Economic Impact Review – Santa Cruz, CA

In October 2000, the Santa Cruz City Council voted unanimously to adopt an ordinance requiring new retail stores over 16,000 square feet to obtain a special permit, with approval hinging on whether they add to a balanced and diverse mix of downtown businesses.

“The continued establishment of large square footage retail businesses in the Downtown, if not monitored and regulated, may frustrate the Downtown Recover Plan goal of establishing and maintaining a diverse retail base with a ‘unique retailing personality,'” the ordinance states.

Specifically, a new store must demonstrate that it 1) adds a desired type of business, 2) contributes to an”appropriate balance of local or non-local businesses,” and 3)contributes to an “appropriate balance of small, medium and large-sized businesses.” In addition to enhancing the overall diversity of the downtown business district, the new store must be a “good neighbor” and contribute to community life by becoming a member of a business or neighborhood organization, hiring local residents whenever possible, and participating in festivals and other events.

Theordinance favors maintaining the community’s authenticity and unique retail character, and presumes local businesses are more likely to accomplish this. Other guidelines for granting permits include reducing the amount of profit that leaks out of the city and encouraging local investment and employment in the downtown.



Excerpt from the city’s zoning code:

c.    Ground-level use exceeding sixteen thousand (16,000) gross square feet per single-tenant/establishment. The Special Use Permit provided for in this subsection shall be issued or denied by the City Council after review and recommendation by the Zoning Board. In addition to the findings for Special Use Permit issuance required under Section 24.08.050, a Special Use Permit required by this subsection shall not be issued unless the following additional criteria, findings and conditions are made by the City Council. The proposed Application would provide a public benefit by demonstrating that:

i.    The use adds a desired, “targeted” business to the Downtown, which would serve to diversify the Downtown Recovery Plan area ground-level business base;
ii.    The use provides a public benefit and contributes to an appropriate balance of local or non-local businesses. For the purposes of this finding, it shall be presumed that local businesses serve to sustain the authenticity and unique retail character of the DRP business mix. However, non-local businesses may add to retail draw and contribute to overall Downtown vitality in certain circumstances;
iii.    The use contributes to an appropriate balance of small, medium and large-sized businesses in the DRP area to diversify the DRP’s ground-level business mix; to insure the maintenance of the “Santa Cruz” identity, unique character and authenticity; to seek to reduce economic “leakage” of sales out of the City and County; and to induce local investment and employment to the DRP area;
iv.    The design of the façade of the proposed use meets the design standards and guidelines of the DRP and is not restricted by corporate standardized or trademarked exterior design, signage, materials, color or other visual treatments;
v.    The proposed use would be a good neighbor and contribute to the community life of the Downtown by participating in such community activities as: (1) Membership in Downtown merchant, resident, neighborhood improvement organizations and/or assessment districts; (2) to the greatest extent feasible, hiring local residents; and (3) hosting or participating in Downtown festivals, fairs, benefit events and similar neighborhood activities; and
vi.    If applicable, all food and/or beverage service activities shall be conducted in accordance with the “good neighbor operating procedures” for such uses described above.


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Stacy Mitchell

Stacy Mitchell is co-director of the Institute for Local Self-Reliance and directs its Independent Business Initiative, which produces research and designs policy to counter concentrated corporate power and strengthen local economies.