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Morgan Hill
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April 14, 2021

City expected to OK new distribution center ban

Compromise initiative adds to existing zoning regulations

Residents behind a recent anti-fulfillment center initiative said in an online forum March 25 that an agreement reached last week with city officials will help achieve many of the short-term and long-term development goals sought by both the Morgan Hill City Council and the Responsible Growth Coalition.

City staff and members of the RGC presented their “joint proposal” for a ban on distribution centers and related uses in Morgan Hill, and answered questions from the public during a Zoom workshop on Friday.

The proposed new ordinance—which will be considered for council approval at the April 7 meeting—would prohibit any new industrial buildings in Morgan Hill that meet three criteria often associated with distribution centers: greater than 75,000 square feet in size; ceiling height more than 34 feet over 25% of the building floor plan; and more than one dock door per 25,000 square feet.

The proposal is slightly different from the Morgan Hill Responsible Growth Coalition’s initiative petition that was certified by the city council March 3, after it was signed by more than 3,500 registered voters. The biggest difference is that the new version increases the allowable ceiling height from a maximum of 24 feet.

The new initiative also adds and clarifies definitions of uses, types and characteristics of proposed buildings to make the ordinance more simplified and enforceable, according to City Attorney Don Larkin. He added that city staff is “strongly recommending” that the city council approve the ordinance April 7.

The increase in permissible ceiling heights in the ordinance would hopefully discourage developers from seeking to build facilities that function as distribution centers, while preserving industrial land for other preferred types of business, members of MHRGC said at the March 25 workshop.

“The end goal of our initiative is not just to prohibit distribution facilities; it is also to attract companies that create sustainable jobs and contribute to the Morgan Hill general fund but won’t hinder the success of other local businesses or impact the environment,” said Linda Nowlen, a volunteer for MHRGC who has been involved in the citizens’ initiative process for more than a year.

Larkin said the new initiative would reinforce an ordinance unanimously approved by the council in November that prohibits distribution and fulfillment centers—including smaller facilities known as “parcel hubs” and “last mile” distribution centers—by regulating the use of property and new industrial buildings.

City staff and council members at the March 3 meeting also voiced concerns that a 24-foot maximum ceiling might discourage some existing industrial properties in Morgan Hill from expanding because their current headquarters’ ceilings may exceed that height. Larkin said March 25 that city staff think that all existing research and development and manufacturing buildings in Morgan Hill have ceilings lower than 34 feet.

“This (joint proposal) will be beneficial in adding to what the council did in November by prohibiting those e-commerce uses, fulfillment centers, sorting centers and last mile delivery with an approach that also manages building features that would support those types of e-commerce activities,” Larkin said March 25. “But it also would solve the concerns we expressed with existing businesses.”

The city council and MHRGC members are trusting each other to follow through with the agreement on the initiative at the April 7 council meeting. In order to enact the new initiative, the council must approve the original initiative for the 2022 ballot, then adopt the new version as an “urgency ordinance,” city staff said. Then, the council would direct the planning commission to review the new “collaborative” ordinance for placement on the ballot. The new initiative would then appear on the 2022 ballot instead of the original MHRGC, whose proponents would agree to withdraw the original initiative.

The council on March 3 certified the original MHRGC initiative on a 3-2 vote, but also directed city staff to continue working with coalition proponents to enact an initiative that both parties could agree on. Council members Gino Borgioli and Rene Spring voted against the item, and instead wanted to enact the MHRGC initiative at the March 3 meeting.

Common arguments against distribution centers, cited by coalition members and the council, include loud noise and environmental impacts from increased truck traffic. The facilities also don’t typically provide as many or as high-paying jobs, and don’t contribute as much to the public tax base, as other types of industrial business like advanced manufacturing or R&D, opponents say.

When asked how the city would prevent builders and tenants from opening distribution centers in violation of the ordinances, Larkin said the city has a variety of enforcement tools at its disposal, including administrative fines up to thousands of dollars a day, civil court orders to stop prohibited uses or, “in extreme cases,” criminal prosecution against the owner.

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