DRRC 03-22-07 Meeting AgendaMEMORANDUM
COUNTY of FREDERICK
Department of Planning and Development
To: Development Review and Regulations Subcommittee
From: Susan K. Eddy, Senior Planner SK6
Subject: March Meeting andAgenda
Date: March 15, 2007
540/665-5651
FAX: 540/665-6395
The Frederick County Development Review and Regulations Subcommittee (DRRS) will be meeting
on Thursday, March 22, 2007 at 7:30 p.m. in the BOARD ROOM of the County Administration
Building, 107 North Kent Street, Winchester, Virginia. The DRRS will discuss the following agenda
items:
AGENDA
1) SIC Codes. Discussion of Standard Industrial Classification (SIC) Codes and the North
American Industry Classification System (NAICS) as they relate to the Frederick County
Zoning Ordinance.
2) Subdivision Streets. A special meeting of the Transportation Committee to discuss the use
of public or private roads within subdivisions will take place on March 26 at 9:00 a.m.
Volunteer representatives from the DRRS are encouraged to attend.
3) Other
Access to this building is limited during the evening hours. Therefore, it will be necessary to enter
the building through the rear door of the four-story wing. I would encourage committee members
and interested citizens to park in the County parking lot located behind the new addition or in the
joint Judicial Center parking lot and follow the sidewalk to the back door of the four-story wing.
SKE/bad
Attachment
107 North Kent Street, Suite 202 • Winchester, Virginia 22601-5000
Item #1: SIC Codes
Currently the Business and Industrial Zoning District Regulations (§ 165-82) in the Zoning Ordinance
are based on the Standard Industrial Classification (SIC). The SIC was established by the federal
government in 1939 and modified numerous times over the years, the last time in 1987. It was
developed as an establishment based industry classification system that classified each establishment
(defined as a single physical location at which economic activity occurs) according to its primary
activity. Zoning Ordinances throughout the country, including Frederick County's, were often based
on the SIC.
By the early 1990s many data users and analysts were criticizing the SIC as outmoded and not
reflective of the economy of the United Stated. In 1992 the US Office of Management and Budget
(OMB) established a committee to examine economic classifications, including those for Canada and
Mexico, and determine if a new system should be developed. A multi-year, multi -agency and user
review followed. On April 9, 1997 OMB adopted the North American Industry Classification
System (NAILS) as the industry classification system used by the statistical agencies of the United
States. NAICS replaces the 1987 SIC.
How is NAICS different from the SIC? NAICS is based on a consistent economic concept.
Establishments that use the same or similar processes to produce goods or services are grouped
together. The SIC was not based on a consistent economic concept. NAICS recognizes the changing
and growing services -based economy of the US. NAICS includes 1,170 industries of which 565 are
service based. The SIC had 1,004 industries of which 4t6 were service related industries. Three
hundred, fifty eight (358) new industries are recognized in NAICS, 250 of which are services
producing industries. As an example, the SIC does not include continuing care retirement
communities (CCRC), the NAICS does. The NAICS is a six -digit system, the SIC was a four -digit
system. The nomenclature used in the NAICS is different from that used in the SIC. Staff has
provided an attachment which details the changes from the SIC to the NAICS.
The obsolescence of the SIC has surfaced as an issue for the Winchester -Frederick County Economic
Development Commission (EDC). The EDC would like to be able to clearly show potential
companies where they can be accommodated in Frederick County. Some new industries just do not
fit within the old SIC codes. Frederick County does not want to be in the position of loosing
potential businesses because of an outdated ordinance. The EDC also has concerns about the SIC
codes allowed within specific zoning districts. A representative from the EDC will speak more
specifically about these concerns at the March DRRS meeting.
The DRRS will be asked to consider whether changing §165-82 of the Zoning Ordinance to a
classification system based on the NAICS is a worthwhile endeavor.
2
New Sectors in NAICS Pagel of 5
XT Sectors in NAILS
NAICS groups the economy into 20 broad sectors, up from the 10 divisions of the SIC system.
Code NAICS Sectors
11 Agriculture, Forestry, Fishing and Hunting
21 Mining
22 Utilities
23 Construction
31-33 Manufacturing
42 Wholesale Trade
44-45 Retail Trade
48-49 Transportation and Warehousing
51 Information
52 Finance and Insurance
53 Real Estate and Rental and Leasing
54 Professional, Scientific, and Technical Services
55 Management of Companies and Enterprises
56 Administrative and Support and Waste Management and Remediation Services
61 Educational Services
62 Health Care and Social Assistance
71 Arts, Entertainment, and Recreation
72 Accommodation and Food Services
81 Other Services (except Public Administration)
92 Public Administration
Many of the new sectors reflect recognizable parts of SIC divisions, such as the Utilities and
Transportation sectors, broken out from the SIC division Transportation, Communications, and
Utilities. Similarly, the SIC division for Service Industries has been subdivided to form several new
sectors, as shown in the chart below.
Other sectors represent combinations of pieces from more than one SIC division. The new
Information sector includes major components from Transportation, Communications, and Utilities
(broadcasting and telecommunications), Manufacturing (publishing), and Services Industries
(software publishing, data processing, information services, motion picture and sound recording). The
Accommodation and Foodservices sector puts together hotels and other lodging places from Service
Industries and eating and drinking places from Retail Trade.
The chart below shows the NAICS sectors and the SIC divisions from which their primary
components were derived. Text linked from the chart discusses the makeup of the new sectors in
greater detail.
Code II NAICS Sectors
11 11 Agriculture, Forestry, Fishing, and Hunting
SIC Divisions
Agriculture, Forestry, and Fishing
http://www.census.gov/epcd/www/naicsect.htm 3/13/2007
New Sectors in NAICS
Wage 2 of �
21 I Mining II
Mining
[Construction
23 Construction
31- Manufacturing
Manufacturing
33
22 Utilities
Transportation, Communications and
48
Transportation and Warehousing
Public Utilities
49
42 Wholesale Trade
Wholesale Trade
44- Retail Trade
Retail Trade
45
72 Accommodation and Food Services
52 Finance and Insurance
Finance, Insurance, and Real Estate
53 Real Estate and Rental and Leasing
51 Information
Services
54
Professional Scientific and Technical Services
56
Administrative Support; Waste Management and
Public Administration
Remediation Services
61 Educational Services _71
62 Health Care and Social Assistance
71 Arts Entertainment, and Recreation
81 Other Services (except Public Adminsitration)
92 Public Administration
55 Management of Companies and Enterprises
(parts of all divisions)
IMPORTANT CHANGES BY SECTOR
Manufacturing
The Manufacturing sector is reorganized and resequenced to achieve comparability with Canada and
Mexico. Seventy-nine new industries are recognized and another 186 are revised. In all, there are 474
NAICS industries in manufacturing as compared with 459 in the 1987 SIC. The most significant
change to manufacturing is the creation of the Computer and Electronic Product Manufacturing
subsector. This new subsector brings together those establishments engaged in the production of
computers, computer peripherals, communications equipment, similar electronic products, and the
http://www.census.gov/epcd/www/nalesect.htm 3/13/2007
New Sectors in NAICS
Page 3 of 5
components for such products. The subsector was created because of the economic significance these
industries have obtained, because their rapid growth suggests that the products of these industries will
become even more important to the economies of the North American countries, and because the
production processes of the establishments in these industries are fundamentally different from the
production processes for other machinery and equipment.
A number of important activities have been moved out of manufacturing while other activities have
moved in. Publishing has moved to the new Information sector and logging to Agriculture, Forestry,
and Fishing. Coming into manufacturing are bakeries that bake on the premise and custom
manufacturing.
Retail and Wholesale Trade
NAICS redefines the boundaries between Retail and Wholesale Trade. The new NAICS definition
emphasizes what the establishment does, rather than to whom it sells. Retailers are defined as those
establishments that sell merchandise, generally without transformation, and attract customers using
methods such as advertising, point-of-sale location, and display of merchandise. A store retailer has a
selling place open to the public; merchandise on display or available through sales clerks; facilities for
making cash or credit card transactions; and services provided to retail customers.
Wholesale establishments, on the other hand, are primarily engaged in selling or arranging the
purchase or sale of. (a) goods for resale, (b) capital or durable nonconsumer goods, and (c) raw and
intermediate materials and supplies used in production. Wholesalers normally operate from a
warehouse or office and are characterized by having little or no display of merchandise. In addition,
neither the design nor the location of the premises is intended to solicit walk-in traffic. Wholesalers
also do not normally use advertising directed to the general public.
The 1987 SIC defined retailers as those establishments that sold primarily to consumers while
wholesalers were those establishments that sold primarily to business customers. The distinction
between the boundaries of the two SIC divisions was based on class of customer rather than the
selling characteristics of the establishment. It is estimated that seven percent of computer
wholesalers; 22 percent of office supply wholesalers; 35 percent of farm supply wholesalers; and 57
percent of petroleum bulk stations will move to retail.
Another major change to the retail trade sector is the removal of restaurants from retail trade.
Restaurants are combined with accommodations to form a new sector in NAICS, Accommodation and
Foodservices. Restaurants accounted for about 10 percent of retail trade as defined by the 1987 SIC.
Information
Perhaps the most important change in NAICS is the recognition of a new Information sector. This new
sector includes those establishments that create, disseminate, or provide the means to distribute
information. It also includes establishments that provide data processing services. Industries included
in this new sector are newspaper, book, and periodical publishers, previously included in the
manufacturing sector in the SIC; software publishers, previously included in services; broadcasting
and telecommunications producers and distributors, previously included with utilities and
transportation; and motion picture and sound recording industries, information services, and data
processing services, previously included in services.
There are 34 industries included in this new subsector, 20 of which are new. Some of the new
http://www.census.gov/epcd/www/naicsect.htm 3/13/2007
New Sectors in NAICS Page 4 of 5
industries include paging, cellular and other wireless telecommunications, and satellite
telecommunications.
Finance and Insurance
This new sector recognizes the important and dynamic changes occurring in the U.S. financial sector.
Real estate --part of this grouping in the SIC --was moved to a new sector called Real Estate and Rental
and Leasing. Deregulation and the constantly changing structure of financial industries made it
difficult to construct a system among the three countries. Therefore, agreement with Mexico for this
sector reaches only to the 3 -digit level (subsector) for finance and 4 -digit level (industry group) for
insurance. However, Canada and the United States reached agreement down to the 5 -digit level.
Real Estate and Rental and Leasing
This sector includes industries from Services; Finance, Insurance, and Real Estate; and
Transportation, Communications, and Public Utilities
Professional, Scientific, and Technical Services
Those businesses whose major input is human capital are grouped together in this new sector. The
industries within this sector are each defined by the expertise and training of the service provider. The
sector includes such industries as offices of lawyers, engineering services, architectural services,
advertising services, veterinary services, advertising services, and interior design services. Forty-seven
industries are grouped in this sector, 28 of which are new.
Administrative and Support; Waste Management and Remediation Services
This sector includes industries from Services; Transportation, Communications, and Utilities;
Construction; and Agriculture, Forestry, and Fishing
Educational Services
Health and Social Assistance
This new sector recognizes that it is sometimes difficult to distinguish between the boundaries of
health care and social assistance; therefore, NAICS groups these industries together in a new Health
and Social Assistance sector. The industries are grouped in order from those providing the most
intensive type of health care to those providing minimal health care with social assistance to those
providing only social assistance.
There are 39 industries in this new sector, 27 of which are new. Some of the new industries include
HMO Medical Centers, Family Planning Centers, Blood and Organ Banks, Diagnostic Imaging
Centers, Continuing Care Retirement Communities, and Community Food Services. The sector also
includes ambulance services transfered from Transportation, Communications, and Public Utilities.
Accommodation and Food Services
This sector includes lodging from Services and food services from Retail Trade
http://www.census.gov/epcd/www/naicsect.htm 3/13/2007
blew 6eciors 1n 1NAiub
Arts, Entertainment, and Recreation
Page of j
Those businesses engaged in meeting the cultural, entertainment, and recreational interests of their
patrons are grouped together in this new sector. Casinos and other gambling businesses are
recognized for the first time in NAICS, as are historical sites and sports teams and clubs. In all, there
are 25 industries in the sector, most of which are new -- 19 in all. While most of the industries in the
sector come from the SIC Se. lice's d.- n nthP s nn a frnm Retail Tr .i F T
I.. �,„� ..,,..� �. isio.�, .,� �..�., .,�m.,1�,,.....,�. Trade ar�u Finance, �r�surai�cc,
and Real Estate.
Other Services
This sector includes industries from Services; Agriculture, Forestry, and Fishing; Manufacturing; and
Finance, Insurance, and Real Estate
Auxiliary Establishments
Auxiliary establishments are those establishments that primarily produce support services for other
establishments of the enterprise. Generally, these support services are not intended for use outside of
the enterprise. In NAICS, these establishments are classified according to the establishment's primary
activity. For example, an establishment providing data processing services for an enterprise is
classified in NAICS 51421, Data Processing Services. An establishment that is the head office of an
enterprise is classified in the new NAICS industry 551113, Corporate, Subsidiary, and Regional
Managing Offices. In the 1987 SIC, each of these establishments was classified according to the
primary activity of the establishment for which the support activity was performed. In the above
examples, if those support units primarily served an automobile making plant, the support
establishment was classified in automobile manufacturing.
The SIC, however, treated the production of goods for other establishments of the same enterprise
differently. If a manufacturing establishment produced goods for use within the enterprise, the
manufacturing establishment was classified according to its primary activity, not the primary activity
of the establishment it served. This different treatment of service producing versus manufacturing
auxiliary establishments was inconsistent and NAICS recognized this inconsistency. NAICS classifies
auxiliary establishments based on what they do, not on whom they serve. The production oriented
concept of NAICS mandated this change.
This change will result in significant shifts in employment data. In 1992, Census data showed over
1,000,000 auxiliary employees assigned to manufacturing and over 840,000 auxiliary employees
assigned to retail trade. These employees are most likely to move to either the Management of
Companies and Enterprises sector; the Warehousing and Storage subsector; the Computer Systems
Design and Related Services subsector; the Accounting, Tax Preparation, Bookkeeping and Payroll
Services subsector; or some other services -related subsector. For the 1997 Economic Census, these
auxiliary establishments will be dual coded by primary activity and by whom they serve. The data will
be shown separately to provide data users with the necessary links to prior information.
Send comments or questions about NAICS or about this web site to naics@census.gov
US. Census Bureau last updated 3/6/98
http://www.census.gov/eped/www/naicsect.htm 3/13/2007