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Home My WebLink About2017-11-09 AdjournedMINUTES OF THE ADJOURNED REGULAR MEETING OF THE CITY COUNCIL OF THE CITY OF SANTA ANA, CALIFORNIA NOVEMBER 9, 2017 CALLED TO ORDER COUNCIL CHAMBER 22 CIVIC CENTER PLAZA SANTA ANA, CA 1:59 P.M. ATTENDANCE COUNCILMEMBERS Present: MICHELE MARTINEZ, Mayor Pro Tem P. DAVID BENAVIDES JOSE SOLORIO SAL TINAJERO (2:00 p.m.) JUAN VILLEGAS COUNCILMEMBERS Absent: MIGUEL A. PULIDO, Mayor VICENTE SARMIENTO STAFF Present: RAUL GODINEZ, II, City Manager SONIA R. CARVALHO, City Attorney MARIA D. HUIZAR, Clerk of the Council PUBLIC COMMENTS (Agendized Items) Jigmesh Padhiar, asked if the City would be adopting State regulations. PUBLIC HEARING 75E-1. PUBLIC HEARING - ORDINANCE AMENDMENT NO. 2017-04 TO AMEND CERTAIN SECTIONS OF CHAPTERS 18 AND 21 OF THE SANTA ANA MUNICIPAL CODE (MEDICAL MARIJUANA COLLECTIVES/ COOPERATIVES) — CITY OF SANTA ANA, APPLICANT {STRATEGIC PLAN NOS. 3, 2, 3, 51 - Planning and Building Agency Legal Notice published in the Orange County Reporter on October 27, 2017 and November 6, 2017. Jorge Garcia, Acting Assistant to the City Manager, presented staff report. CITY COUNCIL MINUTES 1 NOVEMBER 9, 2017 Background Framework ■ Proliferation of illegal marijuana dispensaries in Santa Ana ■ Measure CC qualifies for Santa Ana ballot in Nov. 2014 — would have resulted in further proliferation of marijuana dispensaries with little regulation ■ Voters approve City -sponsored Measure BB instead • Establishes framework for legalizing and taxing medical marijuana collectives/cooperatives ■ Funds enforcement efforts (Code Enforcement, Police Department, City Attorney's Office) ■ Reduces number of illegal dispensaries by over 80% • 17 of the 20 permitted collectives/cooperatives now open ■ California voters approve Prop. 64- Adult Use of Marijuana Act (AUMA) in Nov. 2016 What is the AUMA? ■ The AUMA allows: Anyone over the age of 21 to possess and use cannabis (age 18 for medicinal cannabis) Home cultivation of up to 6 mature cannabis plants for personal use The AUMA requires: • Local jurisdictions to adopt ordinances prohibiting or allowing commercial cannabis activities for medicinal, adult, or combined uses ■ Retail stores ■ Warehousing/distribution ■ Manufacturing/processing ■ Cultivation ■ Quality control testing January 1, 2018 deadline to comply or risk losing State grants for code enforcement Current Structure ■ Chapter 18 — Measure BB • Applies to medicinal cannabis retail stores only ■ Chapter 21 — Business Licenses ■ Taxes on the medicinal cannabis retail stores ■ Chapter 40 — Commercial Cannabis ■ New commercial cannabis ordinance • Covers adult -use cannabis retail stores and all other commercial cannabis activities (medicinal and adult) What have we accomplished? ■ Shut down over 90 illegal dispensaries across Santa Ana (over 80%) ■ Hired new staff in Code Enforcement, Police, and the City Attorney's Office ■ Generated new revenue from gross receipts taxes CITY COUNCIL MINUTES 2 NOVEMBER 9, 2017 ■ Received recognition for a leading-edge ordinance and enforcement program How did we get here? ■ City has to respond to the Jan. 1, 2018 deadline ■ Extensive outreach with community groups, Chamber of Commerce, property owners, cannabis industry, and other stakeholders ■ Be proactive leaders in an emerging industry to prevent return to illegal operations How will we respond? 7Regulate 0' 7DA •Ballot •Ordinance agreement Considerations ■ Prevent proliferation of illegal operations • Partner with the community and the cannabis industry ■ Comply with AUMA ■ Seek new sources of revenue for cost recovery ■ Enforcement • Community Services • Administration Consistency ■ CEQA • Large cities across California are exempting ordinances from CEQA review, supported by recent State Supreme Court ruling (San Diego, Los Angeles, Oakland, Richmond, Napa, etc.) ■ General Plan • New commercial cannabis activities in Chapter 40 are industrial in nature and are allowed only in the industrial areas ■ Climate Action Plan • California building code is "greenest' in the nation and has strict caps on allowed emissions ■ All new facilities will be heavily scrutinized for building code compliance and for additional measures required by the AUMA ■ Water Conservation Ordinance • All new facilities will be subject to State and local water conservation standards • Points awarded to those who use the recycled water ("purple pipe") or onsite water recycling system CITY COUNCIL MINUTES 3 NOVEMBER 9, 2017 Today's Actions ■ 75E-1: Approve first reading to amend chapters 18 and 21 to: • Establish consistency between the SAMC and the AUMA • Raise gross receipts tax from 5 to 6% ■ 75E-2: Approve Chapter 40 second reading to establish new commercial cannabis ordinance • Modify cap on adult -use retail cap to 30; maintain others at 20 (except testing); maintain 500 -ft. distance requirement between retail uses • Exemptions for existing retail and testing operators in good standing ■ 75E-3: Discuss alternative merit -based criteria and in -lieu fee agreement template Merit Criteria ■ Merit criteria will be used to evaluate applications for new businesses ■ Criteria for retail establishments include: • Control of site ■ Experience • Operational standing • Tax records • Local hiring and community benefits experience and commitment ■ Additional criteria for non -retail businesses: • Economic impact • Sustainable business practices Retail merit criteria Applicant demonstrates control of a site that is in full compliance with the 1 requirements of Chapter 18 and/or Chapter 40 of the Santa Ana Municipal Code (base requirement). Up to 2 Applicant demonstrates experience In operating a permitted or licensed commercial cannabis activity within the United States (base requirement). Up to 25 Applicant demonstrates past experience in and commits to local hiring and 3 'sourcing practices and community benefit programs in Santa Ana.* Up to 15 Applicant, employees, volunteers, or any other involved person has no previous record violating state or local laws relating to workplace safety, 4 wages and compensation, discrimination, drug-related felony or misdemeanor, or union activity, and the applicant or premises has not been the subject of any code enforcement activity. Up to 15 5 Applicant is currently on the Measure BB lottery waithst. Up to 10 ,Applicant or entity has no previous record of failing to make timely reporting or remitting of their medical marijuana and/or commercial 5 ,cannabis business license taxes or any other payments required by their ,entitlements. Up to 10 Maximum Possible Points 100 Non -retail merit criteria MINUTES 4 NOVEMBER 9, 2017 Applicant demonstrates control of a site that is in full compliance with the 1 requirements of Chapter 18 and/or Chapter 40 of the Santa Ana Municipal Code (base requirement). If exceed buffer by 500 ft to 749ft= 2 additional points above 20; if 750 ft or more= 3 additional points above 22) 2 Applicant demonstrates experience in operating a permitted or licensed commercial cannabis activity within the United States (base requirement). 3 Applicant demonstrates past experience in and commits to local hiring and sourcing practices and community benefit programs in Santa Ana* 4 Economic Development -creation of jobs on-site and demonstrates value of unsecured equipment for operation. ,Sustainable business practices. Applicant shall demonstrate utilization of 5 solar, recycled water (on-site or purple pipe), proximity to transit, or other efforts to reduce carbon footprint in concurrence with the City's Climate ,Action Plan, Water Conservation Ordinance, or any other applicable plan. Applicant or entity has no previous record of failing to make timely 6 reporting or remitting of their medical marijuana and/or commercial cannabis business license taxes or any other payments required by their entitlements. Applicant, employees, volunteers, or any other involved person has no previous record violating state or local laws relating to workplace safety, 7 wages and compensation, discrimination, drug-related felony or misdemeanor, or union activity, and the applicant or premises has not of anv code enforcement a In -lieu Agreements Maximum upto5 additional Up to 20 Up to 20 Up to 15 Up to 15 Up to Discuss in -lieu fee agreement template • Acts similar to development agreement (DA) • DA only appropriate for physical development projects where party owns or controls property • In -lieu fee agreement allows City to enter into mutual -benefit contract with business owner(s) Agreement also requires • Local hiring and local sourcing • Community benefits commitment All agreements will follow standard template Next steps ■ Today: City Council adopts ordinance • 75E-1 Chapter 18 and 21 First Reading • 75E-2 Chapter 40 Second Reading with modifications ■ Nov. 21: City Council reviews the following ■ Revised merit criteria • Authorize the City Manager to sign In -lieu agreements (75E-3) • Resolution authorizing City Manager to send State letter of "Operational Status" Revised fee resolution ■ Dec. 10: Ordinance becomes effective CITY COUNCIL MINUTES 5 NOVEMBER 9, 2017 Future Steps ■ Mid 2018 — general election preparation ■ August deadline for general election ■ November 2018 General Election ■ Following General Election ■ Amend Zoning Code to reference commercial cannabis uses in the industrial zones • Reorganize all commercial cannabis into Chapter 40 ■ Approve business license tax Mayor Pro Tem Martinez opened the Hearing. There were no speakers on the matter. Council discussion ensued. City Attorney Carvalho, answered questions; noted that testing will be allowed if the proposed amendment before the City Council is adopted under the operational standards; and also in respect to the code enforcement grants as part of the State legislation they did make some funds available to the cities who were going to permit adult use to apply for grants. Councilmember Benavides, asked series of questions including if grant funding has deadline; priority should be to implement a well -regulated ordinance with maximum benefit to community and little impact to residents; how much resources are needed to regulate; define In -lieu fee; by raising tax to 6% how does it compare to other cities and is it adequate; are there local hire credits or requirements; and will same regulations apply to new applicants — require on-site security, etc. Acting Executive Director of Planning and Building Candida Neal, noted that large influx of illegal operators existed after Measure BB was approved by the voters; expect increase on adult/commercial use; tax rate determined by evaluating other communities - decision based on competitive rate; applicants will be required to submit community benefits plan for evaluation; and same measures will apply to all applicants that exists for retail component. Councilmember Benavides, inquired as to enforcement costs and actual revenues received. Acting Executive Director of Planning and Building Neal, will provide at a later date. City Attorney Carvalho, commented that most expenses are to defend the City on regulations; estimate $1 to $1.5 million in city attorney costs for enforcement purposes. CITY COUNCIL MINUTES 6 NOVEMBER 9, 2017 Councilmember Tinajero, clarified 500 feet distance between businesses only applies to medicinal with goal to move away from schools and neighborhoods; community benefit should include local hire and livable wages; opposed to item #1 of non -retail merit criteria, asked for clarification on #4 regarding economic development; requested consideration to reassess criteria points and comply with State law as far as unionization; clarified that all establishments have to be at least 1,000 feet from residential and schools. City Attorney Carvalho, stated that suggestions may be incorporated in revised merit based criteria; fees have been paid by those that applied and may be on wait list; proposal will require even those that have a permit and in good standing to apply and be exempted from merit based criteria and have an RSP. Acting Executive Director of Planning and Building Neal, rational for merit criteria is that they should be further from schools, from each other and sensitive uses the less likely of concentration and impacts; on criteria #4 explained that value of equipment would be considered. City Manager Godinez, noted that criteria recommended established to capture economic development opportunities and allow for investment in technology. Councilmember Solorio, noted that local compliance is in the land use component of the draft ordinance; thanked staff for considering Council comments and accepts Councilmember Tinajero's recommendations; as for timeline would like to provide as much operational status as other cities; what is definition by the State; opined that merit criteria some should be minimum requirements and award points if in good standing in other cities and also allow City residents to apply (supported by Councilmember Tinajero); more jobs and technology commitments needed; suggest one application per address; asked if on-site cultivation should be allowed; will operation status be considered; spoke about distance requirement; requirement to have purple piping; revenue should be used on youth and community services; and important to place item on the ballot for voters to ratify. City Attorney Carvalho, noted that State law states that cities have control land use permits; currently only medical marijuana dispensaries have good operational status. Acting Executive Director of Planning and Building Neal, noted that 679 applications received when process opened up. City Manager Godinez, proposal to increase number of establishments allowed; asked that process be open for competition, i.e. cultivation etc.; CITY COUNCIL MINUTES 7 NOVEMBER 9, 2017 election is recommended to strengthen and protect City from legal challenge. Councilmember Villegas, asked if under the community benefits could focus on education component; is there a deadline; supports changes as proposed by Councilmembers Tinajero and Solorio. Acting Executive Director of Planning and Building Neal, revenue generated from businesses from in -lieu fees would be focused on code enforcement and youth programs and defined through budgetary process; community benefits plan could identify who the best partners could be. City Attorney Carvalho, clarified that deadline is only for code enforcement grant funding purposes only; City will continue to have full land -use control. Mayor Pro Tem Martinez, thanked staff for amended modifications to be consistent with General Plan, Climate Action Plan, etc.; asked if in -lieu fees temporary because of Prop. 218; State giving a temporary permit for 120 days; would City be able to authorize temporary permit until voter approved (Acting Executive Director of Planning and Building Neal noted that that is how it's structured); make the whole permit consistent with other development in -lieu fees. City Attorney Carvalho, noted that in -lieu fees proposed as temporary fix until approved tax by the voters, but City Council can continue with a contract; voter approval will better protect the City. Mayor Pro Tem Martinez, opined that criteria should include green delivery of products; suggested 6 month inspection similar to PREP for code enforcement inspections; City has ability to create a special fund; allow residents to compete; asked why Planning Commission did not vet process. City Attorney Carvalho, regulatory fees include staffing time, but taxes require voter approval. Acting Executive Director of Planning and Building Neal, indicated that matter not considered by the Planning Commission because it's a business license matter and not a land use matter; asked for clarification because she is hearing only one policy issue and rest of the comments are regarding evaluation criteria on merit criteria; length of RSP should be extended permanently or concurrent with temporary license of the State. Mayor Pro Tem Martinez, noted that Ordinance No. NS -2929 will allow Measure BB is in compliance with State on adult use. Motion to approve. CITY COUNCIL MINUTES 8 NOVEMBER 9, 2017 Councilmember Benavides, noted that staff report only provides plan for revenue on additional 1% increase being proposed, proposal to earmark 2/3 of revenue for administration and enforcement and 1/3 for community and youth programs; increment that is part of 75E1 to be decided when budget proposed in upcoming year - all new funds to be appropriated by the City Council. Motion to approve and seconded by Councilmember Tinajero. MOTION; Place ordinance on first reading and authorize publication of title. ORDINANCE NO. NS -2930 - AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA ANA AMENDING CERTAIN SECTIONS OF ARTICLE XIII OF CHAPTER 18 OF THE SANTA ANA MUNICIPAL CODE PERTAINING TO MEDICINAL MARIJUANA TO UPDATE DEFINITIONS TO COMPLY WITH STATE LAW AND ENSURE CONSISTENCY WITH CHAPTER 40 OF THE MUNICIPAL CODE, AND AMENDING ARTICLE XII, SECTION 21-127 OF CHAPTER 21 OF THE SANTA ANA MUNICIPAL CODE INCREASING THE TAX ON MEDICINAL RETAIL MARIJUANA BY ONE PERCENT, FROM FIVE PERCENT TO SIX PERCENT MOTION: Benavides SECOND: Tinajero VOTE: AYES: Benavides, Martinez, Solorio, Tinajero, Villegas (5) NOES: None (0) ABSTAIN: None (0) ABSENT: Pulido, Sarmiento (2) 75E-2. ORDINANCE SECOND READING: ADOPT ORDINANCE AMENDMENT NO. 2017-03 TO CREATE CHAPTER 40 IN THE SANTA ANA MUNICIPAL CODE (COMMERCIAL CANNABIS) {STRATEGIC PLAN NO. 5, 1) Placed on first reading at the October 17, 2017 City Council meeting and approved by a vote of 4-0 (Pulido and Sarmiento abstained; Martinez absent). Published in the Orange County Reporter on October 27, 2017. Discussion as to amendments to the second reading are incorporated under Agenda Item 75E-1 above. CITY COUNCIL MINUTES 9 NOVEMBER 9, 2017 MOTION: Place amended ordinance on second reading and adopt. ORDINANCE NO. NS -2929 — AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA ANA CREATING CHAPTER 40 OF THE SANTA ANA MUNICIPAL CODE, "REGULATION OF COMMERCIAL CANNABIS', TO REGULATE COMMERCIAL CANNABIS ACTIVITIES, EXCEPTING MEDICINAL RETAIL MOTION: Benavides SECOND: , Villegas VOTE: AYES: Benavides, Martinez, Solorio, Tinajero, Villegas (5) NOES: None (0) ABSTAIN: None (0) ABSENT: Pulido, Sarmiento (2) 75E-3. APPROVE AN IN -LIEU FEE AGREEMENT TEMPLATE AND MERIT - BASED CRITERIA DRAFT FOR COMMERCIAL CANNABIS BUSINESSES PURSUANT TO CHAPTER 40 OF THE SANTA ANA MUNICIPAL CODE — CITY OF SANTA ANA, APPLICANT{STRATEGIC PLAN NOS. 3, 2, 3, 51 — Planning and Building Agency Item to be reagendized for City Council consideration at the November 21, 2017 City Council Meeting. ADJOURNED- 3:47 P.M. — The next meeting of the City Council is scheduled for Tuesday, November 21, 2017 at 5:00 p.m. for the Closed Session Meeting immediately followed by the Regular Open Business Meeting at 5:45 p.m. in the Council Chamber, 22 Civic Center Plaza, Santa Ana, California. Maria D. Huizar, Clerk of the Council CITY COUNCIL MINUTES 10 NOVEMBER 9, 2017