The Zoning Commission recommended approval of the zone change and adoption of the findings of the 10 review criteria, and further recommends the City Council include an amendment to the Planned Development which would prohibit the business from operating beyond existing hours of operation (11 pm). The PD draft ordinance was amended by Council on first reading to include a limitation on the hours of operation in Section III.A.d. The amended ordinance is attached. A second reading is required to approve the zone change. Staff recommends the City Council approve this item on second reading to be consistent with its first reading action.

This is a zone change request to amend an existing Planned Development (PD) zoning agreement for Lots 1-3, Block 1 of MK Subdivision, 2nd Filling. Lot 3 at 5417 Hawk Creek Avenue is the location of the Diamond X Beer Company. This location has a domestic brewery license with a taproom and a cabaret license for service of beer and wine in the food service area. The original PD agreement allowed one (1) cabaret license on the property without gaming or gambling. The proposed amendment would eliminate the cabaret beer & wine license and substitute a full-beverage liquor license and keep the prohibition on gaming or gambling in place. The other proposed changes to the PD agreement are to name the current property owners, and conform the agreement to the current and archived city zoning regulations. The owners would like to provide a wider range of before and after dinner beverages for their adult customers. 

The amendment to the PD adds a use, making it necessary for the amendment to go through the zone change process. The other modifications in the agreement are minor. The previous zoning for the property - Neighborhood Commercial - did not allow any on-premise alcohol service for a restaurant and did not allow a brewery. The current corollary zone district of Neighborhood Mixed Use (NMU), allows a full-beverage license with nine or fewer gaming machines for a restaurant, but still prohibits a brewery or craft alcohol maker. The PD agreement is still necessary to provide certainty for the adjoining neighborhood to the north and to ensure the location is developed in a compatible way.

Planning staff recommended approval and adoption of the findings for the 10 review criteria to amend this PD agreement. The Zoning Commission concurred with this recommendation and findings of the 10 review criteria. The essential activity on the property will not change with the change in the type of liquor license on the property. Full beverage licensees are not required to stay open later than the current closing time for Diamond X Beer Company (11 pm) or to sell package liquor to patrons. These are choices made by a license holder but do come with the full beverage license. The brewery/taproom license will remain as a separate license and allows the brewing of beer, daily sales of beer for on-premise consumption and sales of beer to patrons for off-site consumption. A review of public safety calls for service in the last 6 months shows no calls to this location but 4 calls in the surrounding area, within 500 feet of 5417 Hawk Creek Avenue. These calls related to disturbing the peace, drugs, theft, or DUI. The DUI was reported in February of this year, and the other three calls happened in 2022. The applicant conducted a pre-application meeting on March 22, 2023, and two of the 74 surrounding owners attended the meeting. There were no concerns and the Planning Division received no letters, emails or phone calls regarding the proposed change to the Planned Development agreement. 

The applicant conducted a pre-application meeting on March 22, 2023, and two of the 74 notified surrounding owners came to the meeting held at the Grace Montessori School (4819 Grand Avenue). There were no concerns with the proposed change to the PD agreement. Planning staff notified the same surrounding owners on April 14, 2023, posted the property and published a legal ad. Planning staff had not received any communications regarding the application from the public or from other city departments prior to the Zoning Commission hearing.

Zoning Commission Hearing May 2, 2023
The Zoning Commission conducted a public hearing on May 2, 2023, and received the staff recommendation and testimony from the applicant's agent, Performance Engineering, and from the owner Ty Schmechel of Diamond X Beer Company. In addition, testimony from surrounding owners in the Cottonwood Grove Subdivision to north was received including from Kaitlin Taylor of 5408 Round Stone Avenue, Jill Saitta of 5422 Round Stone Avenue, Molly Dutson of 5418 Round Stone Avenue, and Travis Brewington of 5426 Round Stone Avenue.

The applicant and agent stated the change to the PD is to swap out a beer & wine license for an all beverage license but keep the other restrictions in the PD agreement in place including the prohibition on gaming or gambling. Mr. Aspenlieder stated the business does not participate in the annual outdoor concert held by the Den, but at the pre-application meeting the two attendees were most concerned with this activity. Mr. Aspenlieder stated the business is a good neighbor and has address any and all concerns brought forward by the neighbors. Mr. Schmechel stated they do not intend to change any of the format of the business or add on to the existing building. He stated the business has been very successful at this location and intends to keep the family-friendly atmosphere going even with the change in the alcohol license. He stated when the building was constructed they adhered to the stipulations of the PD agreement and will continue to do so.

The surrounding property owner testimony was largely opposed to the zoning request. The individuals listed above who testified expressed concern regarding the noise, suspicious activity, damage to the fencing from erratic driving in the overflow parking lot, people tossing trash over the fence into backyards, over-served patrons causing issues after closing times, staff making noise in the parking lot after hours, public urination and issues generally associated with a business that serves alcohol. The neighbors' concerns also focused on a potential change in the business model from a limited alcohol service and restaurant to more of a bar atmosphere that closes at 2 am. The four property owners all own lots that are directly adjacent to the north property line of Diamond X Beer Company.

Mr. Aspenlieder provided response to the testimony from the surrounding owners. He stated the company takes these concerns seriously and the owner will have discussion about these issues with the neighbors. He stated Mr. Schmechel and his employees are always open to discussing issues or concerns with the neighbors. He stated the issues voiced by the neighbors are valid and stated the owner has no intention of changing the business model or staying open later.

Zoning Commission member David Goss made a motion to recommend approval of the zone change and adoption of the findings of the 10 review criteria, and further recommending the City Council include an amendment which prohibits the business from operating beyond existing hours of operation. Mr. Goss also made a recommendation to the applicant to explore with the neighbors a better buffer yard along the north property line. The motion was seconded by Zoning Commission member Trina White and was approved on a unanimous vote.

City Council Hearing June 12, 2023
The City Council received the Zoning Commission report as presented by Planning staff at the first reading hearing on June 12, 2023. Council members asked questions to clarify the Zoning Commission recommendation. The owner and agent also presented testimony to the City Council on the requested change to the Planned Development document to allow a full-beverage license. The applicant had no objection to including the limitation of operational hours. Questions from the Council included information about future use of the property for a casino or other less compatible uses. The Council and Mayor debated the issue of additional landscaping or screening for the north property line. The planted buffer yard between the building and the neighborhood properties does have young trees including evergreen trees. The gravel parking to the west of the building does not have similar plantings. This area has deciduous trees spaced about 50 feet apart. 

The owner, Ty Schmechel, and agent, Scott Aspenlieder, provided testimony about the current business and the request to swap a beer and wine license for a full beverage license. Mr. Aspenlieder stated they removed the former subsection III.A.d that stated all outdoor activity ceases at 9 pm since the issue of people sitting out on the patio while it is still nice outside in the summer. He stated they are willing to accept the limitation on hours of all operations closing at 11 pm, but would like to use the full facility during the summer months including the outdoor patio. Mr. Aspenlieder stated there is a well planted buffer yard to the north of building, however but the trees are young and not yet to a mature height. When the landscape matures the buffering and screening will improve.

Ty Schmechel, co-owner of the Diamond X Beer Company, stated the change is a simple change and will not fundamentally change the business model they have adopted. This is a family-friendly restaurant and destination. The building and development plan was deliberate, fits with the agrarian heritage of the West End, with full consideration for the closest neighbors. We have an open-door policy with our neighbors. The business is a giving organization that has given more than $10,000 to local non-profits including organizations that support kids. We have taken action based on the neighbor concerns expressed at the Zoning Commission hearing. They intend to buy a full beverage license without any gaming. We have reached out to our vendors and the City Solid Waste about the noise early or late during the day for activity north of the building. He stated they are taking management staff to deal with these issues. Mr. Schmechel also said the business would be fine with adding some more trees to the area north of the gravel parking lot similar to what they already planted north of the building.

Sean Graves, co-owner of Diamond X Beer Company, stated the goal of the business is to provide a family friendly space, where people can come and create memories and give back to the community. The only change is to the type of adult beverages we can serve. This license would also allow us to serve earlier for brunch on the weekends. Our business has been operating since 1994 downtown and here in the West End since 2020.

Tyler Patenaude of 3121 Forbes Blvd, Simon Harris of 2311 Kings Drive, Wesley Dunn of 832 Dorothy Lane, Bryce Pedersen of 539 Wyoming, Jessie Gleason of 1042 Nutter Blvd, Jordan Roberts of 3939 Palisades Park Dr, Jeff McClain of 601 Pryor Creek Road, Dustin Brown of 3304 Tahoe, Tyson Adams, of 4513 San Fernando Drive and Kevin Barth 501 S 44th St W, all testified in favor of the zone change and in support of the Diamond X Beer Company.

Council member Purinton made a motion to approve the request on first reading. The motion was seconded by Council member Tidswell. An amendment to the motion was made to include limting the hours of operation to 11 pm by Council member Boyett. The amendment was seconded by Council member Rupsis and was approved on an 11 to 0 vote. A second amendment to the motion was made by Council member Neese to include a limitation on outdoor activity (the patio) to 10 pm. The motion was seconded by Council member Boyett. This motion failed on a 4 in favor and 7 opposed vote. A third amendment to the motion was offered by Mayor Cole to include language that the buffer yard north of the gravel parking lot be improved with more trees. The motion was seconded by Council member Boyett. This third amendment failed on a 3 in favor and 8 opposed vote.
A final vote on the amended main motion passed on a 10 in favor and 1 opposed vote. Council member Neese voted no.
 

The City Council may:

• Approve and adopt the findings of the ten review criteria for Zone Change 1028 as recommended by the Zoning Commission; or,
• Deny and adopt different findings of the ten review criteria for Zone Change 1028; or,
• Delay action on the zone change request for up to 30 days; or,
• Allow the applicant to withdraw the zone change request.

Staff recommends the City Council approve the zone change on second reading. Any other action would be inconsistent with first reading action.

Approval or denial of the proposed zone change will not have an effect on the Planning Division budget.

Policy A - “Shorten automobile trips by locating non-industrial commercial development in proximity to residential areas."
Policy B - "Limit neighborhood commercial centers to compact “commercial villages” of approximately 15 to 20 acres in size."
Policy N - "Subdivision review should encourage mixed-use development and PUD concepts and shall consider the proximity of housing to commercial, medical, and recreational facilities."
The proposed adjustments to the PD agreement are compatible with goals of the West Billings Neighborhood Plan. The proposed amendment will accommodate uses that are compatible in a mixed-use environment. The proposed development will also have good access to outdoor activities and is close to developed and developing residential neighborhoods and pedestrian facilities. There have been no reported compatibility issues with the existing brewery/restaurant and the adjacent neighborhood.

The proposed amendment is also in line with the adopted 2016 Growth Policy goals for:
Community Fabric:

• Developed landscape areas in commercial areas encourage more pedestrian activity and vibrant commercial activity
• Attractive street-scapes provide a pleasant and calming travel experience in urban and suburban neighborhoods
• Outdoor public spaces provide casual and relaxing gathering areas for people
• Developed landscape areas in commercial areas encourage more pedestrian activity and vibrant commercial activity
• Attractive street-scapes provide a pleasant and calming travel experience in urban and suburban neighborhoods

Strong Neighborhoods:

• Walkable neighborhoods that permit convenient destinations such as neighborhood services, open space, parks, schools and public gathering spaces foster health, good will and social interaction

Mobility and Access:

• Planning and construction of interconnected sidewalks and trails are important to the economy and livability of Billings

Prosperity:

• A diversity of available jobs can ensure a strong Billings’ economy
• Successful businesses that provide local jobs benefit the community
• Community investments that attract and retain a strong, skilled and diverse workforce also attracts businesses
• Retaining and supporting existing businesses helps sustain a healthy economy

The proposed change to the PD agreement will allow this successful business to expand its adult beverage choices and help grow the business in its current location. The business does generate vehicle traffic but the streets within this commercial node at 54th St W and Grand Avenue are private streets. There are two accesses - one from Grand Avenue (Chy Way) and one from 54th St West (Hawk Creek Avenue). A third access will be developed when the lot at the corner of Grand and 54th St W is developed. There is a 25 ft wide landscape buffer along the north property line for these lots and the lot to the east created with the MK subdivision. The PD does not specify a walking path or trail through this area however one has been provided to the north of Diamond X Beer Company (Lot 3). This path will continue to the west across Lots 1 and 2. The lot to the east, Lot 5 in MK Sub 1st Filing, is currently vacant and may or may not complete this paved walkway to the join with the multi-use path that exists on the west side of 54th St W.

2. Is the new zoning designed to secure from fire and other dangers?
The zoning requires minimum setbacks, open and landscaped areas and building separations. The zoning change to allow one full-beverage license will not affect security from fire or other dangers. Any building where alcohol is served is required to be fully sprinkled and there is good access to the property from streets. Fire Station 7 is less than 1,000 feet away on the east side of 54th St W.

3. Whether the new zoning will promote public health, public safety and general welfare?
Public health and public safety will not be affected by the proposed change. The business is fully developed and has a track record of responsible service to their customers and to compatibility with the adjacent neighborhood. The addition of a full-beverage license will not affect the public health, safety or general welfare.

4. Will the new zoning facilitate the adequate provision of transportation, water, sewerage, schools, parks and other public requirement?
Transportation: The city has reviewed a traffic study for the entire subdivision and proposed uses. The developer has already contributed the required amount for traffic management in the area.
Water and Sewer: The City provides water and sewer to the property. There will be no additional impacts to the system from the proposed change.
Schools and Parks: Schools and parks will not be effected by the proposed amendment. The business is a "family friendly" business and is more than 1/4-mile from Ben Steele Middle School
Fire and Police: The subject property is served by city public safety services. The Police and Fire Departments had no concerns with the zone change.

5. Will the new zoning provide adequate light and air?
The existing PD zoning provides for sufficient setbacks to allow for adequate separation between structures and adequate light and air.

6. Will the new zoning effect motorized and non-motorized transportation?
Non-motorized travel – walking and biking – is an essential part of the circulation plan for this area of West Billings. The existing development plans to provide a continuous walkway in the 25-foot landscape buffer to the north. It is expected any development on Lot 5 to the east will follow suit and connect to the existing multi-use trail on 54th St West. There is a traffic signal at 54th St W and Grand Avenue where people on foot or on non-motorized bikes and scooters can safely cross Grand Avenue and 54th St W. The city, county and state will be working on a set of corridor improvement projects for Grand Avenue from just west of Shiloh Road to the intersection with 62nd St West. Traffic counts in the area on Grand Avenue are about 9,000 vehicle trips per day (3-year average) and about 3,900 vehicle trips per day on 54th St W. The new Albertson's store opening just to the east, as well as new residential development in the area will add to traffic volume and the need for safe pedestrian facilities.

7. Will the new zoning promote compatible urban growth?
The proposed addition of a full-beverage license to this development is compatible with urban growth and the provision of city level services to the new residents. The PD prohibits gaming or gambling on the property so the typical concern with a full-beverage license of a casino is not possible on this property.

8. Does the new zoning consider the character of the district and the peculiar suitability of the property for particular uses?
The proposed PD amendment does consider the character of the district and the suitability of the property for the proposed use. This area between Grand Avenue and Rimrock Road is undergoing rapid development compared to other areas of West Billings. The demand for local services such as groceries, pharmacy, personal services and places to relax and dine out is increasing. Providing the whole complement of these services close to where people live in West Billings will help reduce longer vehicle trips to obtain these services. Most West Billings residents do not have convenient access to these services within 2 or 3 miles of where they live. Consequently, traffic volumes on local streets and arterials is higher in this area compared to similar areas of more compact development.

9. Will the new zoning conserve the value of buildings?
The property is a combination of developed and undeveloped parcels. Approval of the zone change to amend the PD agreement will continue to provide certainty to surrounding landowners and may help to maintain property values of adjacent buildings.

10. Will the new zoning encourage the most appropriate use of land throughout the City of Billings?
The proposed amendment to the PD may encourage the most appropriate use of this land in Billings.