Found the perfect place for your business? How to check if zoning, ABC, or neighbors will mess you up!

Location, zoning, census tractMany people wanting to open a new business think they have found a perfect location only to find out that their proposed use is prohibited or subject to a difficult permitting process.  While that may seem conceptually obvious to most people, the existing uses in an area can be misleading to prospective new businesses.  Just because an area is full of commercial ventures doesn’t mean that the proposed business will be allowed.  Even if the area contains many of the same type of businesses, the new business may be prohibited or nearly impossible to open.  How can this be?

First, watch out for local zoning laws.  Zoning laws are typically enacted by counties or cities and prescribe the types of uses, e.g., businesses, that are allowed as well as the form of the structures that will house the business, e.g., height, set backs, etc.  With respect to uses, they can permit one type of business but not another.  Most commonly, they make distinctions between manufacturing, distribution, and retail.  But they also often specify the type of manufacturing and retail.  Many zoning ordinances contain lists of the specific types of businesses that are allowed, thereby prohibiting all businesses not on the list.  This circumstance can be problematic for breweries, brew-pubs, micro breweries, custom wine labelers, etc. or other businesses which have things like tasting rooms and desire to be in retail districts.  Making or distributing beer or wine maybe deemed a prohibited manufacturing or warehousing use, even if doesn’t fit with common notions of such uses.  Luckily for the artisan brewery industry, many municipalities are amending their zoning laws to accommodate their special needs.  Nevertheless, there are still many areas that prohibit breweries.

Additionally, the existence of businesses similar to that of the prospective business may be the result of “grandfathering” of existing uses that are now prohibited.  This is often the case with bars and stores that sell for “off premises consumption.”  An increasing trend in California is for local jurisdictions to adopt “deemed approved” ordinances.  These ordinances are adopted in localities in which alcoholic beverage sales by local businesses are perceived to creating a substantial law enforcement and nuisance problem.  The ordincances are designed primarily as a way to restrict or revoke sales by “grandfathered” businesses when they violate certain standards.  However, these ordinances often contain several “tentacles” that extend far beyond their central purpose, including restrictions or prohibitions on new alcoholic beverage licenses or sales of existing licenses.

Also, look around for residences, churches, schools, parks, and even other similar businesses.  Many zoning laws prohibit businesses within a certain distance of these uses. 

Second, even if the local zoning laws don’t prohibit the proposed type of use, the California’s Alcoholic Beverage Control Dept. (ABC) licensing process may make it difficult or impossible to attain approval.  A funny quirk of ABC laws is that they encourage the dispersion or scattering of licenses throughout regions and discourage their concentration in business districts.   ABC laws use census tracts, which are small geographic areas.  Most Cities contain multiple census tracts.  Each census tract is allotted a certain number of licenses based on residential population – the greater the number of residents, the greater the number of licenses that are allowed.  However, in most of California, business districts have a lower number of residents than residential districts.  Therefore, these ABC laws favor the location of licenses in residential district rather than business district.  Zoning laws are opposite.  The result is that zoning laws prohibit licenses where ABC allows them, and ABC laws disallow licenses where zoning laws allow them.

Nevertheless, in a census tract that already has its allotted quota of licensed businesses, if the business can prove the license will serve “public convenience or necessity” (the “or” is an important word in the phrase, as many people mistakenly think its “and’), the new license may be allowed.  Usually, the local police department or planning agency plays an important role in the ABC process of determining whether such public convenience or necessity is served.  Crime rate in the census tract is also a factor.  Buying an existing license outside the census tract does not avoid this process, although buying an existing license that is already in the census tract can help.  Nevertheless, moving a license only a few yards can trigger zoning laws.  The best option, as far as the regulatory process goes, is to buy a license or business for the same location its already in.  The proximity of churches, schools, parks, and residences is also a factor in the ABC process, although there is a little more flexibility than

When looking for a new location, first visit or call the local planning department or check out a zoning map and ordinance (usually in the municipal code).  Then call the Police Department to get their views of your type of business for that location. Lastly, call the ABC.  If you get a green light from the first two, your looking good.  At that point the ABC will mostly be concerned about noise and interference with residents’ peace and enjoyment.  So if your a noisy business, check and see how close


About William Adams

Attorney at Norton, Moore, & Adams, LLP.
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