Local Government 101: How a Business Comes to Town

Lowell has seen a flurry of building activity in the last year. There are new restaurants, an urgent care and, yes, many marijuana shops.

Whenever construction starts, it’s not unusual for people to wonder why this business and not something else. For instance, why Jimmy John’s and not Aldi’s?

The short answer is that cities and townships don’t get to pick the specific businesses that come to town. The longer answer is that municipalities can use zoning to regulate developments within their community.

Here’s a closer look at how a business comes to town and how much say local governments have in their establishment.

Zoning Dictates Business Development

If you haven’t already read our previous article on zoning, now is a good time to revisit it. That’s because zoning is central to if and how a business can establish itself in a city or township.

Every zoning district has a list of usages that are allowed “by right” and others that require a special land use permit. If a business wants to set up shop in town, its first step is to find a parcel zoned for its use. For example, generally speaking, a factory would need to find property zoned for industrial uses and a supermarket would need to find a parcel that is zoned commercial.

Next, the business needs to present a site plan to the planning commission for approval. This process ensures that a business will meet the city or township’s zoning requirements. The approval process considers things such as available parking, exterior lighting and landscaping. In some cases, when a business is making minimal changes to an existing building – such as the case with Ripple restaurant in downtown Lowell – the site plan review may be done by a staff member rather than the planning commission.

Some usages require a special land use permit. These permits are required for businesses that may not be right for all parcels zoned a particular way. For example, a body shop or a hotel might be appropriate in some areas of a general business district by not others. By requiring a special land use permit for certain business types, a municipality gives its planning commission the ability to determine on a case-by-case basis whether that use makes sense for a specific lot and neighborhood.

Throughout this process, the planning commission and staff can only consider the property use and not the business itself. For instance, if Walmart were to submit a site plan for property zoned for retail use, a planning commission couldn’t vote against it simply because it doesn’t want a Walmart in town. Instead, there has to be a legitimate reason to deny a site plan or special land use permit – such as traffic, safety or infrastructure concerns.

Likewise, the planning commission can’t pick and choose which business uses to allow. For instance, the commission can’t deny a fast food restaurant or auto repair shop simply because the community already has several of these businesses. Assuming the property is zoned for these uses, doing so would certainly result in a lawsuit against the community.

Special Considerations for Alcohol and Marijuana Businesses

If a business wants to sell alcohol or marijuana products, there are some additional requirements dictated by state and local law.

Alcohol

“Michigan is one of 17 control states in the United States,” says Sara Weber, licensing director for the Michigan Liquor Control Commission. The state serves as the sole distributor of spirits in Michigan, and businesses that want to sell alcohol – either to consume on premise or packaged to go – need a liquor license from the MLCC.

These licenses are available using a quota system that is based on population. For instance, the City of Lowell is currently allowed the following liquor licenses under this system:

• Retail sales for on-premise use: 3
• Retail sales for off-premise use (spirits): 2
• Retail sales for off-premise use (beer and wine): 4

There are also additional licenses available through economic development programs, and there are specialty brewery licenses. “They are only allowed to sell what they make,” Weber says of the latter.

Once a business has a license, it can be sold, but even if it is transferred to a business outside the community, it still counts against the municipality’s quota. If a community’s population declines, its quota may be reduced but existing liquor licenses remain in effect. This may be why the MLCC website shows the City of Lowell’s available licenses as -1 for on-premise retail sales and -2 for off-premise retail beer and wine sales.

It is a common misconception that liquor licenses are easy to come by, according to Weber. “They are not as readily available as people think,” she says. And getting a license is no guarantee of being able to open a business either. “[A business] still has to meet all the local zoning requirements.”

Marijuana

When Michigan voters approved a ballot proposal to legalize the recreational use of marijuana in the state, municipalities had the option to opt in or out of allowing marijuana businesses within their borders. Lowell Charter Township and Vergennes Township opted out while the City of Lowell opted in.

Communities were also given the option to limit the number and type of marijuana businesses allowed. However, the City of Lowell declined to limit businesses with councilmembers citing a concern that doing so could result in lawsuits.

Marijuana businesses must be licensed by both the state and city and meet additional zoning requirements. In the City of Lowell, marijuana businesses are regulated under Chapter 28 in the code of ordinances as well as in the zoning ordinance.

The City of Lowell licensing requirements mandate businesses submit an operation plan, proof of insurance and proposed security measures, among other things. On the zoning side, marijuana businesses can only be located in the following zoning districts:

• General business (C-3)
• Light industrial (I-L)
• Industrial (I)
• River’s edge (RE)

What’s more, marijuana businesses must be at least 1,000 feet away from a K-12 school, preschool or child care center. They also must be at least 500 feet away from the C-2 district, which is Lowell’s historic downtown.

Marijuana establishments are only allowed with a special land use permit, and there are additional standards that must be met before they can be approved. These standards cover items such as odor control, security and waste disposal.

As with other site plans and special land use applications, the planning commission cannot deny a permit simply because they think there are too many of these businesses in town. Instead, they can only turn down an application if there are concerns about public health and safety or if the business has not sufficiently shown it can meet the requirements of the ordinance.

Do you have a question about how local governments work? Leave a comment or send an email to [email protected], and we’ll try to answer it in a future article.