AGENDA REPORT
Meeting Date: March 1, 2022
Item Number:
To: Honorable Mayor and City Council
From: Cynthia Owens, Policy and Management Analyst
Subject: RESOLUTION OF THE COUNCIL OF THE CITY OF BEVERLY HILLS
GRANTING A TOBACCO HARDSHIP EXEMPTION FROM JANUARY
1, 2021 TO DECEMBER 31, 2022 FOR 9460 WEST OLYMPIC
BOULEVARD AND OVERTURNING THE ADMINISTRATIVE
HEARING OFFICER'S DECISION, WHICH GRANTED AN 84-MONTH
TOBACCO HARDSHIP EXEMPTION TO 9460 WEST OLYMPIC
BOULEVARD
Attachment: 1. Resolution
RECOMMENDATION
It is recommended the City Council adopt a resolution granting a tobacco hardship exemption from January 1, 2021 to December 31, 2022 for 9460 West Olympic Boulevard and overturning the Administrative Hearing Officer’s decision, which granted an 84 –month tobacco hardship exemption to 9460 West Olympic Boulevard (Attachment 1).
DISCUSSION
In 2019, the City Council adopted Ordinance 19-O-2783, which amended the City of Beverly Hills’ Municipal Code (“BHMC”) Article 21 of Chapter 2 of Title 4 to prohibit the retail sale of tobacco products and electronic cigarette paraphernalia, effective January 21, 2021.
BHMC allows a tobacco retailer to apply for a one-time, financial hardship exemption to continue the sale of tobacco within the City. Mr. Morris Pouldar, owner of 9460 West Olympic Boulevard (the “Appellant”), filed paperwork in accordance with BHMC Article 21, Tobacco and Electronic Cigarette Retailer Permitting Regulations requesting the City consider granting a tobacco hardship exemption in 2020.
On December 8, 2020, an administrative hearing was conducted by Administrative Hearing Officer Angela Shaw to review the documentation submitted by the Appellant who requested a tobacco hardship exemption for 19.37 years to recover costs associated with a $622,818.17 D-9
Meeting Date: March 1, 2022
investment made by the Appellant during 2019 and early 2020 which was alleged to be “directly related only to the Tobacco sales” by the Appellant.
On December 31, 2020, the Administrative Hearing Officer issued a decision on the Appellant’s tobacco hardship exemption request, which granted a two-year tobacco hardship exemption from January 1, 2021 and ending December 31, 2022. The initial decision was based on the conclusion that only 5.88 percent, or $88,000 of the investment was eligible to be recovered through the tobacco hardship exemption.
On January 13 2021, Morris Pouldar, the Appellant, filed a timely appeal of the Administrative Hearing Officer’s decision with the City Clerk’s Office.
In February 2021, City staff contacted the Appellant to set a date for the public hearing of the appeal. The Appellant requested a delay until June 2021 in order to gather new financial information for the appeal.
The Appellant submitted additional financial evidence to staff on June 7, 2021 for consideration.
After a careful review of the information by City staff and the City Attorney’s Office, staff believed there may have been sufficient new evidence for the Administrative Hearing Officer to consider.
On July 27, 2021, the City Council conducted a public hearing on this matter. As there was new evidence submitted by the Appellant, City staff recommended the City Council refer this item back to the Administrative Hearing Officer. The City Council concurred with the recommendation. Additionally, the City Council requested staff provide a report back to them with the decision made by the Administrative Hearing Officer.
On August 26, 2021, an administrative hearing was conducted by Administrative Hearing Officer Angela Shaw to review the revised documentation submitted by the Appellant.
On October 5, 2021, the Administrative Hearing Officer issued a final decision to the Appellant on the tobacco hardship exemption request. The Administrative Hearing Officer granted an 84- month tobacco hardship exemption from January 1, 2021 and ending December 31, 2027.
On October 26, 2021, staff provided an update on the Administrative Hearing Officer’s October 5, 2021 decision to the City Council. The City Council unanimously requested to have this item placed on the November 2, 2021 agenda to see if there was City Council support to call the subject Administrative Hearing Officer’s decision up for review.
On November 2, 2021, a majority of the City Council voted to call up the subject Administrative Hearing Officer’s October 5, 2021 decision to grant an 84-month tobacco hardship exemption to the Appellant for a public hearing.
On December 7, 2021, a public hearing to set the date for the City Council to review the Administrative Hearing Officer’s 84-month tobacco hardship exemption for 9460 West Olympic was held. Pursuant Beverly Hills Municipal Code (BHMC) §1-4-202, the Mayor set the public hearing for January 18, 2022.
On January 18, 2022, the City Council conducted a public hearing to review the evidence for the Administrative Hearing Officer’s decision granting an 84-month tobacco hardship exemption to the Appellant. At the conclusion of the public hearing, the City Council overturned the decision Meeting Date: March 1, 2022
of the Administrative Hearing Officer granting 84-month tobacco hardship exemption to the Appellant and instead directed the City Attorney to draft a resolution which granted a tobacco hardship exemption ending on December 31, 2022 to 9460 West Olympic Boulevard.
Staff has prepared a resolution memorializing the City Council’s decision (Attachment 1) for adoption by the City Council.
FISCAL IMPACT
There is no fiscal impact for this item.
Gabriella Yap,
Deputy City Manager
Approved By
Attachment 1
B0785-0001\2622911v2.doc
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RESOLUTION NO. 22-R-_______
RESOLUTION OF THE COUNCIL OF THE CITY OF BEVERLY
HILLS GRANTING A TOBACCO HARDSHIP EXEMPTION FROM
JANUARY 1, 2021 TO DECEMBER 31, 2022 FOR 9460 WEST
OLYMPIC BOULEVARD AND OVERTURNING THE
ADMINISTRATIVE HEARING OFFICER'S DECISION, WHICH
GRANTED AN 84-MONTH TOBACCO HARDSHIP EXEMPTION TO
9460 WEST OLYMPIC BOULEVARD
The City Council of the City of Beverly Hills hereby finds, resolves, and determines as follows:
Section 1. On June 4, 2019 the City Council adopted Ordinance 19-O-2783 which prohibited the retail sale of tobacco products and electronic cigarette paraphernalia, effective January 01, 2021.
Section 2. On September 30, 2020, Morris Pouldar, Business Owner of Beverly Hills Oil Inc., located at 9460 West Olympic Boulevard filed an application for a financial hardship exemption in order to continue selling tobacco products and electronic cigarette paraphernalia at 9460 West Olympic Boulevard (the “Gas and Mart business”).
Section 3. On December 8, 2020, an administrative hearing was conducted by Administrative Hearing Officer Angela Shaw to review the documentation submitted by the Mr.
Pouldar who had requested a 19.37-year tobacco hardship exemption.
Section 4. On December 31, 2020, the Administrative Hearing Officer issued a final decision to Mr. Pouldar on the application submitted for a tobacco hardship exemption. The Administrative Hearing Officer granted a two-year tobacco hardship exemption from January 1, 2021 and ending December 31, 2022.
Section 5. On January 13, 2021, Mr. Pouldar filed a timely appeal of the Administrative Hearing Officer’s decision with the City Clerk’s Office requesting the City Council consider granting the original request for a 19.37-year tobacco hardship exemption.
Section 6. On February 8, 2021, City staff contacted the Appellant to set a date for the public hearing of the appeal. The Appellant requested a delay until June 2021 in order to gather new financial information for the appeal.
Section 7. On June 7, 2021, Mr. Pouldar submitted additional financial evidence, which staff believed may have been sufficient new evidence for the Administrative Hearing Officer to consider.
Section 8. On July 27, 2021, the City Council conducted a public hearing on this matter. As there was new evidence submitted by the Appellant, City staff recommended the City Council refer this item back to the Administrative Hearing Officer. The City Council concurred with the recommendation.
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Section 9. On August 26, 2021, an administrative hearing was conducted by Administrative Hearing Officer Angela Shaw to review the revised documentation submitted by Mr. Pouldar.
Section 10. On October 5, 2021, the Administrative Hearing Officer issued a final decision to the Appellant on the tobacco hardship exemption request. The Administrative Hearing Officer granted an 84-month tobacco hardship exemption from January 1, 2021 and ending December 31, 2027.
Section 11. On October 26, 2021, staff provided an update on the Administrative Hearing Officer’s October 5, 2021 decision to the City Council. The City Council unanimously requested to have this item placed on the November 2, 2021 agenda to see if there was City Council support to call the subject Administrative Hearing Officer’s decision up for review.
Section 12. On November 2, 2021, a majority of the City Council voted to call up the subject Administrative Hearing Officer’s October 5, 2021 decision to grant an 84-month tobacco hardship exemption to the Appellant for a public hearing.
Section 13. On December 7, 2021, a public hearing to set the date for the City Council to review the Administrative Hearing Officer’s 84-month tobacco hardship exemption for the Gas and Mart business was held. Pursuant Beverly Hills Municipal Code (BHMC) §1-4- 202, the Mayor set the public hearing for January 18, 2022.
Section 14. On January 18, 2022, the City Council conducted a duly noticed public hearing to review the evidence for the Administrative Hearing Officer’s decision granting an 84-month tobacco hardship exemption to the Gas and Mart business. The City Council reviewed the matter and considered evidence, both written and oral, that was presented at the hearing. The permittee shall bear the burden of proof in establishing by a preponderance of the evidence, that the application of the prohibition on tobacco sales to the permittee's business is unreasonable, and will cause significant hardship to the permittee by not allowing the permittee to recover his or her investment backed expectations.
Section 15. Based upon the evidence in the record on this matter, including the agenda report as well as oral and written testimony, the City Council hereby overturns the decision of the Administrative Hearing Office which had granted an 84-month tobacco hardship exemption to the Gas and Mart business and instead issues a tobacco hardship exemption from January 1, 2021 to December 31, 2022 for the Gas and Mart business. The findings for the decision on the tobacco hardship exemption are made as follows:
A. The expenditure of money on the renovation of the Gas and Mart business was not a reasonable investment backed expectation on the continued sale of tobacco products. At a meeting in August 2018, a councilmember requested that the City Council agendize the topic of a prohibition on tobacco sales in the City. The owners of the Gas and Mart business received a notice in January 2019 saying that the Council was going to consider a complete ban on the retail sale of tobacco. The owners of the Gas and Mart business attended a Health and Safety Commission meeting in February of 2019 concerning the DocuSign Envelope ID: 5037C9D4-366A-4AB6-B368-4A2859232EED B0785-0001\2622911v2.doc
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topic of prohibiting retail tobacco sales in the City. A building permit was not obtained for the renovation of the Gas and Mart business until February 2019.
B. There was no effort made to explore alternatives to the sale of tobacco. The Gas and Mart business did not take advantage of any consultants being offered by the City and no business plan was submitted for phasing out the sale of tobacco and tobacco related products.
C. The owners of the Gas and Mart business sought to recover $622,818.17, which equals 35.6% of “Mart investments” of $1.16 million, which includes fuel dispensers, paving, and the canopies above the fuel dispensers; 5.9% of “land and building investment” of $2.05 million; 35.6% of “finance costs” of $250,985. However, there was no evidence regarding what portion of that money, if any, was spent on improvements related to tobacco sales. According to testimony at the hearing, very little floor space was dedicated to tobacco sales and tobacco sales were limited to the area behind the cash register.
Clearly, $622,818.17 was not spent on improvements relating to tobacco. The vast majority of this money was an investment related to fuel dispensing and the sale of non-tobacco products.
D. At the hearing, the owners of the Gas and Mart business testified that because they were so far along in their plans they were hoping that the City Council would change its direction and not prohibit tobacco sales. This is not a reasonable investment backed expectation.
E. Tobacco sales are only a small part of the overall sales of the Gas and Mart business. Tobacco sales amount to approximately 5.88 percent of tobacco sales between 2017 and 2019. Furthermore, this average does not take into account the prohibition on the sale of flavored tobacco which occurred at the end of 2018, which likely further reduced the sale of tobacco in 2019 and beyond.
F. The applicant bears the burden of proof with regard to justifying an unreasonable hardship that prohibited the applicant from achieving the applicant’s investment backed expectations.
G. However, if the Council considered all of the applicants expenditures in 2019, which goes beyond investments in tobacco sales, and a commensurate share of the financing costs, which also includes more than the financing of tobacco related improvements, and if one applies a 5.9% factor to these two numbers, that results in an approximate cost of $53,000. Given that the gross profit on tobacco sales equals approximately $32,000, a hardship exemption of 2 years would more than pay for any investment backed expectations related to tobacco sales.
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Section 16. Based on the findings set forth in Section 15 above, the City Council hereby overturns the Administrative Hearing Officer’s decision granting an 84-month tobacco hardship exemption to the Gas and Mart business.
Section 17. Based on the findings set forth in Section 15 above, the City Council hereby grants a tobacco hardship exemption to the Gas and Mart business at 9460 West Olympic Boulevard from January 1, 2021 to December 31, 2022.
Section 18. The City Clerk shall certify to the adoption of this resolution and shall cause this resolution and her certification to be entered in the Book of Resolutions of the Council of this City.
Adopted:
ROBERT WUNDERLICH
Mayor of the City of
Beverly Hills, California
ATTEST:
(SEAL)
HUMA AHMED
City Clerk
APPROVED AS TO FORM: APPROVED AS CONTENT:
LAURENCE S. WIENER GEORGE CHAVEZ
City Attorney City Manager
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Policy & Management Analyst
City of Beverly Hills
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