UNCODIFIED ORDINANCE NO. ______
AN UNCODIFIED ORDINANCE OF THE CITY COUNCIL OF THE CITY OF COMMERCE APPROVING AND ADOPTING AN AMENDED AND RESTATED DEVELOPMENT AGREEMENT NO. ### [ALSO IDENTIFIED AS COMMERCIAL CANNABIS PERMIT I.D. NO. 18-026] BETWEEN THE CITY OF COMMERCE AND VK LABS, LLC [A CALIFORNIA CORPORATION] TO REPLACE DEVELOPMENT AGREEMENT NUMBER 788 TO REFLECT AMENDMENTS FOR TESTING LABORATORIES FOR THE PREVIOUSLY APPROVED COMMERCIAL CANNABIS BUSINESS AT 5608 EAST WASHINGTON BOULEVARD; MAKING FINDINGS CONSISTENT WITH AND PURSUANT TO GOVERNMENT CODE SECTION 65867.5; AND MAKING FINDINGS OF A CEQA CATEGORICAL EXEMPTION WHEREAS, the State of California enacted California Government Code Sections 65864 et seq. (“Development Agreement Statutes”) to authorize municipalities to enter into development agreements with those having an interest in real property to strengthen the public planning process, encourage private participation in comprehensive planning, and reduce the economic risk of development in connection with the development of real property within their jurisdiction; WHEREAS, the purpose of the Development Agreement Statutes is to authorize municipalities, in their discretion, to establish certain development rights in real property for a period of years regardless of intervening changes in land use regulations, to vest certain rights in the Applicant, and to meet certain public purposes of the local government; WHEREAS, as authorized by the Development Agreement Statutes, the City has adopted Resolution No. 18-50 (“A Resolution of the City Council of the City of Commerce Approving Procedures and Requirements for the Processing of Development Agreements”) establishing the procedures and requirements for the consideration of development agreements with the City; WHEREAS, on September 4, 2018, City Council adopted Ordinance No. 700, concerning commercial cannabis regulations, which added new Chapter 5.61 “Commercial Cannabis Activities”, of Title 5, “Business Regulations and Licensing”, of the Commerce Municipal Code, and became effective October 4, 2018; WHEREAS, the purpose and intent of Ordinance No. 700 is to regulate the cultivation, manufacturing, testing, distribution, non-storefront retailer-delivery only, and microbusinesses, of medicinal and adult-use cannabis and cannabis products, and the ancillary transportation and delivery of same, in a responsible manner to protect the health, safety, and welfare of the residents of the City of Commerce and to enforce rules and regulations consistent with the California Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”), and related laws, regulations, and policies issued by the State of California; WHEREAS, in October 2018, VK Labs, LLC applied to this City for a Commercial Cannabis Permit (hereinafter "CCP”) to conduct Commercial Cannabis Activities. No such activities are allowed or authorized without a development agreement, a Commercial Cannabis Permit, and all requirements pursuant to City Ordinance No. 700, including all requirements pursuant to Commerce Municipal Code Section 5.61.060; WHEREAS, the Owner currently holds a legal or equitable interest in real property considered in Amended and Restated Development Agreement No. 7##, located at 5608 East Washington Boulevard, in the City of Commerce; WHEREAS, the definition of "Owner" hereunder shall mean and refer to the amended and restated development agreement applicant, to the extent such person is a party to the amended and restated development agreement and will hold or be covered by a City of Commerce Commercial Cannabis Permit to operate a commercial cannabis business in the City of Commerce; WHEREAS, VK Labs, LLC presently has a duly-approved and executed development agreement with the City which allows for operation of a commercial cannabis business for Testing of Commercial Cannabis 5608 East Washington Boulevard, consistent with all applicable local and state laws, regulations and policies; WHEREAS, the project site is developed with one industrial building measuring approximately 4,000 square feet located on an approximate 5,103 square foot lot located at 5608 East Washington Boulevard. The lot is generally flat in nature and is situated in the City’s Commercial-Manufacturing Zoning District (C/M-1). The project is already approved for a Commercial Cannabis Permit, which is a type of regulatory permit, to allow for a Commercial Cannabis Facility and a development agreement (DA) for testing of commercial cannabis with no changes proposed to such operations, simply change of ownership; WHEREAS, formal permit fees were established by City Council at the beginning of the City’s cannabis program; WHEREAS, the City defines a testing laboratory to mean a laboratory, facility, or entity in the state that offers or performs tests of cannabis or cannabis products and that is both the following:
(1) Accredited by an accrediting body that is independent from all other persons involved in commercial cannabis activity in the state. (2) Licensed by the State of California.
WHEREAS, in July 2023, VK Labs, LLC submitted a request with City CCP staff to amend their development agreement to modify the fee structure; WHEREAS, the amendments to the development agreement will read as follows:
Community Benefits Fee - Establish an annual flat fee of $32,000.
Require the operator to pay 50% of their annual community benefit fee 30 days after the effective date of the agreement and pay the remaining half 180 days after date of execution. The Effective Date for the amended and restated development agreement is defined as 30 days after the date of the Second Reading approving an ordinance for a commercial cannabis testing operator.
Annual Minimum Operating Fee – Establish minimum annual operating fees at $50,000.
Monthly Non-Operating Fee - Eliminate Monthly Non-Operating Fee.
Quarterly Gross Receipts Fee - Report quarterly gross receipts and reduce the percentage of gross receipts for cannabis operations from 1.5% to 0.5% to be paid on a quarterly basis.
WHEREAS, if the proposed amendment is approved by City Council, VK Labs LLC. shall execute the amended and restated development agreement within 30 days of the amended and restated development agreement’s Effective Date; WHEREAS, the VK Labs, LLC will also be required to comply fully with the terms of the amended and restated development agreement as well as conditions of approval which include, but are not limited to, façade improvements, and compliance with all state and local ordinances and regulations; WHEREAS, this amended and restated development agreement is entered into pursuant to Government Code sections 65868 and 65867.5, which require that this amended and restated development agreement be approved by City ordinance; WHEREAS, all procedures of the California Environmental Quality Act (“CEQA”), California Public Resources Code §21000 et seq., and the CEQA guidelines, title 14 of the California Code of Regulations, chapter 3, §15000 et seq. have been satisfied; WHEREAS, the City has found that the proposed Project is Categorically Exempt from California Environmental Quality Act (CEQA) requirements under provisions of CEQA Guidelines Section 15301 – Existing Facilities. This exemption applies to projects characterized as alterations to existing facilities meeting the conditions described in Section 15301; WHEREAS, the City has given public notice of its intention to adopt this amended and restated development agreement and has conducted a public hearing thereon pursuant to California Government Code §65867; WHEREAS, on August 16, 2023, the Planning Commission asked City staff to republish and re-notice the item and provide the Planning Commission additional information; WHEREAS, pursuant to California Government Code Sections 65867 and 65090, the City of Commerce, on September 7, 2023, published a legal notice in the Los Cerritos News and mailed out to property owners within 500 feet of the subject property, indicating the public hearing to be held by the City of Commerce Planning Commission on October 18, 2023 and continued on November 15, 2023, to consider recommending approval and adoption of Amended and Restated Development Agreement No. ### to the City Council, replacing Development Agreement 788; WHEREAS, Sections 65864-65859.5 of the California Government Code authorize the City to enter into development agreements and require the planning agency of the City to find the proposed amended and restated development agreement to be consistent with the policies and programs of the General Plan and any applicable specific plan. Government Code Section 65865 authorizes the City to enter into development agreements with any person having a legal or equitable interest in real property, which interest the Owners has in the Site, as evidenced by the information within the amended and restated development agreement, and attachments thereto. Government Code Sections 65867.5 and 65868 further allow for amendments to a development agreement; WHEREAS, after conducting a duly noticed hearing on September 24, 2024, in conjunction with the City’s applicable ordinances and resolutions, and after independent review, consideration, analysis of staff’s recommendations, oral and written testimony, and the record as a whole, the City Council approved the execution of this amended and restated development agreement, and made findings after due study, deliberation, and public hearing, the City Council found the Project: consistent with the goals, objectives, policies, general land uses and programs specified in the General Plan and any applicable special plan; compatible with the uses authorized in the City’s standards, codes, and zoning laws; in conformity with the public necessity, public convenience, general welfare and good land use practices; in accordance with the Development Agreement Statutes, including Government Code Section 65864 through 65869.5; will not be detrimental to the health, safety and general welfare of the City; will not adversely affect the orderly development of property or the preservation of property values; will have a positive fiscal impact on the City; and is in the best interest of the City of Commerce and its residents; WHEREAS, the City has given public notice of its intention to adopt this amended and restated development agreement and has conducted a public hearing thereon pursuant to California Government Code §65867; specifically, pursuant to California Government Code Sections 65867 and 65090, the City of Commerce, on September 13, 2024, published legal notice in the Los Cerritos News of City Council’s consideration of this proposed amended and restated development agreement and mailed out notice to property owners located within 500 feet of the Site, indicating the public hearing to be held by the City of Commerce City of Council on September 24, 2024.
WHEREAS, all other legal prerequisites to the approval and adoption of this Ordinance approving and adopting this amended and restated development agreement have occurred.
NOW, THEREFORE, the City Council of the City of Commerce does ORDAIN as follows:
SECTION 1: RECITALS. That based upon staff reports, presentations, public testimony, and all other matters presented during the public hearing on this item, the City Council hereby finds and declares that the foregoing recitals are true and correct and incorporates them herein as findings and as a substantive part of this Ordinance.
SECTION 2: ADDITIONAL FINDINGS. Pursuant to the Government Section Code 65864 through 65869.5 and in light of the record before it including the staff report (and all attachments), and all evidence and testimony heard at the public hearing for this item, and in light of all evidence and testimony provided in connection with this Project, the City Council makes the following FINDINGS pertaining to the Amended and Restated Development Agreement No. ### as related to the proposed disposition of the Site for purposes of the Project:
Finding 1: Amended and Restated Development Agreement No. ### is consistent with the goals and policies of the General Plan, its purposes and applicable Specific Plan(s).
Evidence: The proposed project site is currently developed with one approximately 4,000 square foot industrial building on an approximate 5,103 square foot lot The lot is generally flat in nature and is situated in the City’s Commercial-Manufacturing Zoning District (C/M-1). The proposed project includes change of ownership, and conducting testing of commercial cannabis at 5608 East Washington Boulevard. This project is consistent with the General Plan in that it contributes to help establish an orderly pattern of development, economic development, and a wide range of activities. The project will also improve an existing building that has been underutilized. It will improve upon that use and help compliment the general vicinity. As determined by staff, the use will promote the improvement of a location where reinvestment and revitalization is needed. Furthermore, the project will provide needed economic development to the community.
Evidence: The proposed use is one compatible and consistent within the subject zone and complies with the intent of all applicable provisions of this Title 19. The proposed use is one that is consistent as the land uses within the C/M-1 zone pursuant to the Commerce Municipal Code (CMC). The proposal will allow for the establishment and operation of commercial cannabis business land use within the C/M-1 (Commercial Manufacturing) zone. Through Amended and Restated Development Agreement No. 7##, the conditions of approval thereof, and all other required City approvals, permits and licenses, the applicant will ensure the project will adhere to all requirements of Title 19 of the Zoning Code.
Evidence: The proposed use would not impair the integrity and character of the zone in which it is to be located. As proposed, the use will be complimentary to other uses in the immediate vicinity and throughout the C/M-1 zone. As such, the proposed use will not impair the integrity of the area or its character. Appropriate conditions of approval have also been crafted in order to ensure the use operates in a manner so as not to impact the area in which it is located.
Evidence: The subject site is physically suitable for the type of land use being proposed. All proposals to accommodate the commercial cannabis use will occur within the existing footprint of the building.
Finding 2: Amended and Restated Development Agreement No. 7## is consistent with and furthers a number of goals and objectives identified in the City’s General Plan.
Evidence: General Plans are required to not only be consistent with a City’s zoning ordinance, but they must also be internally consistent. Therefore, individual elements must be consistent with one another. If a project is consistent with one element of a General Plan, it should therefore be consistent with the rest of the document. The subject project includes consistency with the following policies in the Community Development Element of the General Plan:
Community Development Policy 1.1. The City of Commerce will continue to promote land use compatibility.
Community Development Policy 1.8. The City of Commerce, in conjunction with the South Coast Air Quality Management District, the Environmental Protection Agency, the Los Angeles County Fire Department, and other public agencies, will work to reduce potential hazards and health risks associated with the use, storage, or manufacture of hazardous materials.
Community Development Policy 3.1. The City of Commerce will continue to promote the maintenance and preservation of industrial activities and business that contribute to the city’s economic and employment base.
Community Development Policy 6.3. The City of Commerce will require new commercial and industrial development to employ architectural and site design techniques that will promote quality and efficient development.
Evidence: The abovementioned policies, along with other policies and elements identified in the General Plan will help contribute to an orderly pattern of development in the City, while helping to contribute to the City’s economic well-being.
Evidence: The proposed use would be compatible with existing and future land uses within the zone and the general area in which the proposed use is to be located. The parcel is surrounded by a series of complimentary uses. The proposed use is compatible with adjacent uses and combined with other uses in the C/M-1 zone, will serve to help provide a variety of non-residential activities as called for in the City’s General Plan. As such, the proposed use would be compatible with existing and future land uses within the zone and the general area in which the proposed use is to be located.
Evidence: The proposed use would not be detrimental to the public interest, health, safety, convenience, or welfare. The proposed operation of the use will be conditioned to comply with all the applicable standards of the Zoning Ordinance, and with the conditions of approval, the project will not adversely impact the general welfare of the City. To the contrary, the proposed use will be complimentary to the existing operations currently occurring in the general vicinity and operated by the ownership group. Further, the proposed use will be maintained in a safe and efficient manner in accordance with the imposed conditions. The conditions imposed will serve the public interest, health, safety, convenience, and welfare. Therefore, the proposed use would not be detrimental to the public interest, health, safety, convenience, or welfare.
SECTION 3: INCORPORATION, APPROVAL AND EXECUTION OF A DEVELOPMENT AGREEMENT. Based upon the findings outlined hereinabove, the City Council of the City of Commerce hereby approves Amended and Restated Development Agreement No. ### replacing Development Agreement 788 by adopting an uncodified ordinance to approve Amended and Restated Development Agreement No. ### between the City of Commerce and VK Labs, LLC.(a California Corporation) and authorizes the Mayor to execute the Amended and Restated Development Agreement subject to final and technical revisions as required and approved by the City Attorney.
SECTION 4: SEVERABILITY. If any section, subsection, line, sentence, clause, phrase, word, part, provision, or portion of this Ordinance, or its application to any individual, entity, or circumstance, for any reason, is held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance, and shall continue in full force and effect. To this end, any section, subsection, line, sentence, clause, phrase, word, part, provision, or portion of this Ordinance is severable. The City Council of the City of Commerce declares that this Ordinance would have been adopted by the City Council of the fact that any section, subsection, line, sentence, clause, phrase, word, part, provision, or portion thereof, might be declared to be invalid or unconstitutional.
SECTION 5: EFFECTIVE DATE. This Ordinance shall take effect on the thirty-first (31st) day after its adoption.
PASSED, APPROVED AND ADOPTED this ____ day of __________, 20______. ____________________________
Hugo Argumendo
Mayor
ATTEST:
______________________
City Clerk
APPROVED AS TO FORM:
______________________
City Attorney
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