The interest in urban wineries is on the rise, with companies looking to take advantage of close proximity to customers, empty warehouse and industrial space, and access to city water and sewer.  However, hidden land use issues can present significant problems when pursuing this type of urban property, particularly within the City of Portland (City).

“Grandfathered” Uses

With the changing urban landscape (in-fill development, urban renewal areas, etc.), many older warehouses and industrial spaces are located in zones that now restrict commercial and industrial activities.  This means that although an industrial activity may have historically occupied the building, a new or changed industrial use may be prohibited or restricted under the City’s current land use regulations.  Even if the building is marketed as a “grandfathered” industrial space, that does not mean it has been approved as a legal nonconforming use or situation under the City’s code.  It is important to know whether the City has already issued a legal nonconforming determination for the industrial activities and, if not, to consider whether such a determination can be obtained prior to acquiring the property.  The City’s website provides a good explanation of the process and the review requirements. 

A land use due diligence inquiry can identify a potential issue during the contingency period.  Left undiscovered, the issue may be raised during the City’s local endorsement process for an OLCC winery license.  This can cause delay while the applicant brings the site into compliance (if possible) or, in the worst case scenario, can prevent the applicant from using the acquired property for its intended use.

Expensive Site Improvements

Even if the site is properly zoned for the proposed winery activities, alterations or expansion of the existing building may trigger expensive site improvements to bring the site up to current City development standards.  For example, a site may have parking, but the lot may not meet the City’s current minimum parking standard or satisfy access and circulation standards.  In addition, the City may require landscaping of the parking or setback areas to satisfy current City planting requirements.  On-site stormwater management is another common issue.  These site improvements can be expensive and, in some cases, cost-prohibitive.  If such issues are not identified prior to acquiring the property, a prospective winery operator can be taken by surprise during the development permit process.  Again, a land use due diligence inquiry can help identify these issues early on, as can an early assistance appointment with the City.

Limits on Retail Sales and Services

In conjunction with wine production, many urban wineries want to include a tasting room, bistro, or wine bar, or other activities that fall within the scope of retail sales and services.  Some general employment and industrial zones limit the size and number of on-site retail sales and services.  These restrictions may not prevent the use, but need to be accounted for in the planning stages of the winery.