Loading...
HomeMy WebLinkAboutZTA201500002 PresentationCOUNTY OF ALBEMARLE `IRGINSP MEMORANDUM TO: Albemarle County Planning Commission FROM: Greg Kamptner, Deputy County Attorney DATE: August 4, 2015 RE: Farm wineries, farm breweries, and farm distilleries; permissible scope of regulation under the County's zoning ordinance This memorandum addresses the permissible scope of regulation of farm wineries, farm breweries, and farm distilleries by the County, particularly under Virginia Code §§ 15.2 -2283, 15.2- 2283.1, and 15.2- 2283.2. 1. Introduction Although the County has been delegated broad powers to regulate land use and to establish zoning districts under Virginia Code § 15.2 -2280, the General Assembly has limited and partially preempted those broad powers in a range of areas, including farm wineries, farm breweries, and farm distilleries'. Under the State's zoning laws, the relevant section of the Virginia Code applicable to farm wineries is Virginia Code § 15.2 -2283; the relevant section applicable to farm breweries is Virginia Code § 15.2- 2283.1; and the relevant section applicable to farm distilleries is Virginia Code § 15.2- 2283.2. Each of these sections was adopted at different times as part of legislation that also amended various provisions of the State's alcoholic beverage control laws in Title 4.1 of the Virginia Code. The three statutes (Virginia Code §§ 15.2 -2283, 15.2- 2283.1, and 15.2- 2283.2) contain similar elements: A statement of policy to preserve the particular industry, maintaining appropriate local land use authority to protect the public health, safety, and welfare, and permitting the reasonable expectation of uses in agricultural zoning districts (omitted from Virginia Code § 15.2- 2283.2 (farm distilleries)). A list of activities that localities are expressly prohibited from regulating. These activities include the actual production and harvesting of the agricultural products used in the alcoholic beverage, on- premises sale, tasting, and consumption during regular business hours, the sale, shipment, and storage of the alcoholic beverage, and the sale of items related to the alcoholic beverage. 1 Virginia Code §§ 15.2- 2283.1 and 15.2- 2283.2 use the terms "limited brewery" and "limited distillery," respectively. However, the County's zoning ordinance uses the term "farm brewery," and it is anticipated that it will also use the term "farm distillery" when the regulations for that use are adopted. Thus, "farm brewery" and "farm distillery" are used in this memorandum. A statement that any regulations pertaining to activities and events to market and sell the products "shall be reasonable" and must "take into account the economic impact" of the regulation, the "agricultural nature" of the activities and events, and whether the activities and events are "usual and customary" at farm wineries, farm breweries, or farm distilleries. (boldface added) If an activity or event is determined to be usual and customary, it must be permitted unless there is a "substantial impact on the health, safety, or welfare of the public." (boldface added) A requirement that the regulation of noise applicable to the activities and events may not be more restrictive than the standards in the locality's general noise regulations; provided that noise generated by "outdoor amplified music" may be separately regulated and even prohibited, considering the effect on adjacent property owners and nearby residents. The farm brewery and farm distillery statutes also include a provision allowing a locality to exempt the use "from any local regulation of minimum parking, road access, or road requirements." The two elements that have been highlighted in boldface are the focus of the remainder of this memorandum. 2. The applicability of principles of pre - emption and the Dillon Rule to this analysis The principles of State pre - emption and the Dillon Rule are implicated in this analysis, as explained below. A. The County may not impose additional or alternative requirements to those required for State licensure in order for a farm winery, farm brewery, or farm distillery to be classified as such This subsection considers whether the County may impose additional or alternative requirements to those required for State licensure under the Alcoholic Beverage Control Act in order for a farm winery, farm brewery, or farm distillery to be classified as such. For example, may the County require that a farm winery, farm brewery, or farm distillery be located on a parcel that is at least a minimum size or have a minimum amount of acreage in agricultural production in order to be classified as such? Farm wineries, farm breweries, and farm distilleries are licensed by the State under the Alcoholic Beverage Control Act and their qualifications are described in various sections of Title 4.1 of the Virginia Code. Virginia Code § 4.1 -128 prohibits a locality, except in limited circumstances inapplicable to land use matters, from adopting an ordinance or regulation that "regulates or prohibits the manufacture, bottling, possession, sale, wholesale distribution, handling, transportation, drinking, use, advertising or dispensing of alcoholic beverages in the Commonwealth." The term "farm winery" is defined to require that it be located on a "farm" and that it have a "producing vineyard, orchard, or similar growing area." Virginia Code § 4.1 -100. There are two classes of farm winery licenses and they are described as follows in Virginia Code § 4.1 -219: For Class A farm winery licensees, at least 51 percent of the fresh fruits or agricultural products used by the owner or lessee to manufacture the wine shall be grown or produced on such farm and no more than 25 percent of the fruits, fruit juices or other agricultural products shall be grown or produced outside the Commonwealth. For Class B farm winery licensees, 75 percent of the fresh fruits or agricultural products used by the owner or lessee to manufacture the wine shall be grown or produced in the 2 Commonwealth and no more than 25 percent of the fruits, fruit juices or other agricultural products shall be grown or produced outside the Commonwealth. Class B farm winery licensees are not required to use any fresh fruits or agricultural products grown on the farm. The licensing requirements for farm breweries and farm distilleries are somewhat similar to one another but also different than those applicable to farm wineries. The licensing requirements for farm breweries and farm distilleries establish an annual maximum limit on the gallons of the alcoholic beverage produced, and require that they be located on a "farm" on "land zoned agricultural" and that the "agricultural products used by" the brewery or distillery in the manufacture of its alcoholic beverages are "grown on the farm." Virginia Code §§ 4.1- 206(2) (farm distilleries), 4.1- 208(2) (farm breweries). Farm wineries, on the other hand, do not have a maximum limit on the bottles or gallons of wine produced and are not expressly required to be located on agriculturally -zoned land. Under the Alcoholic Beverage Control Act, the General Assembly has established the minimum qualifications for licensure and has delegated to the Alcoholic Beverage Control Board, not localities, the authority to administer licenses. The General Assembly has not granted to localities any express or implied powers to change the terms and conditions of licensure. Therefore, under principles of pre - emption and the Dillon Rule (discussed in subsection 2(B), below), the County may not impose additional requirements for State licensure or to qualify as a farm winery, farm brewery, or farm distillery. For example, the County may not impose minimum site acreage requirements, minimum agricultural production acreage requirements, or other standards in order to qualify as as a farm winery, farm brewery, or farm distillery. The issue considered in this subsection — the authority of the County to impose additional or alternative requirements to qualify as farm wineries, farm breweries, or farm distilleries — is distinct from the matters that the County is enabled to regulate — the activities and events at farm wineries, farm breweries, and farm distilleries, which are discussed in subsection 2(B) and sections 3 and 4. B. The County may regulate activities and events at farm wineries, farm breweries, and farm distilleries as provided by Virginia Code §§ 15.2- 2280,15.2- 2283,15.2- 2283.1, and 15.2- 2283.2 Under the Dillon Rule, a locality's governing body has only those powers expressly granted by the General Assembly, powers necessarily or fairly implied from the express powers, and powers that are essential and indispensable. Jennings v. Board of Supervisors of Northumberland County, 281 Va. 511, 516 (2011) ( "a locality's zoning powers are `fixed by statute and are limited to those conferred expressly or by necessary implication "'). The first step in a Dillon Rule analysis is whether the local governing body is enabled under any State law. Marble Technologies v. City of Hampton, 279 Va. 409, 418 (2010). In this case, the County's power to regulate, restrict, permit, and prohibit uses is enabled under Virginia Code § 15.2 -2280, generally, but the broad delegation of authority under that statute has been modified and refined with respect to farm wineries, farm breweries, and farm distilleries by Virginia Code §§ 15.2 -2283, 15.2- 2283.1, and 15.2- 2283.2. The second step in a Dillon Rule analysis considers how a locality may properly execute the power granted to it. There are two alternative rules that may apply, depending on whether the enabling authority specifies the manner in which the locality may execute its power. In this case, Virginia Code §§ 15.2 -2283, 15.2- 2283.1, and 15.2- 2283.2 specify the factors that localities must consider in regulating activities and events to market and sell the products and prohibits localities from regulating usual and customary activities and events unless there is a substantial impact. Beyond that, a locality's regulations implementing these statutes must be reasonable and exercised under Virginia Code § 15.2 -2280. At bottom, although the County may not impose additional or alternative requirements to qualify as a farm winery, farm brewery, or farm distillery for the reasons explained in subsection 2(A), it may regulate the activities and events to market and sell the products by considering the relevant factors and adhering to the limitations in Virginia Code §§ 15.2 -2283, 15.2- 2283.1, and 15.2- 2283.2. The analysis in sections 3 and 4, below, examines those factors and limitations. 3. The scope of the power to regulate activities and events at farm wineries, farm breweries, and farm distilleries Virginia Code §§ 15.2 -2283, 15.2- 2283.1, and 15.2- 2283.2 each provide that any regulations pertaining to activities and events to market and sell the products "shall be reasonable" and must "take into account the economic impact" of the regulation, the "agricultural nature" of the activities and events, and whether the activities and events are "usual and customary" for farm wineries, farm breweries, or farm distilleries. Each of these factors is analyzed below. A. Whether the activities and events pertain to marketing and selling the product The first consideration is whether the activities and events pertain to marketing and selling the product because this consideration determines how the activities and events may be regulated. Virginia Code §§ 15.2 -2283, 15.2- 2283.1, and 15.2- 2283.2 do not explain what it means to market and sell the product. It may be presumed that, at a minimum, the product must be displayed, be available for sale, or be promoted at each activity or event. If an activity or event does not pertain to marketing and selling the product, then the restrictions of Virginia Code §§ 15.2 -2283, 15.2- 2283.1, and 15.2- 2283.2 do not apply, the analysis under those statutes ends, and the County may regulate the activities and events under its general zoning powers in Virginia Code § 15.2 -2280. In that situation, the County would not be required to specifically consider the economic impact of its regulations, the agricultural nature of the activities and events, or whether the activities and events are usual and customary. Of course, any such zoning regulation would have to be reasonable and be within the scope of the County's authority under Virginia Code § 15.2 -2280. If an activity or event pertains to marketing and selling the product, then the analysis continues to subsection 3(B) and section 4, below. B. Any regulations must be reasonable A regulation is "reasonable" when it is "[flair, proper, or moderate under the circumstances; sensible." BASF and James City County v. State Corporation Commission, Va. (2015). In other words, a reasonable zoning regulation must serve some legitimate purpose under the zoning power such as protecting the public health, safety, or welfare, must be supported by facts, and must regulate in a way that does not impose undue burdens on affected landowners. The opposite of a reasonable regulation is an "arbitrary and capricious" regulation, which is described as being "willful and unreasonable and taken without consideration or in disregard of facts or without determining principle." James v. City of Falls Church, 280 Va. 31, 42 (2010). Because any valid regulation must be reasonable, its express inclusion in Virginia Code §§ 15.2 -2283, 15.2- 2283.1, and 15.2- 2283.2 is, in many respects, unnecessary. If nothing else, including the reasonableness requirement in the statutes is a reminder from the General Assembly to localities of their obligation under those statutes. In order for regulations of activities and events to be reasonable under Virginia Code §§ 15.2 -2283, 15.2- 2283.1, and 15.2- 2283.2, the locality must consider the economic impact of the regulation, the agricultural nature of the activities and events, and whether the activities and events are usual and customary for farm 11 wineries, farm breweries, or farm distilleries. Significantly, Virginia Code §§ 15.2 -2283, 15.2- 2283.1, and 15.2- 2283.2 only require that these factors be "take[n] into account" and do not require a particular result after these factors are considered. Thus, these factors serve to guide whether regulations will be deemed to be reasonable, i.e., fair, proper, and moderate. (1) In developing reasonable regulations, the economic impact of the regulations on farm wineries, farm breweries, and farm distilleries must be considered Virginia Code §§ 15.2 -2283, 15.2- 2283.1, and 15.2- 2283.2 require that the economic impact of the regulations be considered when they are developed but do not compel a particular result. The economic impact of a regulation may come in at least five forms: (1) the economic impact of being able to adequately market and sell the product; (2) the economic impact resulting from restrictions on activities and events (e.g., a restriction that allows no more than 15 people on site at a time or limits activities and events only to daylight hours); (3) the cost to obtain approvals required by the regulation (e.g., the cost to apply for a special use permit or to obtain approval of a site plan); (4) the cost to make required improvement (e.g., the cost to grade and pave a parking area); and (5) the economic impact resulting from delay in obtaining approvals and installing improvements. When applied to a proposed regulatory scheme, these considerations may shape the nature and the extent of any regulation, justify that application fees for legislative and ministerial approvals required for activities and events be different than those for other uses, justify that processing these applications be expedited or be subject to different procedures (e.g., a sketch plan in lieu of a site plan), warrant the development of staff - administered performance standards in lieu of requiring legislative approvals, and warrant the creation of site development standards that are different than those for other uses. (2) In developing reasonable regulations, the agricultural nature of the activities and events must be considered As with the economic impact factor, Virginia Code §§ 15.2 -2283, 15.2- 2283.1, and 15.2- 2283.2 require that the agricultural nature of the activities and events be considered when proposed regulations are developed, but do not compel a particular result. This factor raises several issues. First, by directing the County to consider the agricultural nature of the activities and events, this factor allows the County to consider whether and to what extent the proposed classes of activities and events are tied to agriculture. Those situations where an activity or event's link to agriculture is tenuous or non - existent may tip the scale in favor of limiting these activities and events that create impacts, particularly in light of the other relevant factors in the regulatory analysis (i.e., the economic impact of the regulation and whether the activity or event is usual and customary). For example, it is reasonable to conclude that weddings and wedding receptions held at farm wineries are not agricultural in nature, and merely holding these activities and events on a farm does not necessarily make them agricultural in nature. However, the County is aware that weddings and wedding receptions are usual and customary at farm wineries and is informed that regulations prohibiting or severely regulating these activities may have a significant economic impact. As another example, while a hayride is an activity that clearly is agricultural in nature in most circumstances, that conclusion will be different if the hayride is conducted at a farm distillery that has only 15 square feet of grains in production on the farm. Second, this factor makes the amount of acreage in agricultural production a relevant consideration in determining the agricultural nature of the range of activities and events, as well as their intensity, that should be permitted and how they should be regulated .2 (3) In developing reasonable regulations, whether the activities or events are usual and customary must be considered Virginia Code § 15.2 -2283, 15.2- 2283.1, and 15.2- 2283.2 do not define usual and customary, but the County added a definition of the term "usual and customary use, event or activity" as part of a 2014 zoning text amendment as follows: A use, event, or activity at a farm winery, farm brewery, or agricultural operation that is both ordinary and commonly practiced or engaged in at farm wineries, farm breweries, or agricultural operations, as applicable, within the Commonwealth, as determined by objective evidence. Albemarle County Code § 18 -3.1. This definition could be further refined because there is one key distinction between Virginia Code § 15.2 -2283 (farm wineries) and Virginia Code §§ 15.2- 2283.1 (farm breweries) and 15.2- 2283.2 (farm distilleries). Virginia Code § 15.2 -2283 refers to activities and events that "are usual and customary for farm wineries throughout the Commonwealth." (italics added) By comparison, although Virginia Code §§ 15.2- 2283.1 and 15.2- 2283.2 refer to activities and events that usual and customary, they do not require that the activities and events be usual and customary throughout the Commonwealth. Thus, in evaluating activities and events at farm breweries and farm distilleries, the County is not compelled to consider what is usual and customary throughout the Commonwealth. It has the discretion to consider what is usual and customary in the County, the region, or the Commonwealth. There also are two practical differences between the range of activities and events that are usual and customary at farm wineries and those that are usual and customary at farm breweries and farm distilleries. First, when the County's farm winery regulations were significantly revised in 2010, both the County's farm winery industry and the known range of usual and customary activities and events were already well - established. In addition, the County was aware of a failed farm winery bill that listed activities and events that would have been classified as usual and customary. We explained the staff's analysis at that time as follows: County staff worked with staff from other localities in 2007 and 2008 to identify usual and customary activities at farm wineries. In the 2008 General Assembly Session, HB 463 would have amended Virginia Code § 15.2- 2288.3 to include a list of usual and customary activities at a farm winery. Although the bill failed, representatives of the farm winery industry told County staff in a meeting in 2008 that the farm winery industry would rely on the list of usual and customary uses in HB 463 as its model. The list below, [with certain exceptions], is based on HB 463. County staff has considered each of the items on the list and, though not all of these activities have been usual and customary at farm wineries in Albemarle County, they are all related to agritourism or wine sales in a way that promotes the particular farm winery or farm wineries in general. Staff explained during the 2010 farm winery zoning text amendment that including weddings and wedding receptions as usual and customary events was "based on the HB 463 version of Virginia Code § 2 This issue is different than the issue addressed in section 2(13) above as to whether the County may require a minimum amount of acreage be in agricultural production in order for the use to qualify as a farm winery, farm brewery, or farm distillery. 0 15.2- 2288.3 as subsection (A)(3)(a). If more than 200 persons may attend at any time, a special use permit would be required." Thus, the County's existing farm winery industry and HB 463 (2008) provided the basis for the range of usual and customary activities and events the County allows at farm wineries and how it regulates them. Farm breweries and farm distilleries arrive in the County with a blank slate as to what are usual and customary activities and events because there is no established farm brewery or farm distillery industry in the County or the region. In addition, a member of the local government team that worked with the General Assembly and those in the industry promoting the farm brewery legislation in 2014 stated that those promoting the legislation could not identify what they would consider to be usual and customary activities and events at farm breweries. The 2014 zoning text amendment that implemented Virginia Code § 15.2- 2283.1 for farm breweries was based on the guiding principle that farm wineries and farm breweries be regulated the same way. However, the County is not compelled to conclude that what may be usual and customary activities and events at farm wineries are necessarily usual and customary activities and events at farm breweries or farm distilleries, or to regulate them in the same way. 4. If an activity or event is determined to be usual and customary, it must be permitted unless there is a substantial impact on the health, safety, or welfare of the public. Virginia Code §§ 15.2 -2283, 15.2- 2283.1, and 15.2- 2283.2 do not define substantial impact on the health, safety, or welfare of the public, but the County added a definition of the term "substantial impact" as part of a 2014 zoning text amendment to mean: An impact that may arise from an event or activity at a farm winery, farm brewery, or agricultural operation that has a significant adverse effect on: (i) an abutting lot or the neighborhood, including an impact on any owner, occupant, or agricultural or silvicultural activity; or (ii) any rural road, natural resource, cultural resource, or historical resource. A substantial impact may result from a wide variety of factors including, but not limited to, the generation of traffic, noise, dust, artificial outdoor light, trash, stormwater runoff, and excessive soil compaction; the failure to provide adequate traffic controls and sanitation facilities; the cumulative effects of large numbers of events and activities occurring simultaneously, particularly when they are in close proximity to one another or require travel on the same rural roads; and events and activities that are incompatible with existing production agriculture. Albemarle County Code § 18 -3.1. The County's current farm winery and farm brewery regulations establish the attendance by more than 200 people at any time as an additional substantial impact threshold for farm winery or farm brewery events (both terms are defined), weddings, wedding receptions, and other uses not specifically permitted. If these activities and events will have more than 200 people at the farm winery or farm brewery at any time, a special use permit is required. The 200 - person threshold was established in conjunction with the 2010 farm winery zoning text amendment. Staff explained this threshold as follows: Because HB 463 would have limited usual and customary activities to those which were for fewer than 200 persons, County staff recommends that this threshold be used. The 200 - person threshold is consistent with other thresholds for events allowed in the Rural Areas zoning district: special events at farm wineries for up to 150 people under the existing farm 7 winery regulations (County Code § 5.1.25(c)); by -right festivals for up to 150 people at historical centers (County Code § 5.1.420)) (the historical center use classification requires a special use permit); and special events for up to 150 people (County Code § 5.1.43(e)) (the special events use classification requires a special use permit). Of course, even within the same industry (e.g., farm breweries), the impacts of more than 200 persons attending an activity or event can be quite different on a 60 -acre site or a 1 -acre site. On the 1 -acre site, the 200 - person threshold may allow the use to be too intensive to provide, for example, adequate on -site parking or adequate water facilities, or to not adversely impact abutting parcels. In addition, the impacts of activities and events at farm breweries and farm distilleries may be different than those at farm wineries. The common understanding is that, as a result of their minimum licensing requirements under the Alcoholic Beverage Control Act, farm breweries and farm distilleries can be located on smaller parcels than farm wineries. Although State law requires that licensees be located on a farm and that they use agricultural products grown on the farm, the State has not established minimum standards for what is a "farm" or the amount of agricultural products that must be grown on the farm and used in the product. In the absence of these minimum standards, a small token "crop" is likely sufficient to satisfy State licensing requirements. 5. Conclusion The County's regulation of activities and events for marketing and selling products under Virginia Code §§ 15.2 -2283, 15.2- 2283.1, and 15.2- 2283.2 must be guided by considering the economic impact of the regulation, the agricultural nature of the activity and event, and whether the activity or event is usual and customary for the particular industry. Considering these factors is essential in order for the regulations to be deemed reasonable. How these factors are evaluated and what weight may be given to one factor in relation the other factors may vary from industry to industry. Any activities and events that are found to be usual and customary may be regulated only if there is a substantial impact on the public health, safety, or welfare. The threshold for a substantial impact may vary depending on the nature of the activity or event and the condition of the site. Although Virginia Code §§ 15.2 -2283, 15.2- 2283.1, and 15.2- 2283.2 impose some limitations on how the County may regulate activities and events at farm wineries, farm breweries, and farm distilleries, the statutes also leave the County with the discretion within the statutory framework to ensure that the health, safety, and welfare of the citizens of the County are protected while at the same time preserving and promoting the economic vitality of the respective industries by allowing a reasonable range of activities and events to market and sell their products.