STAFF REPORT TO THE CITY COUNCIL
DATE: Regular Meeting of July 11, 2023
TO: Members of the City Council
VIA: Dante Hall, City Manager
SUBMITTED BY: Tim Rood, Community Development Director
SUBJECT: Business Attraction Grant Program Guidelines RECOMMENDED ACTION:
Staff requests that the Council:
Receive a staff report on potential clarification of the program guidelines; Ask staff clarifying questions, if any;
Receive comments from the public, if any; and
By minute order, approve clarifications to the Business Attraction Grant program guidelines adopted on June 13, 2023. The Council may either:
Adopt only the staff-recommended clarifications; or
Adopt both the staff-recommended clarifications and a food service requirement BACKGROUND:
On April 4, 2023, the Council’s Economic Development Committee received a report on a pilot Business Attraction matching grant program to incentive desired types of business, to move into existing, vacant retail spaces. The committee recommended the program be brought to the full Council for consideration.
On June 13, 2023, the Council approved the program along with a request that staff return with potential clarification of the program guidelines to ensure that participating eating/drinking establishments provided some level of food service.
Rollout of the grant program is on hold pending the Council’s potential changes to the program guidelines.
ANALYSIS:
Targeted Business Types
The Business Attraction Grant program aims to help attract businesses that provide community gathering spaces. As adopted, the program guidelines allow restaurant/café, wine bar/café, or brewpub/micro-distillery businesses to be eligible for the grants. All of these business types serve beverages for on-site consumption, but not all necessarily serve food or complete meals.
The policy issue before the Council is whether the Business Attraction Grant program guidelines should be amended to limit participation to businesses that serve food, which typically enables minors to be present on site, or should continue to be open to eligible businesses that do not serve food. Example businesses from the surrounding area are provided below to illustrate the types of businesses that could be attracted to Hercules depending on the program guidelines adopted.
Alcoholic Beverage Control License Types
In California, many different types of licenses to serve alcoholic beverages are available from the state Department of Alcoholic Beverage Control (ABC). Some of these license types require some amount of food service to be available, and some license types restrict minors from being on the premises. Typically, minors are allowed at a “bona fide eating place” that serves alcohol.
California Business & Professions Code Sections 23038 and 23787 define a “bona fide eating place” as a licensed premises equipped and maintained in good faith for sales to and consumption by the public of meals upon the premises. The premises must have suitable kitchen facilities and supply an assortment of foods commonly ordered at various hours of the day.
Applicable ABC license types for targeted business types are listed below, along with requirements relating to food service and the presence of minors. For each license type, example businesses from Hercules and the surrounding area that are listed on the ABC license lookup service as having that type of license are provided for information.
ABC License Types Requiring Food Service:
Type 40 On-Sale Beer (Bar, Tavern)
Authorizes the sale of beer for consumption on or off the premises No wine or distilled spirits may be on the premises.
Full meals are not required; however, sandwiches or snacks must be available (often through vendor partnerships with food trucks or nearby takeout businesses) Minors are allowed.
Microbrewery examples: Hop Grenade, Concord; Four Legs Brewing, Brentwood Type 41 On-Sale Beer & Wine – Eating Place
Must operate and maintain the licensed premises as a bona fide eating place.
Must maintain suitable kitchen facilities and must make actual and substantial sales of meals for consumption on the premises.
Minors are allowed.
Examples: Mazatlán, Genki House, Jumping Spoon, Anh’s Kitchen Wine Bar example: Residual Sugar, Walnut Creek.
Type 47 On-Sale General – Eating Place
Must operate and maintain the licensed premises as a bona fide eating place.
Must maintain suitable kitchen facilities and must make actual and substantial sales of meals for consumption on the premises.
Minors are allowed.
Examples: Powder Keg Pub, Leila By the Bay
Wine Bar examples: Bar Cava, Martinez; The Loft Wine Bar & Restaurant, Benicia Brewpub example: Firehouse Brew & Grill, Martinez
Type 75 Brewpub-Restaurant
Authorizes the sale of beer, wine and distilled spirits for consumption on a bona fide eating place plus a limited amount of brewing of beer.
Minors are allowed on the premises.
This license does not authorize the sale of alcoholic beverages for consumption off the premises where sold.
No examples in Contra Costa or Solano Counties, likely to due to prohibition on off-sale, which is common for breweries.
Examples: Downtown Joe’s, Napa; Waterfront Seafood Grill, Napa; Calistoga Inn, Calistoga ABC License Types That Do Not Require Food Service:
Type 23 Small Beer Manufacturer
Production of less than 60,000 barrels of beer per year.
Typical license type for breweries and brewpubs.
Food service is not required, but often provided through partnerships.
Examples with food: Elevation 66 Brewing Company, El Cerrito; Del Cielo Brewing Co., Martinez (sandwiches/salads/desserts).
Examples without food: Calicraft Brewing Company, Walnut Creek; Five Suns Brewing, Martinez; Morgan Territory Brewing, Pleasant Hill Type 42 On-Sale Beer & Wine – Public Premises
Authorizes the sale of beer and wine for consumption on or off the premises.
No distilled spirits may be on the premises.
Minors are not allowed to enter and remain (musicians excepted).
Food service is not required, but often provided through partnerships Wine bar example: The Chill, Benicia (offers charcuterie plate or delivery orders from nearby restaurant); Beer bar/taproom examples: Hop Asylum, Brentwood (21+ craft beer bar with sandwiches, flatbreads and appetizers); Vine & Grain, Brentwood (21+ wine/craft beer bar with tapas/charcuterie) Type 74 Craft Distiller
Allows commercial manufacture of up to 150,000 gallons of distilled spirits per fiscal year Authorizes sale of distilled spirits manufactured by the licensee, up to 2.25 liters per consumer per day May also sell all beers, wines, brandies and distilled spirits to consumers for consumption at a bona fide eating place upon the licensed premises.
Minors are allowed if a bona fide eating place is upon the licensed premises Examples with food service: Savage & Cooke – An American Distillery, Vallejo; Heretic Brewery & Distillery, Fairfield Example without food service: Dissident Spirits tasting room, Richmond Program Guidelines and Recommended Clarifications
Staff recommends clarifying the program guidelines to do the following:
Define the types of eligible businesses using more precise terminology, consistent with that used by ABC.
Clarify that the eligible business must be the primary use in the space and not incidental or accessory to a non-eligible use. For example, a non-eligible business, such as a salon, that wished to sell coffee and pastries in a portion of its space would not be eligible for the grant program.
Clarify that Planning permits for the space must be approved at the time of submittal for the grant program, in order to prevent grant funds being expended on uses that are later denied by the Planning Commission or Council.
Clarify that grant recipients are required to provide a Certificate of Occupancy as well as a City business license prior to receiving the final grant payment.
Staff further requests that the Council discuss and decide if it wishes to amend the program guidelines to limit the Business Attraction program only to businesses that provide food service. Staff’s recommendation in this regard would be not to add a food service requirement, in the interest of casting a broad net for this pilot program and allowing business types, such as small breweries, that create gathering spaces and add vibrancy, to participate even if they do not prepare and serve food.
The approved program guidelines are as follows. Redline text indicates staff-recommended clarifications of the program guidelines.
Business Attraction Grant Budget
A total of $100,000 (allocated from the General Fund) with a maximum grant amount per business of $25,000 (and a minimum grant amount of $5,000). Grant amount must be matched by the applicant.
Grant Program Eligibility
The business is a brick-and-mortar, for-profit, sales tax-generating businesses in one of the following categories:
Restaurant
Café (if the café comprises a majority of the space/operation, or if the café is the primary use and not incidental to another use) Wine bar / café
Brewpub Brewery or taproom
Micro-distillery Craft distillery
The business must lease/rent their commercial property directly from a landlord.
The space must be vacant and available for lease as of the start date of the program.
The business is either independently owned/operated or a locally owned franchisee (i.e., local outlets of chains or franchises that are headquartered outside of the nine-county Bay Area and/or have more than six locations are not eligible) The business must provide a matching move-in expenditure equal to or greater than the grant amount.
Submittal Requirements
Signed Lease or Letter of Intent (LOI) for a vacant (as of the grant program start date) tenant space in Hercules.
Verification that all required Planning approvals for the business have been granted and applicable appeal periods have expired.
Pro-forma detailing all construction and move-in expenses required to open the business.
Grant amount requested and verification by the pro-forma that the grant amount will not exceed 50% of all construction and move-in expenses.
Complete and signed online application which will include:
Verification that the business is within one of the eligible categories.
Verification that the business is either independently owned/operated or a locally owned chain (as defined under eligibility requirements) Use of Funds
Tenant improvements (construction costs)
Signage
City, County or Utility permitting and connection fees
Mechanical, Appliance and Equipment Costs
Furniture and Furnishings
Computer and Software Costs
Grant payments (up to the amount requested and awarded) will be upon submittal of receipts and/or invoices to HdL every 30 days. Business shall obtain a City Business license and have a Certificate of Occupancy prior to final reimbursement payment.
Additional Guidelines Adding Food Service Requirement
If the Council wishes to add a requirement that grant recipients provide food service, staff recommends adding “with food service” to the eligible business types, as follows:
Grant Program Eligibility
The business is a brick-and-mortar, for-profit, sales tax-generating businesses in one of the following categories:
Restaurant
Café (if the café comprises a majority of the space/operation, or if the café is the primary use and not incidental to another use) Wine bar with food service
Brewery or taproom with food service
Craft distillery with food service
Conclusion/Recommendation
Staff requests that the Council by minute order 1) approve the recommended clarifications of the program guidelines and 2) if desired, approve the addition of a food service requirement to the program.
FISCAL IMPACT:
There would be no fiscal impact to this proposal. The adopted FY 23-24 budget includes an appropriation of $100,000 for this program in order to allow up to four grants for the maximum $25,000.
Attachments
Att. 1 - Presentation