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 CITY COUNCIL AGENDA ITEM NO. 23



Meeting Date: September 10, 2002

Subject/Title: Discussion on Zoning for Financial Institutions

Submitted by: Mitch Oshinsky, AICP, Community Development Director

Approved by: John Stevenson, City Manager


RECOMMENDATION 
That Council provide direction to staff as to how to regulate financial institutions.


PREVIOUS ACTION
Councilman Petrovich directed staff to bring this item forward for Council discussion.


BACKGROUND
The Zoning Code is inconsistent in how it regulates Financial Institutions. Here is how our commercial zones compare:

Zones that allow banks as a permitted use when 3 or more are in the CB Zone (historic downtown), and require a CUP when there are less than 3 in the CB Zone

• Administrative/Professional/Commercial Office (CO) Zone
• Commercial Office/Business (COB) Zone
• Commercial Office/Residential (COR) Zone
• Commercial/Residential (CR) Zone
• General Commercial (C-2) Zone
• Thoroughfare Commercial (C-3) Zone
• Planned Development (PD) 10, Subareas C and E, * note Subarea A below, doesn’t require banks downtown
• PD 20, Subarea General Commercial
• PD 34
• PD51
• PD 3 – pending Council approval

Zones that allow banks only when there are 3 or more in the CB Zone, and that do not allow banks even with a CUP if there are less than 3 in CB

• PD 37


Zones that allow banks with a CUP, no requirement for banks in CB Zone

• PD 21, Subarea B

Zones that allow banks as a permitted use, no requirement for banks in CB Zone

• Central Business (CB) Zone
• PD 6, Subareas for Regional Commercial and Office Commercial
• PD 10, Subarea A ,* note Subareas C & E above, require 3 or more banks in the CB Zone 
• PD 16, Subarea A 
• PD 17, Subarea Commercial

Zones that allow ATM’s with a CUP

• Neighborhood Commercial (C-1) Zone
• PD 18, Subarea Neighborhood Commercial
• PD 37

Zones that do not allow banks

• Industrial/Commercial (IC) Zone

Zones with conflicts in the Code, that allow banks as permitted uses with no requirement for banks in CB Zone, but which also require a CUP if there are less than 3 banks in CB Zone

• PD 12, Subarea B
• PD 20, Subarea PEC

There has been some discussion as to whether a bank within a supermarket is a full service bank, which requires a CUP. Let me try to clarify this. First, the Code defines a “Financial Institution” as: 

“Banks, savings and loans, and similar businesses which offer a wide range of services including the deposit and withdrawal of money, loans, and other financial transactions. Check cashing services, pawnshops, automatic teller machines and other similar uses which conduct limited types of financial transactions are not defined as financial institutions.” 

The Union Bank proposed earlier this year inside Albertson’s was a Financial Institution per the Code definition, because it would have offered a wide range of services, and was not just an ATM, or limited facility. It did require a CUP in the PD 34, Albertson’s Center, because there were only two banks in the CB Zone. Council denied that request on appeal in January 2002.

Second, the Brentwood Town Center (Safeway with Wells Fargo) is in the PD 10 Zone. Safeway is in Subarea A of that Zone, which lists Financial Institutions as being a permitted use – no CUP required, no reference to limits based on banks in the CB Zone. That is why Wells Fargo went into Safeway without a CUP.

Third, some people have recently questioned the new Tri County Bank inside Raley’s in the AIG Baker Shopping Center in PD 6. This zone allows banks as a permitted use, with no restrictions. This PD zoning was approved by the City Council in 1995.

PLEASANTON EXPERIENCE

In the early 70’s downtown Pleasanton was in danger of losing banks to neighborhood commercial centers, as had happened with supermarkets and drug stores. As a result of that trend, in 1973, the City Council adopted a policy that required all financial institutions to have a downtown branch as a prerequisite of locating branches at other locations in Pleasanton, except for the Stoneridge Mall area.

In 1987 the City Council amended this policy to prohibit banks from locating outside downtown (except Stoneridge Mall area) if there were fewer than 8 financial institutions downtown, or if that particular financial institution had no branch in the downtown.

In 1995, the City was approached by several financial institutions wishing to locate outside the downtown, however there were only 5 banks in the downtown. None of the banks desiring to locate outside downtown had a branch in the downtown at the time.

The City Council discussed this issue and rescinded the bank policy at that time. Some of the issues they discussed included the following:

• The provision restricting banks outside the downtown was intended to encourage banks to remain in the downtown since they generate employees which use downtown businesses, since they draw people into the downtown, which in turn generates the potential for retail sales, and since they have ATM’s which provide cash for potential downtown shoppers.

• Retention of a non-market driven policy, however, also has several disadvantages. Financial institutions displace other uses, such as retail, which in some cases may better utilize the locational advantages of downtown. A 1987 market study stated the downtown could be “over-banked” (there were 8 downtown banks then), and that could break up the continuous retail street frontage necessary for the success of downtown. In addition, the restriction appeared to inhibit the satisfaction of demand for financial institutions in other parts of Pleasanton. Finally, the policy did not guarantee the continued presence of banks downtown. In past years several had left the area.

• The changing nature of the banking industry (with ATM’s and banking by phone - in 1995), where many financial services were no longer offered solely in traditional banks, was also making it difficult to define what a “financial institution” really is. 

Today, absent bank restrictions for 7 years, downtown Pleasanton has 6 banks.

DIRECTION

Some of the issues discussed in 1995 which led Pleasanton to eliminate their bank restrictions, are relevant in Brentwood today. Banking by internet has additionally changed the nature of banking. Another factor in downtown Brentwood is that over the past few years, staff has been approached by a couple of banks that were willing to consider locating in our downtown CB zone. They reportedly could not locate an adequate site for themselves.

There are a variety of regulations and some conflicts in our existing Code, which lead to confusion. Obviously, the 2 Zones (PD’s 12 and 20) that have conflicts between banks as permitted uses and uses subject to a CUP, should be cleaned up. 

Aside from that, it would be more customer friendly, and would simplify matters for the business community, Council, Planning Commission and staff, to have a more consistent approach on banks across our commercial zones. 

If Council supports a consistent approach, the question is, do we want to be more or less restrictive on banks outside of the CB Zone?
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