Economist: City Permit Process Hamstrings Business

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By Daniel Langhorne | LB Indy

Correction: A previous version of this story misstated Village Laguna’s position on conditional use permits.

An economist hired by Laguna Beach to evaluate the downtown retail market recommends city leaders allow consumers to determine what businesses should open and close, rather than curating the commercial landscape through conditional use permits.

The 73-page report by Stanley R. Hoffman Associates perpetuates what many Laguna Beach business owners and entrepreneurs have said for years—the city’s antiquated regulations make it extremely difficult for new ventures to open.

“The city should let the market ultimately dictate which stores survive and which ones fail,” Hoffman wrote in the report. “To place any artificial conditions on a store’s product mix or a restaurant’s menu is ultimately non‐productive and furthers the city’s reputation as being hard to deal with.”

In January 2019, the City Council agreed to pay Hoffman $38,800 to complete the retail market evaluation. At that time, Chamber president J.J. Ballesteros requested that council members reallocate the city’s budgeted $25,000 contribution to the Chamber for Fiscal Year 2019 to help pay for Hoffman’s contract.

The Planning Commission is scheduled to review the report and hear public comments on its findings at a Feb. 26 meeting.

Currently, almost all proposed commercial uses in the Downtown Specific Plan require a prospective tenant to obtain the Planning Commission’s approval of a conditional use permit. Any deviation in a business’ product inventory typically requires applicants to return for additional Planning Commission review.

“Stakeholder inputs indicate that the Conditional Use Permit process is restrictive and is keeping innovative and fresh businesses out,” Hoffman wrote. “Additionally, these inputs point to delays associated with the lengthy and uncertain CUP permitting process as a major hindrance in the ability to plan ahead.”

As part of the efforts to collect first‐hand information on retail conditions in Downtown Laguna  Beach, the consultants conducted an online survey of business owners/operators, property owners and managers, and residents.

The forever-debated topic of loosening parking requirements for new businesses received mixed reactions in the survey.

Key stakeholders identified the lack of parking and parking garages for visitors, clients and Downtown workers is proving to be a major barrier, combined with traffic congestion.  Meanwhile, property owners suggested requirements for onsite parking spaces should be eased for new developments and not be used as a barrier to new investment.

Business owners have expressed many of the same perspectives laid out in the retail market evaluation during city council meetings, said Paula Hornbuckle-Arnold, executive director of the Laguna Beach Chamber of Commerce.

“It takes a village to change the opinion of policies and procedures that have been in place at city hall for 30 years,” she said

Hornbuckle-Arnold hopes the Planning Commission will keep in mind that they are not retail experts when voting on the Downtown Specific Plan.

“The experts have been hired, the experts came back with a comprehensive report and comprehensive suggestions, so listen to them,” she said.

Bob Chapman, a commercial real estate agent and former planning commissioner, said Laguna Beach’s conditional use permit process was adopted 30 years ago when it made sense for city leaders to have a hand in curating the mix of businesses downtown. That time has passed, he said.

The onerous regulations not only block new businesses coming into town but also existing businesses that are operating under the conditional use permit but aren’t able to change their mix of merchandise to meet the needs of their clientele, Chapman said.

Chapman recommends the city only require restaurants and bars to obtain conditional use permits, adding that it can always revisit this requirement for other commercials uses.

Opponents of changing the conditional use permit process argue that it will invite developers to alter charming commercial buildings that attract people to move to and visit Laguna Beach. Chapman argues these buildings will continue to deteriorate if the businesses inside aren’t thriving.

Village Laguna has not supported or rejected any particular changes to conditional use permitting because none are officially on the table, Village Laguna spokesperson Johanna Felder wrote in an email.

“Village Laguna has supported changing the conditional use process and has testified to that effect several times,” Felder wrote.

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