Loading...
Resolution 2003-33 RESOLUTION NO. 2003-33 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF GILROY UPHOLDING THE DECISION OF THE CITY ADMINISTRATOR TO MODIFY BUSINESS LICENSE 4294 FOR 5 DAY FURNITURE WAREHOUSE, 500 EAST LUCHESSA BOULEVARD, GILROY, CA. WHEREAS, pursuant to Gilroy City Code Section 13.4, a separate license must be obtained for each branch or location of a "fixed place of business" transacted and carried out within the City of Gilroy ("City"); and WHEREAS, pursuant to the Gilroy City Code, Business License No. 4294 was issued to Mr. Steven Tang for the operation of 5 Day Furniture Warehouse (the "License"), located at 500 East Luchessa Boulevard, Gilroy, California, on October 3, 2002; and WHEREAS, pursuant to Gilroy City Code Section 13.45, in the event that the Chief of Police has reasonable cause to believe and does believe that any licensee or other person employed by or representing such licensee is violating any of the provisions of Gilroy City Code Chapter 13 or any other law or ordinance relating to the business of the licensee, or is conducting or has conducted or operated such business so as to be detrimental to the public morals or the public welfare, all facts and information relating to such alleged violation or conduct shall be reported to the City Administrator; and WHEREAS, the City Administrator may hold an administrative hearing to revoke, modify or suspend such business license, with his actions subject to review by the City Council; and WHEREAS, Gilroy has adopted Resolution No. 97-17 providing for an Administrative Hearing Policy ("Administrative Hearing Policy"). Said resolution provides for an evidentiary IJHI587548.2 01-052003-04706079 -1- Resolution No. 2003-33 hearing in front of the City Administrator for a business license revocation or suspension; with appeal to the City Council confined to the record and oral argument; and the time within which to seek judicial review of any final administrative detennination is governed by Section 1094.6 of the Code of Civil Procedure; and WHEREAS, on January 21,2003, upon the recommendation of the City Police and Planning Departments, the City Administrator issued a "Notice of Intention to Revoke Business License No. 4292 and Notice of Opportunity for Administrative Hearing"; and WHEREAS, representatives of5 Day Furniture Warehouse did file a request in a timely manner for an administrative hearing which was granted; and WHEREAS, on February 3, 2003, the City Administrator issued a "Notice of Administrative Hearing." In advance of the hearing, the representatives of5 Day Furniture Warehouse were furnished a copy of the Administrative Hearing Policy; and WHEREAS, the administrative hearing on the revocation or modification of the License for 5 Day Furniture Warehouse was duly held on March 5,2003, in the City Council Chambers. It lasted from 10:00 a.m. until approximately 11 :30 a.m., and was recorded by videotape. 5 Day Furniture Warehouse was represented by its attorneys, Mr. John Baker and Mr. Thomas Griffin. 5 Day Furniture Warehouse's business manager, Mr. Nguyen, was present at the hearing. The Planning Department was represented by zoning code enforcement officer, Mr. Gregg Polubinsky, without an attorney. The hearing was held in front of City Administrator, Jay Baksa, who was represented by Assistant City Attorney Jolie Houston. The hearing was held pursuant to Gilroy's Administrative Hearing Policy; and \JH\587548.2 01-052003-04706079 -2- Resolution No. 2003-33 WHEREAS, on March 28, 2003, the City Administrator issued his Findings and Decision stating that the decision of the City Administrator was to modify the License; and WHEREAS, 5 Day Furniture Warehouse has timely filed a request for an appeal of the City Administrator's decision to the City Council; and WHEREAS, on Apri128, 2003, the City Council conducted a duly noticed hearing at a special meeting, at which the City Council reviewed the entire administrative record of this matter, including the City Administrator's Findings and Decision, 5 Day Furniture Warehouse's Appeal of City Administrator's Decision and all evidence introduced at that hearing, and heard oral argument from the parties, and thereafter, continued the matter to its next City Council meeting; and WHEREAS, on May 19, 2003 at a duly noticed meeting of the City Council, the Council heard further argument from 5 Day Furniture Warehouse's attorneys. NOW, THEREFORE, BE IT RESOLVED THAT the City Council hereby adopts findings and makes a decision in this matter as follows: 1. The City Council hereby adopts the City Administrator's Findings and Decision in its entirety. A copy of that decision is attached hereto as Exhibit 1 and incorporated herein by this reference. The City Council adopts the Findings and Decision of the City Administrator as its own, it specifically finds that substantial evidence in the record supports each of the findings made by the City Administrator, and that his findings support his decision to modify the License. 2. 5 Day Furniture Warehouse's License No. 4294 is hereby officially modified and all activities conducted at 5 Day Furniture Warehouse, 500 East Luchessa Boulevard, shall be according to the City Administrator's Findings and Decision as set forth in Exhibit 1. \JH\587548.2 01-052003-04706079 -3- Resolution No. 2003-33 3. Pursuant to City Code Section 13.45, the License, as modified, may be revoked by the City upon a determination that 5 Day Furniture Warehouse has failed to comply with any condition thereof 4. Pursuant to the Administrative Hearing Policy, Section vrn, this decision constitutes a final administrative decision pursuant the Code of Civil Procedure Section 1094.6. Any petition for judicial review of this decision must be sought within the time limits and pursuant to the procedures established by the Code of Civil Procedure 1094.6, or such shorter time as required by state or federal law. PASSED AND ADOPTED this 19th day of May, 2003 by the following vote: AYES: COUNCILMEMBERS: DILLON, GARTMAN, PINHEIRO, VELASCO and SPRINGER NOES: COUNCILMEMBERS: ARELLANO and MORALES ABSENT: COUNCILMEMBERS: NONE APPROVED: --/f~"O Cv'~~ Thomas W. Springer, Ma or ~2 f< . \. ./ \' ' p I ~' . ~--~ "~~ Rhonda Pellih, City Clerk \JH\587548.2 01-052003-04706079 -4- Resolution No. 2003-33 EXHIBIT 1 FINDINGS AND DECISION OF CITY ADMINISTRATOR IN THE MATTER OF BUSINESS LICENSE REVOCATION FOR 5 DAY FURNITURE WAREHOUSE 500 EAST LUCHESSA BOULEVARD GILROY, CALIFORNIA BUSINESS LICENSE NUMBER 4294 INTRODUCTION On January 21,2003, the City of Gilroy ("City") City Administrator issued a "Notice of Intention to Revoke Business License No. 4294 and Notice of Opportunity for Administrative Hearing" which was duly served on the business manager of 5 Day Furniture Warehouse, Mr. Jay Nguyen. The notice stated that pursuant to City Code Section 13.4, a separate license must be obtained for each branch or location of a "fixed place of business" transacted and carried on within the City. The notice stated in part that the Police and Planning Departments had recommended that the City revoke Business License No. 4294 ("License"), issued by the City to 5 Day Furniture Warehouse, 500 East Luchessa Boulevard, Gilroy, California, on October 3, 2002. The notice further stated that it was the intent of the City Administrator to take action and to decide whether or not to revoke the License pursuant to City Code Section 13.45, unless a request for an administrative hearing was filed by 5 Day Furniture Warehouse on February 3, 2003. Representatives of 5 Day Furniture Warehouse did file a timely request for an administrative hearing. A subsequent notice for administrative hearing regarding the License was duly served on the 5 Day Furniture Warehouse business manager, and the hearing was scheduled for February 19,2003. One ofthe attorneys for 5 Day Furniture Warehouse, Mr. John Baker, requested that the administrative hearing previously set for February 19,2003, at 9:00 a.m., be rescheduled to March 5, 2003, at 10:00 a.m. at Gilroy City Hall. The City granted this request. In advance of the hearing, Mr. Baker was furnished copies of Gilroy Resolution 97-17 (Administrative Hearing Policy) and the letters and notices of violation with regard to the Planning Department's investigation of 5 Day Furniture Warehouse. The administrative hearing on the revocation of the License for 5 Day Furniture Warehouse was held on March 5, 2003, in the Gilroy City Council Chambers. It lasted from 10:00 a.m. until approximately 11:30 a.m., and was recorded by videotape. 5 Day Furniture Warehouse was represented by its attorneys Mr. John Baker and Mr. Tom Griffin. 5 Day Furniture Warehouse's business manager, Mr. Nguyen, was present at the hearing. The Planning Department was represented by zoning code enforcement officer Gregg Polubinsky, without an attorney. The hearing was held before the City Administrator, Jay Baksa, who was represented by Assistant City Attorney Jolie Houston. The hearing was held pursuant to the City's Municipal Administrative Hearing Policy, Resolution No. 97-17. SUMMARY OF THE HEARING The following is not intended to be a complete summary of the hearing. The official record is the videotape on file with the City. 1. Prior to commencement of the taking of evidence, this Hearing Officer, gave a brief introduction of the administrative hearing process the City would be using pursuant to Resolution No. 97-17. This Hearing Officer noted that the hearing was being recorded by videotape. 2. The Assistant City Attorney then briefly described the administrative hearing process pursuant to Resolution No. 97-17. She noted for the record that notices of the hearing had been duly served on 5 Day Furniture Warehouse. She noted that the hearing officer for the administrative hearing would be the City Administrator, Mr. Jay Baksa ("Hearing Officer"), and that a formal record of the hearing would be made by videotape. In the event that the decision of the Hearing Officer is appealed to the City Council, the videotape would go to the City Council, or if the applicant wished to have it transcribed and wanted to pay for the transcription, that could be done, but the official record would be the videotape. She noted that the hearing would not be held pursuant to formal rules of evidence and that there would not be cross-examination at this hearing. If either side had questions that they wished to pose to a witness, they would request that the Hearing Officer pose the questions, which would be at his discretion. She also noted that the Hearing Officer would issue a written decision and that there was an appeal process to the City Council, which was set out in Resolution No. 97-17. 3. This Hearing Officer asked for the Planning Department and 5 Day Furniture Warehouse to state their appearances for the record. With that, zoning code enforcement officer Gregg Polubinsky stated his appearance for the City Planning Department (hereinafter "Mr. Polubinsky"). Mr. John Baker and Mr. Tom Griffin, attorneys for 5 Day Furniture Warehouse (hereinafter "Mr. Griffin"), stated their appearances, and Mr. Griffin stated he would be handling the presentation and would not be calling any witnesses. 4. The first witness was zoning code enforcement officer Mr. Polubinsky. Mr. Polubinsky testified in a narrative form regarding his investigation of 5 Day Furniture Warehouse. Mr. Polubinsky stated that he would be giving a chronology of his investigation that established that there was "reasonable cause" to believe that 5 Day Furniture Warehouse was operating primarily as a retail business in an M2 industrial zone in violation of the City Zoning Ordinance. 5. Mr. Polubinsky introduced Exhibits 1 through 10, which are as listed below: City Zoning Ordinance Section 21, M2 General Industrial District (Exhibit 1). City Zoning Ordinance Section 22, Industrial Use Table (Exhibit 1). City Zoning Map (Exhibit 1). Business License No. 4294 (Exhibit 2). Declaration of Melissa Durkin (Exhibit 3). Cease and desist letter dated December 9, 2002 (Exhibit 4). South Valley Direct advertisement (Exhibit 5). ') Gilroy Dispatch advertisement (Exhibit 6). Notice of Violation dated January 10, 2003 (Exhibit 7). Notice of Intent to Revoke Business License, dated January 21, 2003 (Exhibit 8). Notice requesting administrative hearing dated January 30, 2003 (Exhibit 9). Photographs of signage (Exhibit 10). 6. The next witness was Mr. Griffin, one of the attorneys for 5 Day Furniture Warehouse, who testified in a narrative form on behalf of 5 Day Furniture Warehouse. 7. Mr. Griffin introduced Exhibits 11-16, which consisted of letters from the business owners immediately around 5 Day Furniture Warehouse. 8. Mr. Griffin introduced Exhibits 17 A and 17B, which were lists of 5 Day Furniture Warehouse's wholesale and retail customers. 9. Mr. Griffin introduced Exhibits 18 A through Y, which were photographs of the 5 Day Furniture Warehouse site and site activities. 10. At the conclusion of the Planning Department's and the 5 Day Furniture Warehouse's testimony, this Hearing Officer stated that pursuant to Resolution 97-17, he had 30 days from the date of the hearing to make his findings and he further reminded 5 Day Furniture Warehouse that there was an appeal process. This Hearing Officer also noted for the record that 5 Day Furniture Warehouse would be submitting additional records regarding the wholesale sales at the facility. With these comments, this Hearing Officer closed the administrative hearing. 11. As agreed by the parties at the administrative hearing on March 5, 2003, Mr. Griffin submitted a supplemental letter and exhibits, which were records of wholesale sales, to this Hearing Officer on Monday, March 10, 2003, which have been incorporated into the administrative record by this reference. 12. Pursuant to City Code Section 13.4, 5 Day Furniture Warehouse was required to obtain a separate license for each branch or location of a "fixed place of business" transacted and carried on within the City, and each license shall authorize the licensee to transact and carry on only the business licensed thereby at the location or in the manner designated in such license. (See Exhibit 8) 13. Pursuant to City Code Section 13.45, the City Administrator may revoke, modify or suspend a business license. Pursuant to City Code Section 13.45, the Gilroy Police Department and Planning Department submitted a recommendation to the City Administrator that 5 Day Furniture Warehouse's License be revoked. (See Exhibit 8) '2 FINDINGS OF FACT This Hearing Officer, having heard the oral testimony and argument, and having received into evidence documentary Exhibits I-I8Y, and the supplemental records submitted on March 10,2003, now makes the following findings, all of which are supported by substantial evidence in the record: 1. The Planning Department submitted substantial evidence that there was "reasonable cause" to find that 5 Day Furniture Warehouse was operating primarily as a retail business in a M2 Industrial zoning district in violation of the Zoning Ordinance, and as such, was in violation of City Code section 13.45. 2. Mr. Polubinsky submitted Exhibit 1, the City's Zoning Map, which established that 5 Day Furniture Warehouse is located in an M2 zoning district which prohibits retail uses. This evidence was not rebutted. 3. Mr. Polubinsky submitted Exhibit 1, Zoning Ordinance Sections 21 and 22, which established the permitted uses in the M2 Industrial zoning district. Exhibit 1 also established that the M2 district allowed wholesale warehouse uses, but not retail uses. This evidence was not rebutted. 4. Mr. Polubinsky submitted Exhibit 2, which established that 5 Day Furniture Warehouse's License described the business as a "furniture wholesale and retail." This evidence was not rebutted. 5. Mr. Polubinsky submitted Exhibit 3, which established that the License included the restriction that the business "must be a wholesale business, with retail only as an ancillary use." Mr. Griffin objected to the declaration and argued that the License would allow a retail use of up to 25% of the total 5 Day Furniture Warehouse's business sales. However, Mr. Griffin's objection was rebutted by the evidence submitted regarding the retail sales versus wholesale sales. (See discussion below, ~ 9,10,11.) 6. Mr. Polubinsky testified that based on his investigation, 5 Day Furniture Warehouse is not primarily functioning as a wholesale warehouse, but primarily as a retail business facility open to the general public. Mr. Polubinsky testified that while onsite at 5 Day Furniture Warehouse he observed a facility open to the general public, with unboxed furniture, clearly displayed for sale with price tags on each piece. Further, while he was at 5 Day Furniture Warehouse he observed furniture being sold directly to the public. These facts are consistent with a full retail operation. Mr. Griffin testified that there was warehouse activity at the site and trucks were not seen at the site because the loading docks were on the side of the building not in the front of the building. Exhibits 18 A through Y, consisting of photographs of the warehouse activity at the 5 Day Furniture Warehouse site, were submitted in support of the warehouse activity at the site. These exhibits are evidence that warehouse activity in fact takes place at the site. II 7. Mr. Polubinsky testified and submitted evidence, Exhibits 5, 6 and 10, that "5 Day Furniture Warehouse is advertising the sale of furniture to the general public. Mr. Polubinsky further testified that if 5 Day Furniture Warehouse was a bona fide wholesale warehouse selling to retailers, then it would not be open to the general public; and further, it would not be advertising to the general public. Mr. Griffin objected to Mr. Polubinsky's reliance on the fact that 5 Day Furniture Warehouse advertises as an violation of their commercial speech. This objection is not at issue in these proceeding, and it is not relevant. The facts as established by Exhibits 5, 6 and 10 are all consistent with a retail use, which were not rebutted. 8. Mr. Griffin explained that 5 Day Furniture Warehouse is a business that manufactures furniture in China, and the furniture is then shipped to the west and east coasts. 5 Day Furniture Warehouse sells directly to some of the major furniture companies, Macy's, for example. He stated that these companies order the furniture, which is then manufactured, loaded into containers and shipped to the United States. He explained that there is a considerable time lag between the ordering of that furniture and its arrival into the United States. Mr. Griffin explained that market conditions could change between the time the furniture is ordered and when it arrives. Under these circumstances, sometimes the major customers will not accept the container when it arrives on the west coast. 5 Day Furniture Warehouse has an arrangement when one of those loads is rejected, the 25% down payment that the purchaser made at the time of the placing of the order is forfeited. Mr. Griffin then testified that when the furniture in the containers is rejected, they then have furniture sitting on the west coast, which needs to be liquidated, and 5 Day Furniture Warehouse in the City of Gilroy is the mechanism to liquidate that furniture. The Gilroy outlet is where the excess or rejected merchandise can be distributed, on both wholesale and retail levels. This factual testimony, although informative of 5 Day Furniture Warehouse's business plan, did not rebut the evidence that 5 Day Furniture Warehouse was operating primarily as a retail business in a M2 Industrial zoning district in violation of the Zoning Ordinance. 9. Mr. Griffin submitted the following testimony and evidence that 5 Day Furniture Warehouse was operating as a retail use in the M2 zoning district in compliance with its License: a. Mr. Griffin testified that 5 Day Furniture Warehouse's ancillary use was "subordinate to" or "in assistance of' its wholesale warehouse use. Mr. Griffin testified that 5 Day Furniture Warehouse representatives, Mr. Barnes and Mr. Tran, discussed their business plan as a wholesale use and they would be operating retail at the site with a City representative, who stated it would be allowed so long as the retail was ancillary to the wholesale use. Mr. Griffin further testified that a City representative stated that 5 Day Furniture Warehouse would be allowed up to 25% retail. Mr. Griffin relied on Exhibit 2, the License, to support his contention that the business use could be ancillary. However, the License expressly stated that the use "must be a wholesale business, with retail only as an ancillary use" and did not specifY any percentage of retail use. Exhibit 3 further clarified that the License was not granted with a condition that 5 Day Furniture Warehouse could operate as a retail use up to a set maximum percentage of gross sales. Mr. Griffin's written or oral evidence did not rebut the evidence that 5 Day Furniture < Warehouse was operating primarily as a retail business in a M2 Industrial zoning district in violation of the Zoning Ordinance. b. Mr. Griffin further testified there was no evidence of the number of customers, cars or transactions, and that the conclusion that it is primarily retail, based on the advertising was not justified. However, Mr. Polubinsky's introduction of the advertising into these proceeds was justified because it established factual evidence that 5 Day Furniture Warehouse was operating not strictly as a wholesale warehouse, but also as a retail business. The evidence of the number of customers and cars was not clarified by either party. 10. Mr. Griffin submitted evidence of the wholesale and retail sales for 5 Day Furniture Warehouse facility, which was as follows: a. Mr. Griffin testified that 5 Day Furniture Warehouse, as a total company, imports between 60 and 100 containers a month to the "west coast." Only the furniture in those containers that is not sold/distributed makes its way to the Gilroy facility. b. Mr. Griffin testified that with respect to 5 Day Furniture Warehouse's retail sales, the month of January was approximately $206,000, and the month of February was approximately $128,000. c. The supplemental letter dated March 10,2003, from 5 Day Furniture Warehouse to the Hearing Officer, provided the following updated evidence of the wholesale sales: The January total was $110, 336. The February total was $89,512. 11. Mr. Griffin further testified that compared to the overall business that 5 Day Furniture Warehouse, as a complete business entity was doing throughout the west coast, the retail use was less than 15% of their total overall business activity. However, the overall west coast sales are not relevant in this case, because this Hearing Officer must only identify what business activity is occurring at the warehouse site in Gilroy, California. The License authorizes the business to transact only the business licensed and only at that location within the City. 5 Day Furniture Warehouse's retail business as compared to the wholesale business transacted within the City, is as follows: a. January retail $206,000 versus January wholesale $110,336, or, 1.86 times more retail than wholesale. b. February retail $128,000 versus February wholesale $89,512, or, 1.43 times more retail than wholesale. Based on this evidence, 5 Day Furniture Warehouse is operating primarily as a retail business in a M2 Industrial zoning district in violation of the Zoning Ordinance. -6- 12. Mr. Griffin further testified that the total square footage is 162,000 square feet; and less than 10% of the total square footage is being utilized for retail. This fact is not relevant because the City did not condition the License toa square footage requirement. 13. Mr. Griffin submitted Exhibits 11-16, consisting of letters from business owners in the surrounding area in support of the 5Day Furniture Warehouse business, but this evidence did not rebut the evidence that 5 Day Furniture Warehouse was operating primarily as a retail business in a M2 Industrial zoning district in violation of the Zoning Ordinance. 14. Mr. Griffin submitted Exhibits 17 A and 17B, consisting of 5 Day Furniture Warehouse wholesale and retail customers, but his evidence did not rebut the evidence that 5 Day Furniture Warehouse was operating primarily as a retail business in a M2 Industrial zoning district in violation of the Zoning Ordinance. 15. Mr. Griffin further testified that he believed that 5 Day Furniture Warehouse's use was also consistent with the Zoning Ordinance, which indicated that a person can be allowed a use that was "compatible" with the Industrial Use list. However, it was confirmed for the record that 5 Day Furniture Warehouse did not submit a written request to the City for a determination of whether or not its use was similar to a use listed on the Industrial Use Table as provided for in Zoning Ordinance Section 22-20. CONCLUSIONSIDECISION Having heard the oral evidence and argument and having reviewed the documentary evidence, it is this Hearing Officers decision that the above referenced License be modifed as follows: 1. 5 Day Furniture Warehouse operates a wholesale and storage business out of the facility located at 500 East Luchessa Boulevard. As such, that portion of the License will be allowed to remain in tact. 2. The biggest issue in front of this Hearing Office is the retail sales. At the present time there is no question that 5 Day Furniture Warehouse is functioning primarily as a retail business. It advertises (i.e. "The Region's Largest Furniture Store") as a retail store. Its "hours of operations" to the public are consistent with other retail stores. And finally, its retail sales far exceed their wholesale sales. To use an old saying, "If it walks like a duck, it looks like a duck, and it quacks like a duck, it must be a duck". In this case the 5 Day Furniture Warehouse is operating primarily as a retail operation in the M2 Industrial zoning district in violation of the City's Zoning Ordinance. Therefore, it is in violation of its License. The one mitigating circumstance in this case involves the City's practice of allowing a limited number of "ancillary" retail uses in the industrial zone districts. Because of this practice, this Hearing Officer will modify the License to allow for four (4) "clearance" sales to occur at the 5 Day Furniture Warehouse location. These sales will occur no more often than quarterly.(4 times per year) They will be allowed from Friday through Sunday. 5 Day Furniture Warehouse will abide by all City ordinances (including but not limited to on and off site signage). -7- cO The details (hours of operations, specific dates, parking requirements, etc.) for the implementation of the above conditions will be submitted by 5 Day Furniture Warehouse, and approved by the City's Planning Staff prior to each clearance sale date. Accordingly, the decision of this Hearing Officer is to modify the License with the above mentioned conditions. Pursuant to City Code Section 13.45, the License, as modified, may be revoked by the City upon a determination that 5 Day Furniture Warehouse has failed to comply with any condition thereof 3. Pursuant to Section VI of the Administrative Hearing Policy (Resolution No. 97-17), the owner of5 Day Furniture Warehouse has 15 days from the mailing of this decision within which to appeal the decision to the City Council. If no appeal is filed with the city clerk within that period of time, then this decision shall be final on the expiration of the 15th day following the date of such mailing, and 5 Day Furniture Warehouse shall immediately be subject to the License, as modified. If a timely appeal is filed, then this decision shall not be final until action is taken by the City Council. Dated: S /':A g I 0.3 -8- I, RHONDA PELLIN, City Clerk of the City of Gilroy, do hereby certify that the attached Resolution No. 2003-33 is an original resolution, duly adopted by the Council of the City of Gilroy at a regular meeting of said Council held on the 19th day of May, 2003, at which meeting a quorum was present. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Official Seal of the City of Gilroy this 20th day of May, 2003. (Seal)