Agenda Report
Fullerton City Council
MEETING DATE: june 21, 2022
TO: CITY COUNCIL / SUCCESSOR AGENCY
SUBMITTED BY: eric J. levitt, City Manager
PREPARED BY: meg mcwade, PUBLIC WORKS DIRECTOR
STEPHEN BISE, CITY ENGINEER
SUBJECT: STANDARD OUTDOOR DINING GUIDELINES AND LEASE RATE UPDATE AND WALK ON WILSHIRE (WOW) PILOT BIKE LANE
SUMMARY
In March 2022, City Council directed staff to extend the temporary outdoor dining program to June 13, 2022, given businesses expressed interest in applying for the City’s standard outdoor dining program and willingness to pay current lease rates. City Council also directed staff to revisit current market rates for lease of public land.
Nine businesses signed affidavits expressing interest in applying for the program. Staff has drafted an update to the Standard Outdoor Dining Guidelines and performed an assessment of lease rates for City Council review and approval. Staff plans to move forward with the removal of pilot bike lane installed in the Walk on Wilshire Temporary Outdoor Dining Program area and to evaluate an installation for future City Council consideration that would allow for shared use that enhances or maintains the aesthetics of the area while maintaining safety, unless directed otherwise.
RECOMMENDATION
Approve updated Standard Outdoor Dining Guidelines and grant staff administrative approval of minor changes as needed.
Provide direction on the preferred lease rates by either:
Affirm the current standard outdoor dining lease rates originally adopted in 2012: No liquor: $0.30/sf month ($3.60 sf/annually); Beer and wine only: $0.60/sf (or $7.20 sf annually); Full liquor: $0.90/sf ($10.80 annually) by adoption of Resolution No. 2022-XX.
RESOLUTION NO. 2022-XX – A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF FULLERTON, CALIFORNIA, AMENDING THE CITY’S SCHEDULE OF FEES AND CHARGES FOR MUNICIPAL SERVICES PERTAINING TO THE CITY’S LEASE RATES FOR STANDARD OUTDOOR DINING IN THE PUBLIC RIGHT-OF-WAY OR
Update standard outdoor dining lease rates to: No liquor: $0.58/sf month (or $6.96 sf/annually); Beer and wine only: $1.14/sf (or$13.68 sf annually); Full liquor: $1.71/sf (or $20.52/sf annually) by adoption of Resolution No. 2022-XX.
RESOLUTION NO. 2022-XX – A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF FULLERTON, CALIFORNIA, AMENDING THE CITY’S SCHEDULE OF FEES AND CHARGES FOR MUNICIPAL SERVICES PERTAINING TO THE PUBLIC WORKS DEPARTMENT’S LEASE RATES FOR STANDARD OUTDOOR DINING AND PANDEMIC-RELATED TEMPORARY OUTDOOR DINING PROGRAM IN THE PUBLIC RIGHT-OF-WAY Authorize removal of pilot Bike Lane deployed within the Walk on Wilshire Temporary Outdoor Dining area.
PRIORITY POLICY STATEMENT
This item matches the following Priority Policy Statement:
Infrastructure and City Assets.
FISCAL IMPACT
The increase in lease rates will provide additional revenue to the City but may deter some businesses from participating in the program. Staff included a comparison of rates as an attachment to this report.
DISCUSSION
Guidelines
The City adopted the current Outdoor Dining Guidelines in August 2012. Staff has updated process, procedures, applications and agreements since that time. The attached draft guidelines provide a roadmap from application to agreement. In addition, Staff has removed all fees and lease rates from this document to limit redundancy and/or discrepancy with fees in the Public Works Fee Schedule. The updated guidelines will reference the fees adopted by resolution.
The guidelines include specific criteria and approval process for utilizing one of the three parking districts for outdoor dining since several businesses used public parking lots under the temporary program. In addition, should any of the businesses opt to mobilize in one of the City’s paid parking lots, resulting in a loss of parking spaces, the applicant shall be responsible for the revenue loss incurred by the City.
The Encroachment Agreement is for an initial 12-month period and may be extended indefinitely based on compliance with the terms and timely payment of the monthly lease. However, unlike the previous agreement, the new language includes a termination clause that allows cancellation based on a 30-day written notice, which the City may issue at any time, not just at the end of the calendar year. In addition, the agreement has a no-appeal immediate cancellation clause based on any serious violation associated with use that may adversely affect the public health, safety or general welfare. The Public Works Director will have sole discretion to reinstate the Agreement, upon correction of the violations.
Encroachment Fees and Lease Rates
Each Standard Outdoor Dining Encroachment Agreement will be subject to the standard application fees established by City Council as part of the fee schedule adoption. In addition, the City will require a monthly lease based on square footage of the dining area and type of alcohol license held.
On June 21, 2011, staff proposed the monthly lease rate be 75% of Citywide average market rate per square foot (sf). Initially staff looked at both ¼ mile and ½ mile radius around the potential Encroachment Agreement sites. However, this resulted in a variation from $1.54/sf to $2.08/sf, or a nearly 35% range from one end of downtown to the other. The whole-City approach to smoothing of the lease rate results in $1.78/sf. Using the criteria of 75%, the base lease rate would equal $1.78/sf/month x 0.75 = $1.34/sf/month.
Per City Council direction, staff revised the monthly lease rate on February 7, 2012 to 50% of the Citywide average, per square foot. Using the criteria of 50%, staff established the base lease rate at $0.90/sf/month.
City Council approved modifications to the Outdoor Dining Guidelines on May 15, 2012, which included the following lease rate structure:
A tiered monthly lease rate based upon the type of alcohol license held for the outdoor dining within the public right of way. No liquor: $0.30/sf (or $3.60/sf annually); Beer and Wine only: $0.60/sf (or $7.20/sf annually); Full Liquor: $0.90/sf (or $10.80/sf annually).
City Council directed staff to revisit and update the lease rates to current market value on March 15, 2022. Staff retained a brokerage firm to perform an Opinion of Value, which details a reset to our outdoor dining lease rate values given Consumer Price Index (CPI). Staff directed the consultant to use the 2011 recommended rate (75% of market value; $1.34/sf/month) as the baseline to reset rates. In addition, the City maintained the same tiered approach based on the applicant’s alcohol license.
Based on the Opinion of Value, the following lists the 2022 market lease rates for outdoor dining:
No liquor: $0.58/sf (or $6.96/sf annually)
Beer and Wine only: $1.14/sf (or $13.68/sf annually)
Full Liquor: $1.71/sf (or $20.52/sf annually).
Staff included a comparison of these rates as an attachment to this report. Staff will include these rates in the Public Works fee schedule, if approved, and apply to all executed encroachment agreements (not to businesses participating in the extended temporary outdoor dining program). Staff will notify any business with an existing encroachment agreement for outdoor dining of the change in rates and issue a notice of termination in accordance with terms of the agreement. If they wish to apply for a new agreement, staff will prepare a new agreement with the rates and terms concurrent with the termination.
Since the City adopted the current rates in the 2012 Outdoor Dining Guidelines, adoption of the new Standard Outdoor Dining Guidelines essentially will remove the lease rates from the program. This will necessitate an amendment to the Fee Schedule to include the lease rates. If City Council does not find the recommended rates acceptable currently, staff recommends City Council adopt a resolution to include the 2012 rates in the Fee Schedule. If City Council finds the recommended rates acceptable, staff has prepared a separate resolution to amend the Fee Schedule with the new rates.
Walk on Wilshire
On March 15, 2022, City Council authorized an extension of the temporary outdoor dining program related to Walk On Wilshire through September 30, 2022. City Council authorized deployment of a separated bike lane as recommended by the City’s Active Transportation Committee as part of that action.
Staff utilized barriers to ensure mutual safety of the diners and bike riders to activate the bike lane for this temporary program. The City can store and re-purpose the barriers for future City operations. Staff deployed the barriers and signage for over a month and with minimal usage by the cyclist community. In evaluating the impact of the barriers, the City Manager believes some cyclists do not realize the barriers provide for a safe bike lane and at the same time has created a negative aesthetic impact to the WOW program. Staff recommends removal of the pilot bike lane while researching and implementing an alternative barrier concept, if the program continues in some form. City Council will revisit the bike boulevard element when it considers the future of WOW.
Attachments:
Attachment 1 – PowerPoint Presentation
Attachment 2 – Draft Standard Outdoor Dining Guidelines, May 2022 Attachment 3 – Draft Resolution to amend Fee Schedule with interim lease rates Attachment 4 – Draft Resolution to amend Fee Schedule with new lease rates Attachment 5 – Broker Opinion of Value, May 2022
Attachment 6 – Comparison of Lease Rates (Current and Proposed) Standard Outdoor Dining Guidelines and Lease Rate Update June 21, 2022 - Page 3