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HomeMy WebLinkAbout2.a. Liquor License Issues EXECUTIVE SUMMARY City Council Regular Meeting Date: February 17, 2015 AGENDA ITEM: Liquor License Issues AGENDA SECTION: Discussion PREPARED BY: Clarissa Hadler, City Clerk, Eric Zweber, City Planner Mary Tietjen, City Attorney AGENDA NO. 2.a. ATTACHMENTS: Proposed Improvement 3-D Rendering/Images, Comparable Theaters, Liquor Establishment Flowchart APPROVED BY: ddj RECOMMENDED ACTION: Discussion and recommendations . SUMMARY Staff has been planning an update to the Liquor Regulations due to some ambiguities and unclear language. Also, two specific issues make the code improvements timely. These issues include an inquiry from Marcus Theaters about obtaining a liquor license, as well as the increasing popularity of microbreweries and micro-distilleries and new state laws associated with these uses. Additionally, Community Development staff propose s changes to hotel liquor regulations in preparation for any future hotel development. ISSUES Marcus Theaters Marcus Theaters has inquired about applying for a liquor license in connection with the addition of a restaurant internal to the building. The owner will be doing some remodeling and adding Zaffiro’s Express, an expansion of their current concessions food service . As shown in the rendering, this expansion would include a separate service window from which specialty food items and liquor could be sold. This model has been used in other communities, as shown in the images, though none in Minnesota. Marcus is in the beginning of their planning process and hopes to have the renovations completed and obtain a liquor license toward the end of 2015. The current liquor regulations might allow the theater to qualify for a Class B liquor license as a restaurant, if they fit the definition of “restaurant” as defined in state statute. That definition states that a restaurant is “an establishment, other than a hotel, under the control of a single proprietor or manager, where meals are regularly prepared on the premises and served at tables to the general public, and having a minimum seating capacity for guests as prescribed by the appropriate license issuing authority.” There is some question whether meals served through a service window fit this definition. City Attorney Tietjen is currently researching this issue further and will provide a verbal update at the work session. Should they qualify as a restaurant, Marcus Theaters is concerned about the 51% food requirement in our code and would like to be considered under a rule similar to that for bowling centers, which requires 25%. This percentage is the required amount of food to be sold as a percentage of total sales; where “total sales” refers to sales of food (including concessions), nonalc oholic and alcoholic beverages. Staff supports an amendment to the liquor code that would allow restaurants operated in conjunction with movie theaters to meet a 25% food requirement. Staff has contact ed the cities of Oakdale, Waite Park, St. Louis Park, Burnsville and Rochester to get feedback on their theaters that serve liquor. The appendix “Theater Comparison” outlines some of the information. The model in which liquor is served varies significantly. Most of the facilities researched are licensed as restaurants; one as an exclusive liquor store. Burnsville and St. Louis Park have specific areas where liquor may be served. Oakdale and Waite Park, which are Marcus Theaters, license the whole premises and do not limit the areas in which liquor may be consumed. None of these locations currently serve s exclusively from a service window. The clerks in those communities stated the theaters had passed their compliance checks. Chief of Police Scott did note that some of the locations did see an increase in police calls in the years after the liquor licenses were issued. With regard to Marcus Theaters, staff is supportive of the issuance of a license to the theater should City Attorney Tietjen determine that they do fit within the statutory definition of a restaurant. Staff intends to bring forward an ordinance amendment that recommends restaurants operated in conjunction with movie theaters to meet a 25% food requirement. Additionally, staff has examined the other uses that may obtain a liquor license and recommends the ordinance permit live theaters to also meet a 25% food requirement. In recognition of the Council interest in obtaining a hotel in the community, staff will be recommending that the 51% food requirement for hotels be removed. The Council may recall that the previously approved hotel was anticipating a small bar area that would be used for hotel patrons which would not contain any restaurant. Staff would want to allow this same accessory use in a hotel. Breweries / Distilleries Staff has reviewed the City Code and State Statutes regarding micro-breweries and their taprooms, as well as similar alcoholic beverage manufacturers such a farm wineries and micro-distilleries and their cocktail rooms. The Zoning Ordinance currently addresses breweries and distilleries as beverage manufa cturers within the GI: General Industrial zone. This classification is intended for industrial level breweries and distilleries, such as the former Schmidt brewery and the Phillips distillery. When considering micro-breweries and micro-distilleries, these businesses function more as a retail operation but there are still some industrial qualities to the business, such as truck docks for deliveries and distribution. Additionally, many micro-breweries have significant entertainment components including outdoor patios, food trucks and events. To help address these issues, staff is proposing to use the State licensing categories to divide the breweries into three categories (producing less than 3,500 barrels annually; producing between 3,500 and 20,000 barrels; and producing more than 20,000 barrels) and distilleries into two categories (less than 40,000 proof gallons and more than 40,000 proof gallons). Dividing the businesses into these categories will allow the City to allow the businesses with the smallest production in more retail zones and leaving the businesses with the largest production in the industrial zones. Existing micro-breweries are located in many different areas in the Twin Cities. Micro-breweries exist in the downtowns of Hopkins, Minneapolis, St. Paul, Victoria, Waconia and White Bear Lake; exist in industrial districts of Minneapolis, Minnetonka, Roseville, Shakopee, St. Paul, and St. Louis Park; and even exist in agricultural areas in conjunction with farm wineries. Their location varies for a number of reasons. The micro-breweries located in downtowns typically have opened since the passing of the “Surly Bill” that allowed taprooms to sell their beer on-sale to the public. Micro- breweries are often in industrial areas because the existing buildings have high ceilings necessary for the production equipment (brewers prefer buildings with at least 12 foot tall ceilings) and the truck docks necessary for equipment and ingredient delivery and beer distribution. To accommodate micro-breweries and micro-distilleries, an amendment is required to the Business Regulation Ordinance to add additional liquor license categories. A taproom license will be needed for micro-breweries to be allowed to sell their beer on-sale to the public and a small brewer license would be needed for micro-breweries to sell their beer off-sale in growlers. A cocktail license will be needed for micro-distilleries to sell drinks on-sale to the public. Micro-distilleries cannot sell their product off-sale directly to the public. Most of the State Statutes regarding micro-breweries and micro-distilleries are relatively new and are generally more restrictive than other States. The industry is continuing to lobby the legislature to pass legislation similar to these other States. For this reason, staff would recommend that the City adopt regulations that reference State Statute as much as possible so that the City would not need to amend its ordinances with every change to the State Statutes. Attached to this Executive Summary is a flowchart of the various alcohol related businesses and how staff proposes to amend the City Code to allow these businesses to operate with appropriate regulation. There are business regulation ordinance and Zoning Ordinance amendments that are necessary. The business regulations can be amended by the City Council, but the Zoning Ordinance amendments require a Public Hearing and recommendation from the Planning Commission before the City Council can take action. Staff is proposing to work with the Planning Commission to determine the appropriate zoning district for the various types of businesses and if some of them should require a Conditional Use Permit to address their potential impacts on adjacent businesses or residents. Staff anticipates that these amendments may take up to three (3) months of work with the Planning Commission. DISCUSSION Staff invites Council to comment on any concerns they might have on these issues and provide direction on the proposed amendments to the liquor and zoning codes. Staff plans to begin edits to the Liquor Regulations in the near future. In addition, Marcus Theaters would like input as to whether they might qualify for a liquor license. © TK Architects International Inc., 2015 LOBBY REMODEL. MARCUS ROSEMOUNT TKA-13091.04. 2015.01.28 MARCUS THEATERS PROPOSED IMPROVEMENTS Liquor Served Here © TK Architects International Inc., 2015 LOBBY REMODEL. MARCUS ROSEMOUNT TKA-13091.04. 2015.01.28 EXISTING ZAFFIRO’S EXPRESS LOCATION THEATER COMPARISON Oakdale (Marcus Theaters) – • There is a restaurant, but food/drinks are delivered or may be carried to the movie theaters. • Initial license covered restaurant only; was expanded a few months later to include the whole building. • Oakdale’s code does not require the 51% food sales. • Limited to sale of one drink per person at a time. • No failed compliance checks. Waite Park (Marcus Theaters) – • Separate restaurant, but also have a “side window”. • Consumption allowed in any theater. • Do not have 51% food rule. • Limit of 2 drinks / person at a time. • Passed all compliance checks. Burnville (Paragon Theater) – • Restaurant on top floor, with theater balconies where liquor is allowed. • Liquor only in the restaurant and those specified theaters • They are currently inquiring about concessions sale of liquor/beer/wine. (expanding the premises.) • No failed compliance checks or increased criminal activity. Rochester (Paragon Theater) – • Have a “bar and lounge” in the front of the building. • Full On-Sale – Exclusive Bar License (similar to our Class A, but they have limit of 26 city-wideand ours is 2.) (Not sure this qualifies as an Exclusive Liquor Store, as they sell movie tickets.) • No failed compliance checks that city staff was aware of. Actually, doesn’t ever look that busy when she’s been there. St. Louis Park (ICON Theater) – • Restaurant on top floor, with theater balconies where liquor is allowed. • Followed Bloomington’s lead when creating policy/ordinance. • Changed Ordinance (issue stemmed from potential nudity in movies. Our code does not limit the showing of nudity in films; only live nudity.) • Does have 51% food sales rule; allows Concessions to count as food. Establishment with Alcohol Off-Sale License On-Sale License Zoning District Bar Restaurant Club “Live” Theater Hotel Bowling Center Brew Pub (restaurant with on site beer production) Microbrewery (less than 3,500 BBL) Brewery (less than 20,000 BBL) Brewery (more than 20,000 BBL) Farm Winery Microdistillery (less than 40,000 proof gallons) Distillery (more than 40,000 proof gallons)       C-1  GI AG   LI  BP  C-4  C-3 DT Liquor Store Off Sale Intoxicating Liquor Small Brewer License Wine (and Beer)  On Sale Club On Sale Taproom Cocktail Room Class A On Sale (No required food sales) (No more than 2 allowed) Class B On Sale (51% revenue from food sales) (25% food sales for  bowling center) Solid Lines = Existing Ordinance Dashed Lines = Proposed Ordinance Cross Hash = Remove from Ordinance ALCOHOL REGULATION FLOWCHART