FROM:
Planning Department
SUBJECT:
Title
Introduce an Ordinance of the City Council of the City of Fontana, California, Pursuant to an Exemption from the California Environmental Quality Act, Approving a Development Agreement with Catalyst- Fontana, LLC, concerning a retail cannabis business and direct staff to file a Notice of Exemption.
End
RECOMMENDATION:
Recommendation
Based on the information in the staff report and subject to the findings, conclusions, and resolution presented in the public hearing, staff recommends that the City Council read by title and waive further reading and introduce Ordinance No. 1960; and
1. Find, after review of the Development Agreement, that the project is EXEMPT from the California Environmental Quality Act (“CEQA”), pursuant to State CEQA Guidelines Section 15301 (Existing Facilities) and direct staff to file a Notice of Exemption; and
2. Read by title only and waive further reading of and introduce Ordinance No. 1960, an Ordinance of the City Council of the City of Fontana, California, Pursuant to an Exemption from the California Environmental Quality Act, Approving a Development Agreement with Catalyst - Fontana, LLC, concerning a retail cannabis business and Direct Staff to File a Notice of Exemption.
3. Approve an Operating Agreement with Catalyst - Fontana LLC, as required by FMC 33-21.
End
COUNCIL GOALS:
• To promote economic development by concentrating on job creation.
• To promote economic development by pursuing business retention, expansion, and attraction.
• To promote economic development by striving to constantly improve the city's competitiveness.
APPLICANT:
Catalyst - Fontana LLC
401 Pine Avenue
Long Beach, CA 90802
LOCATION:
15911 Highland Avenue (APN: 0228-301-01)
REQUEST:
A request that the City Council, pursuant to an exemption under CEQA, approve the Development Agreement with Catalyst - Fontana LLC, concerning a retail cannabis business, pending adoption of an Operating Agreement with Catalyst - Fontana LLC.
BACKGROUND INFORMATION:
Pursuant to state law, the City adopted regulations in Chapter 33 of the Fontana Municipal Code (“FMC”) to allow a maximum of three (3) cannabis retail establishments that would be permitted to operate within the city’s jurisdiction, one each in three designated areas (i.e. North, Central and South).
The City received an application from Catalyst - Fontana LLC, (the “Applicant”) on May 4, 2023, for a Retail Commercial Cannabis Business Activity Permit (“Permit”) for the North area of the City pursuant to FMC Chapter 33 for the rights and entitlements to develop and operate a commercial cannabis retail sales business at a project site located at APN: 0240-091-10. On April 24, 2023, the City issued a Cannabis Zoning Verification Letter that provided that the property located at APN: 0240-091-10 had a zoning designation of Commercial/Retail within the Fontana Promenade Specific Plan and that allowed consideration of a cannabis retailer use. The applicant’s application was evaluated and determined to be the second-ranked applicant in the North Area of the City and thus was not initially selected to receive a retail cannabis permit. On May 1, 2024, the top-ranked applicant for the North Area was informed by the City that its permit application process had been terminated by the City. Applicant was then notified by the City on October 17, 2024 that the City Manager was exercising his discretion under the City’s Cannabis Application Procedures, and subject to the City Council’s ultimate approval of a settlement agreement with Applicant, to (a) move forward with issuing a notice of selection to Applicant as the second-highest scoring applicant in the North Area, and (b) approve 15911 Highland Avenue (APN: 0228-301-01) as an alternate location for the Project, subject to Applicant providing proof of the right to use and occupy the premises on the Project site within 90 days of said notice of selection being issued. Therefore, October 17, 2024, is considered the date when the use was established. On October 21, 2024, the City received an application for a Development Agreement with Applicant (the “Project”) to establish timing parameters and to provide certain fees and other public benefits in conjunction with Applicant’s cannabis operations. On October 29, 2024, the City issued a Cannabis Zoning Verification Letter that provided that the property located at 15911 Highland Avenue (APN: 0228-301-01) had a zoning designation of General Commercial (C-2) and that allowed consideration of a cannabis retailer use.
The Planning Commission held a public hearing on November 19, 2024 and recommended that the City Council adopt the Development Agreement with Catalyst - Fontana LLC. The Planning Commission voted 4-0 (Vice Chair Sanchez absent) to adopt Resolution PC No. 2024-056, thereby forwarding a recommendation of approval to the City Council. Staff received a total of two (2) written communications (see Attachment No. 5) and four (4) verbal communications in opposition of the agreement. After closing the public hearing, the Planning Commission made a minor modification to the DA language in the operating agreement in Section 5.2 Community Benefits. The revised agreement stipulates that the approval of any new additional partners shall be subject to the sole discretion of the City.
In accordance with FMC 33-21, the Applicant is required to enter into a fully executed operating agreement with appropriate fiscal mitigation measures. The Operating Agreement and the Development Agreement are mutually dependent on each other. The Operating Agreement is attached as an exhibit to the Development Agreement.
The project site is located within the General Plan Land Use Designation General Commercial (C-G) and zoned with General Commercial (C-2).
PROJECT DESCRIPTION:
Development Agreement with Catalyst - Fontana LLC, which has a term of 3 years, with 2-year extension periods, will provide for timing parameters and community benefits in the form of the payment of a percentage of gross receipts, payment of retail fees to the City and benefits to the local residents of the City by supporting local nonprofit organizations and providing opportunities for local jobs and work.
ANALYSIS:
The Applicant, Catalyst - Fontana, LLC, is seeking issuance a Cannabis Operating Permit that allows for the right to operate a commercial cannabis business at the Project site. The Applicant is now, as required by City ordinance, requesting approval of this Development Agreement to establish timing parameters and community benefits associated with the business operations. Additionally, Applicant will make minor tenant improvements to the existing building and open a Commercial Cannabis Activity facility business on the Site consistent with State Cannabis Law, all other applicable California law, and the project approvals.
The City Council is asked to review and render an approval regarding this Development Agreement by reviewing for consistency with the objectives, policies, general land uses and programs specified in the general plan. The information, findings and conclusions provided in this staff report, the Project documents and upon the information presented in the public hearing will form the basis and reasons for the City Council entering into the Development Agreement with the Applicant.
The Development Agreement is in conformity with the public necessity, public convenience, general welfare, and good land use practices; 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; and will have a positive fiscal impact on the City. The provisions of the Development Agreement and its purposes are consistent with the objectives, policies, general land uses and programs specified in City’s General Plan, zoning code and municipal ordinances.
The Applicant has demonstrated to City staff, by its application documentation, that it is qualified to operate a Commercial Cannabis business and has pledged in this Development Agreement that it will operate its business in accordance with state and local law and in a responsible manner to contribute positively to the community and the local economy.
The key terms of the Development Agreement are as follows:
1. Initial Term is three (3) years, and, at the sole discretion of the City, two (2) year extension periods may be granted.
2. Applicant shall pay to City retail and public benefit fees, a percentage of gross receipts of its commercial cannabis business.
3. City will grant a vested right and entitlement to Applicant to develop and operate the Project for the Term of the Development Agreement, subject to all applicable laws, regulations, conditions and permits, including but not limited to, the terms of the Commercial Cannabis Regulatory Permit, the requirements of Chapter 33 of the Fontana Municipal Code governing cannabis businesses and activities, the Development Agreement and Operating Agreement.
4. City covenants to expeditiously process all applications for permits submitted by Applicant.
5. Applicant and City shall enter into an Operating Agreement with additional terms and conditions for the implementation, development, operation and maintenance of the Project, including but not limited to, strict oversight, measures and management of the commercial cannabis business to ensure safety and welfare of the residents of the City and Applicant shall use reasonable efforts and give priority to hiring local Fontana residents to fill open jobs and to engage qualified local contractors to perform work on the Project.
Public notice of its intention to adopt this Ordinance No. 1960 approving and executing the Development Agreement with the Applicant has been given and has conducted public hearings thereon pursuant to California Government Code section 65867 and Municipal Code Section 30-322. A public hearing is not required for the Operating Agreement.
The key terms of the Operating Agreement are as follows:
1. Initial Term is three (3) years and, at the sole discretion of the City, two (2) year extension periods may be granted;
2. Purpose of Operating Agreement is to ensure positive community impacts from the operation of commercial cannabis business operations;
3. Reasonable efforts to hire qualified City of Fontana residents;
4. Valid City of Fontana business license requirement;
5. Operational requirements; and
6. Default and Termination for Cause provisions.
The terms and conditions of the Development Agreement have undergone extensive review by City staff and have been found to be fair, just, and reasonable. The pursuit of the Project will best serve the interests of its citizens and the public health, safety, and welfare by entering into this Development Agreement. By conducting this public hearing and the Planning Commission rendering a recommendation to the City Council, the required findings in Municipal Code Section 30-322 and pursuant to Section 4 of Fontana Resolution No. 85-217 will have been satisfied.
ENVIRONMENTAL:
The Development Agreement has been reviewed and found to be exempt from the California Environmental Quality Act (“CEQA”) per State CEQA Guidelines Section 15301, Existing Facilities, as the cannabis retail use will be located in an existing commercial facility with no proposed expansion to the building.
FISCAL IMPACT:
New revenue, in the form of special fees paid to the City, resulting from execution of this Development Agreement is currently projected to exceed $500,000 annually.
MOTION:
Approve staff’s recommendation.
ATTACHMENTS:
Attachment No. 1 - Vicinity Map
Attachment No. 2 - Ordinance and Development Agreement
Attachment No. 3 - PC Package and Public Communication 11-19-2024
Attachment No. 4 - PC Minutes of 11-19-2024
Attachment No. 5 - Notice of Exemption
Attachment No. 6 - Public Hearing Notice