16, 2026. No changes to the ordinance were made by the City Council. However, following the meeting, staff identified and corrected a typographical error. On page six, Section 13 of the Ordinance, the reference to the definition of "Tobacco retailer" has been changed from Section 18-90(f) to Section 18-90(h). A copy of the ordinance for second reading is attached to this report as Exhibit 1. ENVIRONMENTAL IMPACT Pursuant to the California Environmental Quality Act ("CEQA") and the CEQA Guidelines, the adoption of this Ordinance ("Project") is exempt from CEQA review pursuant to Section 15060(c)(2) because the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment; Section 15060(c)(3), because the activity is not a "project" as defined in Section 15378; and Section 15061(b)(3), because it can be seen with certainty that there is no possibility that the adoption of this ordinance, which establishes land use and zoning regulations for smoke shops to protect public health and safety, may have a significant effect on the environment. These amendments are administrative and regulatory in nature, do not authorize specific development projects, and are intended to prevent the over -concentration and proliferation of smoke shops near sensitive uses. Based on this analysis, a Notice of Exemption, Environmental Review No. 2026-08, will be filed for this Project. FISCAL IMPACT The proposed ordinance has a net neutral fiscal impact, as the passage of the ordinance would generate fiscal impacts to the City in the form of additional expenditures offset by new revenues. A new smoke shop CUP application would generate a base cost of $13,691. Application fees include those for processing a Conditional Use Permit, Development Project Review, and an Environmental Review. In 2026, staff estimates conducting 38 inspections for existing smoke shops operating with permits and Certificates of Occupancy, resulting in approximately $47,000 in total inspection fees. Therefore, an appropriation adjustment is not required. EXHIBIT 1. Ordinance for Second Reading Submitted By: Ali Pezeshkpour, AICP, Executive Director, Planning and Building Agency Approved By: Alvaro Nunez, City Manager