LDC-12-115 Planning Commission January 7, 2014

Staff Contact: Phil Prete, 910-342-2779, phil.prete@wilmingtonnc.gov

Staff Recommendation: APPROVAL with modifications

Planning Commission Recommendation: Scheduled for Public Hearing: 1/7/2015

City Council Action: Pending

Request Code Section(s) 18-185. MX, Mixed Use District; 18-194. CB, Community Business District;

18-195. RB, Regional Business District; 18-196. Central Business District; 18-197. CS, Commercial Services District; 18-198. LI, Light Industrial District; 18-199. IND, Industrial District; 18-200. AI, Airport Industrial District; 18-202. RFMU, Riverfront Mixed Use District; 18-204. UMX, Urban Mixed Use District; 18-213.2. Wrightsville Avenue Corridor regulations; 18-325. Prescribed Conditions; and 18-811. Definitions

Request Add distillery and craft distillery as permitted uses in certain commercial districts. Establish prescribed conditions and add applicable definitions for each use.

Applicant Seth Thompson and Alex Posey Case Overview At their September 2, 2014 meeting, City Council adopted an ordinance to define several classes of breweries and specify districts where they would be permitted along with prescribed conditions. On September 23, 2014 planning staff received a request to amend the Land Development Code (LDC) to treat craft distilleries in much the same fashion. Though not as wide spread as craft brewing, craft distilling is a growing business sector nationally, and much like craft brewing, provides a vehicle for economic development in some North Carolina communities. The modern microdistilling movement grew out of the beer microbrewing trend, and the same rationale that was used to support the craft brewing business may be considered applicable to craft distilleries as well. This amendment seeks to accommodate this type of use and investment in Wilmington’s commercial districts while maintaining protection of lower-intensity commercial districts from large-scale industrial-type uses. ANALYSIS Within the City of Wilmington, distilleries are currently only permitted in the Land Development Code (LDC) as “manufacturing industries.” The LDC allows distilleries as manufacturing in industrial districts, including Airport Industrial (AI), Light Industrial (LI), and Industrial (IND) by right and in the Urban Mixed Use (UMX) district with prescribed conditions. Based on research of the industry and

LAND DEVELOPMENT CODE AMENDMENT

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benchmark studies, staff believes that setting aside craft distilleries with pedestrian and tourist attractions as a use separate from other manufacturing uses is appropriate. In considering which districts would be suitable for distilleries, staff considered the types, intensity, and compatibility of existing uses permitted in each district. 1. Request The applicant’s proposed amendment as modified does four things:

. 1. Creates a definition of distillery and small craft or microdistillery;

2. Differentiates between distilleries and craft distilleries with regard to the districts in which they could locate; and

3. Creates prescribed conditions for craft distilleries.

4. Adds small craft distilleries as a use permitted under prescribed conditions in the MX, CB, RB, CBD, CS, RFMU, and UMX districts

The amendment does not change the way the code treats large distilleries. These larger distilleries would still be permitted as manufacturing industries.

DEFINITIONS: Distillery - An establishment primarily engaged in the production and distribution of liquor through distillation, and may include accessory uses such as a tasting room, retail, demonstration areas, or other uses incidental to the distilling business and open and accessible to the public. Small Craft Distillery - an independently owned distillery not exceeding 25,000 square feet that produces small batch, craft distilled spirits where the principal distiller defines the house style and oversees all aspects of production. Craft distilled spirits are the products of an independently-owned distillery where the product is physically distilled and bottled on site.

PERMITTED USE:

The proposed amendment would add small craft distilleries as a use permitted under prescribed conditions in the Mixed Use (MX), Community Business (CB), Regional Business (RB), Central Business District (CBD), Commercial Services (CS), River Front Mixed Use (RFMU) and Urban Mixed Use (UMX) districts. These proposed allowed uses are summarized in the table below.

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Table 2. Proposed Use Schedule for Distilleries

Use

MX HD HDMU

O&I-1

O&I-2 NB MS

MU CB RB CBD CS LI IN

D AI RFMU RO UM

X

Small craft or microdistillery PC - - - - PC PC PC PC PC PC P P P PC - PC

Distillery - - - - - - - - - - - P P P - - PC

Notes: 1) P = Permitted by right, PC = Permitted under prescribed conditions, S = Special use permit, “-“ = Not a permitted use 2) Entries bolded and underlined reflect changes to existing code allowances

PRESCRIBED CONDITIONS:

The following table summarizes the proposed conditions and the districts within which each condition is to be applied. Table 3. Proposed Prescribed Conditions

Prescribed Conditions Districts in which condition applies CB RB CS CBD MX UMX RFMU

Required to include one or more accessory uses such as a tasting room, tap room, restaurant, retail, demonstration area, education and training facility or other use incidental to the distillery and open and accessible to the public.

Outside gathering areas restricted from being located within one-hundred (100) feet of a residential district

Off-site distribution is only permitted if the tractor trailer traffic is limited to streets classified as arterial on the Wilmington Metropolitan Planning Organization Functional Classification Map

Required parking is calculated based on square footage proposed for each use.

All newly constructed loading and unloading facilities required to be internal to the site or in private service alleys or back of building.

Storage of materials, including silos, products for distribution and other items requiring long-term storage shall be allowed in areas behind building, within service alleys, in enclosed buildings, or otherwise screened from the public right of way or pedestrian way. The city manager may authorize an exception to this requirement for decorative silos that are consistent provided.

2. Proposed amendment The applicant’s proposed amendment and modified amendment request to the Land Development Code can be viewed in the attached application.

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3. History/Background City of Wilmington began receiving inquiries in 2014 from craft distillers interested in opening up a distillery in Wilmington. Currently, since the City of Wilmington’s Land Development Code does not address distilleries as a land use type, distillery operations are treated as manufacturers, limiting options in which distillers of any size can effectively locate and operate. Looking to other cities in North Carolina as guides, staff agrees that adding a definition for “distillery” with a sub-category of craft distillery and amending the code to permit these as uses in a range of districts would be consistent with other land uses. 4. Benchmark research

Staff reviewed the distillery regulations for Wilmington’s benchmark cities and other municipalities identified as having success with distilleries. The results are summarized in the attached benchmark research summary.

CONSISTENCY WITH ADOPTED PLANS

• City of Wilmington Strategic plan o Sustainability and Adaptability

The City will make decisions focused on ensuring the long-term financial, physical and environmental, and social health of the City. We will implement initiatives designed to augment the City’s capacity to respond to changing conditions with new solutions. Our actions will be based on a shared commitment to continuous improvement.

Applicability: Small batch craft distilleries have a track record of repurposing older buildings, which has multiple benefits of potential preservation of historic structures, revitalizing neighborhoods, improving property values and reducing crime associated with blighted areas. This amendment would encourage redevelopment of vacant or underutilized properties while maintaining a neighborhood character unique to Wilmington.

o Diverse and Thriving Economy The City will create and implement a sustainable, regionally coordinated

economic development plan and business-friendly processes and policies to attract new businesses of different sizes and types and support existing businesses.

Applicability: Small batch craft distilleries are a niche industry that is different from traditional manufacturing industries. The active pedestrian-oriented location most often selected by such uses is more in keeping with the size and intensity of commercial districts than industrial districts. As such, staff believes that defining these uses and establishing prescribed conditions for their location will encourage investment in the economy while protecting existing neighborhoods. Where they have been accommodated, distilleries have proven to be a source of tourism as a destination for local, regional and national travelers.

CONCLUSIONS

• The proposed amendment would:

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o create a definition of distilleries and differentiate between conventional distilleries and small batch craft distilleries;

o create prescribed conditions for distilleries; o add distilleries as a use permitted under prescribed conditions in the MX, CB, RB,

CBD, CS, RFMU and UMX districts. • Districts identified as appropriate for distilleries already allow similar land uses. • Prescribed conditions proposed for each district will limit the scale and impact of the

distilleries to maintain compatibility with existing permitted uses. • The proposed amendment is consistent with distillery regulations for other municipalities

identified as having success with the distillery industry as illustrated in the attached benchmark research summary.

RECOMMENDATION Adaptability to emerging market conditions and industrial trends is critical to the viability of any economy. Code amendments that keep current with these trends while protecting existing uses is consistent with the City Council’s adopted focus areas of Diverse and Thriving Economy, Welcoming Neighborhoods and Public Spaces, and Sustainability and Adaptability. Staff presented the proposed modifications to the applicants request and they were received favorably. Staff recommends APPROVAL of the revised amendment with modified definition and prescribed conditions.

PUBLIC OUTREACH Planning Commission City Council Advertisement Date(s) 01/02/2015

ACTIONS TO DATE Planning Commission 1/7/15 – Public Hearing Scheduled City Council Pending

ATTACHMENTS

1. Applicant amendment application 2. Benchmark research summary

A request for small batch distilleries, micro distilleries be allowed under the following zoning districts: regional business; central business district; commercial services; urban mixed use, community business, mixed use, and riverfront mixed-use districts. Of course being subject to detailed conditions on the zoning district. Definitions: Distillery -a place orAn establishment where primarily engaged in the production and distribution of liquor through distillation, and may include accessory uses such as a tasting room, retail, demonstration areas, or other uses incidental to the distilling business and open and accessible to the public. Small Craft Distillery and Micro Distillery -A distillery , as defined above, an independetly owned distillery not exceeding 25,000 square feet that produces small batch, craft distilled spirits product of an independently owned distillery where the principal distiller defines the house style and oversees all aspects of production. CRAFT DISTILLED SPIRITS are the products of an independently-owned distillery where the product is physically distilled and bottled on site. Sec. 1 Chapter Article 5, Division II Section 18-185. Request for Wilmington City Code to add the following: Small craft distilleries and micro distilleries Sec. 2 Chapter 18 Article 5, Division II, Section 18-194 Request for Wilmington City Code to add the following: Small craft distilleries and micro distilleries Sec. 3 Chapter 18 Article 5, Division II, Section 18-195 Request for Wilmington City Code to add the following: Small craft distilleries and micro distilleries Sec. 4 Chapter 18 Article 5, Division II, Section 18-196 Request for Wilmington City Code to add the following: Small craft distilleries and micro distilleries Sec. 5 Chapter 18 Article 5, Division II, Section 18-197

Request for Wilmington City Code to add the following: Small craft distilleries and micro distilleries Sec. 6 Chapter 18 Article 5, Division II, Section 18-198 Request for Wilmington City Code to add the following: Small craft distilleries and micro distilleries Sec. 7 Chapter 18 Article 5, Division II, Section 18-199 Request for Wilmington City Code to add the following: Small craft distilleries and micro distilleries Sec. 8 Chapter 18 Article 5, Division II, Section 18-200 Request for Wilmington City Code to add the following: Small craft dDistilleries and micro distilleries Sec. 9 Chapter 18 Article 5, Division II, Section 18-202 Request for Wilmington City Code to add the following: Small craft dDistilleries and micro distilleries Sec. 10 Chapter 18 Article 5, Division II, Section 18-204 Request for Wilmington City Code to add the following: Small craft dDistilleries and micro distilleries Small craft distilleries or micro distilleries shall not me be classified as manufacturing uses or restaurants. Distilleries not meeting the criteria below shall continue to be permitted in other districts subject to meeting requirements for restaurants, nightclubs, or manufacturing uses. Small craft Distilleries distilleries shall be permitted in the CB, RB, CBD,CS, RFMU,MX and UMX subject to the following location, size, and design requirements. a. Small craft distilleries, micro distilleries within the CB

1. Outside gathering areas shall not be located within 100ft of a residential district 2. Shall be limited to those meeting the criteria for a small batch or micro distillery 3. Required parking shall be calculated based on square footage proposed for each

use. 4. Storage of materials, including silos, products for distribution and other items

requiring long term storage shall be allowed in areas behind building, within service alleys, in enclosed buildings or otherwise screened from the right of way or pedestrian way.

5. Off-site distribution is only permitted if the truck traffic is limited to streets classified as arterial on the Wilmington Metropolitan Planning Organization Functional Classification Map.

b. Small craft distilleries, micro distilleries within the RB and CS

1. Shall include one or more accessory uses such as a tasting room, retail, demonstration area or other incidental to the distillery and open and accessible to the public.

2. Required Parking shall be calculated based upon square footage proposed for each use.

c. Small craft distilleries, micro distilleries within the CBD

1. Shall include one or more accessory uses such as a tasting room, retail, demonstration area or other incidental to the distillery and open and accessible to the public.

2. Shall be designed such that all newly constructed loading and unloading facilities are internal to the site or in service alleys or back of building.

3. Storage of materials, including silos, products for distribution and other items requiring long term storage shall be allowed in areas behind building, within service alleys, in enclosed buildings or otherwise screened from the right of way or pedestrian way.

4. Small craft distilleries or micro distilleries in the CBD shall only be permitted north of Brunswick St. and west of 3rd Street

d. Small craft distilleries, micro distilleries within the MX, UMX, RFMU

1. Shall include one or more accessory uses such as a tasting room, retail, demonstration area or other incidental to the distillery and open and accessible to the public.

2. Shall be designed such that all newly constructed loading and unloading facilities are internal to the site or in service alleys or back of building.

3. Storage of materials, including silos, products for distribution and other items requiring long term storage shall be allowed in areas behind building, within service alleys, in enclosed buildings or otherwise screened from the right of way or pedestrian way.

Attachment 3 – LDC-12-115 - Distillery Benchmarking Summary Benchmark Cities

Definition Permitted Districts Requirements

Chattanooga, TN Small: Small scale limited to producing 1,000 barrels per month on-site, with one barrel holding 55 gallons. Large: Large-scale production exceeding 1,000 barrels per month on-site, with one barrel holding 55 gallons.

C-2 (Convenience Commercial), UGC(Urban General Commercial ), C-3 (Central Business) & M-1 zones all with a special exceptions permit

Review by Treasurer's Office, RPA Development Services, Traffic Engineer, City Attorney and City Council review. No Planning Commission review

Alexandria, VA Not addressed Annapolis, MD Not addressed Asheville, NC Not addressed Charleston, SC Not addressed New Bern, NC Not addressed Raleigh, NC Not addressed Sante Fe Not addressed Savannah, GA Not addressed Other Cities researched Cape Coral, FL ARTISAN DISTILLERY. A use that distills

spirituous beverages on a small scale and whose annual production of spirits is capped by the City of Cape Coral in contrast to a full-fledged distillery that may produce an unlimited volume of spirits. These establishments may include a tasting room and retail space to sell spirits produced on the premises along with related retail items and food.

I-1 (Industrial District), Corr ( Corridor District), SC (South Cape Downtown District)

• maximum production– 75,000 proof gallons/ year • semi-annual production reporting • sell on premises only alcoholic products produced on site • 6’ opaque barrier to screen outdoor alcohol production

equipment and storage • loading & unloading restricted to side or rear of building • outdoor storage of distillery limited to 24 hours. • to encourage the repurposing of buildings, some

requirements may be waived such as visibility of the mechanical equipment & loading areas from a public street(s) & residential development

City

Definition Permitted Districts Requirements

Everett , WA:

Brewery, distillery or winery” means a plant in which beer, wine or other alcoholic beverages are produced and bottled for wholesale distribution Microbrewery, micro distillery, or micro winery” means a small-scale business located in a building where the primary use is for restaurant, retail, or tasting room, and which specializes in producing limited quantities of wine, beer, or other alcoholic beverage.

C-1(19), C-2(19), C-2ES, W-C, M-S, M-M, M-1, M-2

• only in conjunction with a restaurant, tavern, retail sales or tasting room, with public facade of the building oriented to the public street or in a shopping center or business park, access to common space where the public can access the building

• can’t create odor • Micro distillery:

Dunedin, Fl Craft/micro brewery, winery or distillery: A small-scale, licensed manufacturing establishment which produces, processes, ferments, rectifies or blends craft brews, wines or distilled spirits; may or may not offer tastings, and may or may not provide on-site sale and consumption of the products.

TF (Tourist Facility), DC (Downtown Core) and FX-M and FX-H (our two form-based code districts)

By right