Ordinance 3339CITY OF ALAMEDA ORDINANCE NO. 3339
New Series
INTRODUCTION OF ORDINANCE AMENDING ALAMEDA MUNICIPAL
CODE SECTION 6-62 (THIRD -PARTY FOOD DELIVERY SERVICES) OF
ARTICLE XVIII (FAIR HOUSING AND TENANT PROTECTIONS) OF
CHAPTER VI (BUSINESSES, OCCUPATIONS AND INDUSTRIES) TO
CONTINUE PLACING LIMITS ON CHARGES IMPOSED BY THIRD -
PARTY DELIVERY SERVICES; DEFINE CORE PRODUCT OFFERING
TO MEAN A SERVICE; AND OTHER AMENDMENTS
WHEREAS, the County of Alameda has more than 1,200 full-service restaurants,
more per capita than the State average, and the City of Alameda is home to a diverse
and vibrant food and beverage scene; and
WHEREAS, restaurants are vital to the character that makes Alameda such a
special place; and
WHEREAS, restaurants are a critical component of the U.S. food supply chain and
during the COVID-19 pandemic, restaurants were restricted to takeout or delivery offerings
and continue to have limited dining with decreased capacity. This has placed a sudden
and severe financial strain on these local businesses, particularly those that already
operate on thin margins, adding to financial pressures in the industry that predate the
COVID-19 crisis; and
WHEREAS, customers ordering takeout or delivery from Alameda restaurants
frequently do so via third -party food delivery service platforms and these third -party
platforms charge restaurants fees and surcharges for use of their services; and
WHEREAS, service agreements between some restaurants and third -party
platforms provide for the payment of fees and charges that can range, in jurisdictions
where no caps are in place, from 15% of the purchase price per order to up to 30% of the
purchase price per order; and
WHEREAS, while some restaurants negotiated such fees and surcharges prior to
the COVID-19 pandemic, the pandemic and the ensuing emergency has made deliveries
a principal means of restaurant operations; and
WHEREAS, research indicates that restaurants were among the most hard-hit
businesses during the height of the pandemic, and continue to experience challenges as
the economy recovers including, but not limited to, chronic understaffing, inflationary
pressures, and supply chain; and
WHEREAS, restaurants report that despite improvements in business activity
compared to the early months of the COVID-19 pandemic, they continue to struggle with
ongoing concerns related to the COVID-19 pandemic such as the apprehension of
customers to return to in-person dining at pre -pandemic levels; and
WHEREAS, for many Alameda restaurants, and particularly for those which do not
have large areas available for outdoor dining, delivery and take-out services have become
a primary source of income; and
WHEREAS, the number of consumers using food delivery platforms to place orders
with restaurants has increased significantly and is expected to continue at higher levels
in the coming years; and
WHEREAS, as restaurants must rely on food delivery platforms to meet consumer
demand, it is anticipated that delivery platforms will continue to play an increasing role in
the restaurant industry going forward; and
WHEREAS, restaurants have expressed a desire to maintain the services they are
currently being provided at current pricing levels; and
WHEREAS, if Alameda restaurants close as a result of high fees from third -party
delivery services, their workers will lose employment and vulnerable customers will lose
essential services, thereby affecting their ability to provide for their families and to remain
safe during the COVID-19 pandemic; and
WHEREAS, other cities have adopted limits on delivery service fees, and in
response online platforms have fought back by increasing fees to consumers and reduced
delivery radius thereby frustrating local regulation adopted to address impacts to
consumers who are sheltering in place and restaurant workers; and
WHEREAS, any such end -run actions by third -party food delivery companies and
restaurant closures due to exorbitant delivery fees will also further limit food options for
residents, could place vulnerable residents in untenable positions of not being able to
obtain life sustaining food, and further disrupt US food supply chain; and
WHEREAS, restaurants report that were it not for the delivery fee cap within the
City established by ordinance, they would no longer be in business; and
WHEREAS, adopting a combined cap on per -order fees charged to consumers
and restaurants at 15% will accomplish the legitimate public purpose of easing the
financial burden on struggling restaurants, their employees, and consumers, and maintain
reliability regarding the cost of third -party food delivery services, while safeguarding their
health and welfare, and that of their employees and consumers, during this emergency
and not unduly burdening third -party platforms; and
WHEREAS, food service delivery programs will likely continue to be used by City
residents because some form of social distancing, masking, and other health measures,
all of which reduce in-person service capacity, are expected to continue for the
foreseeable future, given the ever-present prevalence of respiratory pathogens, including
variants and subvariants of the COVID-19 virus, Respiratory Syncytial Virus (RSV),
Influenza, etc.; and
WHEREAS, by the staff report, testimony, and documentary evidence presented
at the March 7, 2023 City Council meeting, the City Council has been provided with
additional information upon which the findings and actions set forth in this ordinance are
based.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF
ALAMEDA as follows:
Section 1: Alameda Municipal Code Section 6-62 (Third -Party Delivery Services) is
hereby amended to read as follows:
6-62 Third -Party Food Delivery Services
6-62.1 Definitions
City means the City of Alameda.
Core Product Offering means a service that (1) lists a Retail Food Establishment, and
makes the Retail Food Establishment discoverable, with reasonable effort, on all
modalities or platforms offered by a Third -Party Food Delivery Service, including but not
limited to any website, mobile application, or other internet service where a Third -Party
Food Delivery Service lists Retail Food Establishments; and (2) facilitates and/or performs
the delivery (through the Third -Party Food Delivery Service, Retail Food Establishments,
or any other means) of food and/or beverages from Retail Food Establishments to
customers. The purpose of this definition is to ensure that Retail Food Establishments have
an affordable means of obtaining basic services from Third -Party Food Delivery Services
while preserving their freedom to contract for more services at a higher rate. Accordingly,
Core Product Offering does not include any other service that may be provided by a Third -
Party Food Delivery Service to a Retail Food Establishment, including but not limited to
advertising services, search engine optimization, business consulting, or payment
processing.
Consumer Price Index means the Consumer Price Index for All Urban Consumers ("CPI -
U") for the San Francisco -Oakland -Hayward, CA Region, published by the U.S.
Department of Labor, Bureau of Labor Statistics.
Service Fee means any fee charged by a Third -Party food Delivery Service to a Retail
Food Establishment for providing the Retail Food Establishment with a service that delivers
or assists the purchase of food and beverages from such establishment to customers.
Online Order means a food and/or beverage order placed by a customer through a
platform provided by a Third -Party Food Delivery Service, including a telephone or
software- or application -based order, for delivery or pick-up within the City.
Purchase Price means the price, as listed on the menu, for the items contained in an
online order. This definition does not include taxes or gratuities that may make up the total
amount charged to the customer of an online order.
Retail Food Establishment means a restaurant, delicatessen, bakery, coffee shop, or
other eat -in or carry -out service of processed or prepared food or beverages.
Third -party Food Delivery Service means an online business that acts as an intermediary
between consumers and multiple food facilities to submit food orders from a consumer to
a participating food facility, and to arrange for the delivery of the order from the food facility
to the consumer.
6-62.2 Prohibitions
a. It shall be unlawful for a Third -Party Food Delivery Service to charge a Retail Food
Establishment a Service Fee that totals more than fifteen percent (15%) of the
Purchase Price of each Online Order, except as otherwise provided for in this
Article.
b. It shall be unlawful for a Third -Party Food Delivery Service to increase any fee, cost,
or commission, or establish any new fee, cost or commission, with respect to
customers beyond those established on September 3, 2020, except that with
respect to flat fees (i.e., non -percentage fees), such fees may be adjusted annually
from 2020 onward by the percentage change in the Consumer Price Index for the
twelve (12) month period ending April of each year and rounded to the nearest
one-tenth of a percent.
c. It shall be unlawful for a Third -Party Food Delivery Service to charge a customer
any Purchase Price for a food or beverage item that is higher than the price set by
the Retail Food Establishment on the Third -Party Food Delivery Service or at the
time of the order.
d. It shall be unlawful for a Third -Party Food Delivery Service to retain any portion of
amounts designated as a tip or gratuity for a Online Order. Any tip or gratuity shall
be paid by the Third -Party Delivery Service, in its entirety, to the person delivering
the food and/or beverages.
e. It shall be unlawful for a Third -Party Food Delivery Service to collect any fee from a
Retail Food Establishment or its customers for a telephone order if a telephone call
between such establishment and a customer made to place the order does not result
in an actual transaction.
f. Beginning on March 1, 2023, the fee limit in subsection (a) of this Section 6-62.2
shall not apply to a Third -Party Food Delivery Service that does both of the
following:
(1) offers all Retail Food Establishments the option to obtain or restore Core
Product Offering for a total fee, commission, or charge not to exceed 15% of
the purchase price of the online order, without requiring the purchase of
additional services; and
(2) notifies any affected Retail Food Establishment in writing of the ability of the
option described in subsection (e)(1), and obtain a written wavier from the Retail
Food Establishment of their rights under subsection (a) of this Section 6-62.2.
Retail Food Establishments shall have the right to rescind any such waiver, in
writing, at any time.
g. Contracts between a Third -Party Food Delivery Service and a Retail Food
Establishment shall clearly define the fees, commissions, or charges associated
with contracted services.
6-62.3 Disclosure Requirements
a. Upon a request by a customer, the a Third -Party Food Delivery Service shall
disclose to the customer an accurate, clearly identified, and itemized cost
breakdown of each transaction between the customer and a Retail Food
Establishment that occurred through or was otherwise facilitated by the Third -
Party Food Delivery Service, including but not limited to the following:
1. The Purchase Price of the food and beverage;
2. A notice, if applicable, that the Third -Party Food Delivery Service charges a
fee, commission, or cost to the Retail Food Establishment, fees, costs, or
commissions charged to the Retail Food Establishment for delivery
services, unless the Retail Food Establishment directs that the Third -Party
Food Delivery Service disclose to customers the delivery fee charged to the
Retail Food Establishment and each fee, commission, or cost charged to
the Retail Food Establishment;
3. All fees, costs, or commissions charged to the customer by the Third -party
Food Delivery Service; and
4. Any tip or gratuity.
b. The Third -Party Food Delivery Service shall annually disclose to the City a
current breakdown of the proportion of businesses within the City electing to
maintain Core Product Offering in comparison to those electing to purchase
additional marketing services.
6-62.4 Enforcement
a. Any person who violates any provision of this article shall be guilty of an infraction
which shall be punishable by a fine not exceeding two hundred fifty ($250.00)
dollars, or a misdemeanor, which shall be punishable by a fine not exceeding one
thousand ($1,000.00) dollars, or by imprisonment in the County Jail for a period not
exceeding six (6) months, or by both such fine and imprisonment.
b. Any person who violates any provision of this article may be subject to
administrative citations issued pursuant to Article 1-7 of this Code.
c. The City Attorney, pursuant to Section 1-5.3 of this Code, or any aggrieved private
party, may enforce, and seek to enjoin any violation of, this Article by means of a
civil action. The burden of proof in such cases shall be preponderance of the
evidence. As part of any civil action brought by the City to enforce this article, a
court shall assess a civil penalty in an amount up to one thousand ($1,000.00)
dollars per violation, against any person who commits, continues to commit,
operates, allows or maintains any violation of this article.
d. Any person convicted of violating any provision of this article in a criminal case or
found to be in violation of this article in a civil or administrative case brought by a
law enforcement agency, including but not limited to the City of Alameda, shall be
ordered to reimburse the City and other participating law enforcement agencies
their full investigative costs.
e. Any civil action initiated by a private party alleging a violation of any provision of
this Article shall commence only after the following requirements have been met:
1. Written notice is provided to the Third -Party Food Delivery Service of the
provisions of the Article alleged to have been violated and the facts to support
the alleged violation; and
2. The Third -Party Food Delivery Service is provided fifteen (15) days from the
date of the written notice to cure any alleged violation.
f. This Article is not intended to, and does not, create any rights or benefits,
substantive or procedural, enforceable at law or in equity, against the City of
Alameda, its departments, officers, or employees.
g. The remedies provided in this Article are cumulative, and nothing in this Article
shall preclude any person from seeking any other remedies, penalties or
procedures provided by law.
6-62.6 Exception
a. Nothing in this Article shall be construed as imposing a limitation on Third -Party
Food Delivery Service if doing so would be in violation of the Constitution of the
United States, the Constitution of the State of California, or any applicable
California state or federal law, as determined by an independent City hearing
officer pursuant to this Section. Accordingly, the requirements of this article shall
not apply or shall be limited to an extent to avoid any unconstitutional or unlawful
deprivation of the Third -Party Food Delivery Service's rights.
b. Notwithstanding the limitations set forth in Section 1-8.01(a) of this Code, any
Third -Party Food Delivery Service seeking an exception from the requirements of
this Article shall file an application with the City that includes each and every
contested issue or basis for the application, along with relevant evidence in
support thereof, which shall be reviewed by a City hearing officer and constitute
the City's final decision on the matter.
c. The burden of establishing by satisfactory factual proof of a constitutional
deprivation, by a preponderance of the evidence, shall be on the Third -Party Food
Delivery Service.
d. No exception or limit shall be granted pursuant to this section unless a finding is
made, based on satisfactory factual proof provided by the Third -Party Food
Delivery Service, of a constitutional or applicable statutory deprivation.
6-62.7 Implementing Regulations
The City Manager, or his/her designee, shall have the authority to adopt all necessary
guidelines, procedures, and regulations to implement the requirements and fulfill the
policies and purposes of this Article.
6-62.8 Sunset
This article shall sunset and be of no further force or effect after May 1, 2025, unless
otherwise extended by successor legislation.
Section 2: IMPLIED REPEAL
Any provision of the AMC inconsistent with this Ordinance, to the extent of such
inconsistencies and no further, is hereby repealed or modified to the extent necessary to
effectuate this Ordinance.
Section 3: CEQA DETERMINATION
The City Council finds and determines that the adoption of this ordinance does not
constitute a "project" as defined in California Environmental Quality Act (CEQA)
Guidelines Section 15378 and therefore no further CEQA analysis is required.
Section 4: SEVERABILITY
If any provision of this Ordinance is held by a court of competent jurisdiction to be invalid,
this invalidity shall not affect other provisions of this Ordinance that can be given effect
without the invalid provision and therefore the provisions of this Ordinance are severable.
The City Council declares that it would have enacted each section, subsection,
paragraph, subparagraph and sentence notwithstanding the invalidity of any other
section, subsection, paragraph, subparagraph or sentence.
Section 5: EFFECTIVE DATE
This Ordinance shall be in full force and effect from and after the expiration of thirty (30)
days from the date of its final passage. ;
Presidi Offi rjet the City Couicil
Attest:
Lara Weisiger, City Clerk
I, the undersigned, hereby certify that the foregoing Ordinance was duly and
regularly adopted and passed by the Council of the City of Alameda in a regular
meeting assembled on the 21st day of March, 2023, by the following vote to wit:
AYES: Councilmembers Daysog, Vella and Mayor Ezzy Ashcraft — 3.
NOES: Councilmembers Herrera Spencer and Jensen — 2.
ABSENT: None.
ABSTENTIONS: None.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official
seal of said City this 22nd day of March, 2023.
Lara Weisiger, City Clerk
City of Alameda
Approved as to form:
i�-
Yibin Shen, City Attorney
City of Alameda