HomeMy WebLinkAbout2.c. Liquor OrdinanceCITY OF ROSEMOUNT
EXECUTIVE SUMMARY FOR ACTION
COMMITTEE OF THE WHOLE MEETING DATE: June 11, 2003
AGENDA ITEM: Liquor Ordinance
AGENDA SECTION:
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PREPARED BY: Gary D. Kalstabakken, Chief of Police
AGENDA NO:
ATTACHMENTS: Ordinance
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APPROVED BY:
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There are three issues related to the ordinance regulating liquor licenses to be discussed to receive Council
direction.
Off— Sale Liquor License
The current ordinance limits the number of off -sale liquor licenses based on the population estimate of the
Metropolitan Council. One license is authorized'for every 6500 residents. The Met Council estimate of
Rosemount's population as of April 2001 is 15,270. Staff is attempting to get a more current estimate. Based
on the estimate, two (2) off -sale license are permitted and there are two licenses currently held for off -sale.
Council received a letter from the existing off -sale license holders requesting that the population limit be raised.
A realtor representing a potential off -sale license applicant has made an inquiry of city staff on how to have the
ordinance changed to eliminate the license limit. There was also discussion early in the legislative session this
year to prevent cities from limiting the number of off -sale licenses.
Attached are the letters previously sent to Council from the current license holders. Staff compiled the attached
spreadsheet comparing data from surrounding communities and other similar metro area cities.
Extended Hours Legislation
The 2003 legislature passed a bill authorizing municipalities to extend bar hours to 2:00 a.m. A survey of the
licensed bars indicates that the majority are interested in having Rosemount's ordinance amended to allow for
the later hours. However, the owners /managers also indicated that they probably will not stay open every night
until 2:00 a.m. even if the ordinance is amended. The most likely dates that hours would be extended are
Wednesday, Thursday, Friday -and Saturday.
License Violation Penalties
An administrative fine, license suspension and license revocation are all actions that may be taken by Council
when a license violation occurs. The existing ordinance does not contain any type of predetermined penalty
system to guide Council. Penalties are determined on a case -by -case basis. Other cities have adopted a matrix
showing the presumed penalty for any violations that occur within a specified time period. This matrix system
informs license holders of what to expect for violations and establishes a set system for Council to follow; this
may prevent accusations of favoritism when any penalties are imposed. Council is asked to discuss adopting a
"penalty matrix."
RECOMMENDED ACTION Discussion
COUNCIL ACTION:
DATE: June 04, 2003
TO: Gary Kalstabakken, Chief of Police
FROM: Linda Jentink, City Clerk
SUBJECT: Off -Sale Liquor License Survey 2004
CITY/ POPULATION
CURRENT
Apple Valley
Municipal stores
N/A
2
952- 953 -2500
only
46,600
Burnsville
$200.00
10
8
Free standing
952- 895 -4400
buildings
60,434
1 mile minimum
Chaska
$150.00
None
6
Two with on -sale
952- 448 -2851
business
18,380
Cottage Grove
$200.00
One per
4
651- 458 -2800
7,500
30,753
population
Eagan
$200.00
None
13.
651- 675 -5000
64,300
Farnlington
Municipal stores
N/A
2
651 -463 -7111
only
13,279
Hastings
$200.00
None
11
651- 437 -4127
18,503
Inver Grove Heights
$200.00
None
5
651- 450 -2500
30,150
Lakeville
Municipal stores
N/A
3
952- 985 -4400
only
44,751
Lino Lakes
$100.00
None
5
651- 982 -2400
17,380
Nort hfield
Municipal stores
N/A
1
507- 645 -8832
only
17,509
North St. Paul
$200.00
4
3
651- 770 -4450
11,923
Oakdale
$200.00
None
10
651- 739 -5086
26,906
South St. Paul
$200.00
12
2
651 -554 -3200
20,174
West St. Paul
$200.00'
7
7
651 -552 -4100
19,624
city
Population Est.2001
Met Council
Limit
Current
Stores Per
Population
Burnsville
60,434
10
8
7554
Eagan
64,300
None
13
4946
Hastings
18,500
None
11
1682
Inver Grove Heights
30,150
None
5
6030
South St. Paul
20,284
12
2
10142
Cottage Grove
30,753
Po . 7500
4
7688
Lino Lakes
17,380
None
5
3476
North St. Paul
12,780
None
3
4260
Oakdale
26,906
None
10
2691
Chaska
18,380
None
6
3063
West St. Paul
19,600
7
7
2800
Average
4939
Rosemount
15,270
6500
2
7635
Munkal Liquor Stores
Apple Valley
46,600
Muni
2
23300
Farmington
13,279
Muni
2
6640
Lakeville
44,751
Muni
3
14917
Northfield
16,051
Muni
1
16051
Average
15227
Rosemount Liquors, I nc.
15070 Chippendale Ave.
P.O. Box 14
Rosemount, MN 55068
To: Rosemount City Council:
Mayor: William (Bill) H. Droste
Council Members: Mary Riley, Mark DeBettingnies,
Kim Shoe - Corrigan, Kevin Strayton
Phone 651- 423 -9065
Fax 651 -423 -1003
Re: Rosemount Off -Sale Liquor Ordinance
Date: April 7, 2003 SAY n
2003
Dear Mayor and Council Members:
My name is Rishi P. Mohabir, a resident of Rosemount and Chief Executive
Officer of Rosemount Liquors, Incorporated. I am writing with respect to modification
of the current off -sale liquor ordinance, and perhaps assist in providing a rationale for
preamble findings in the liquor ordinance revision and amendment to the issuance of
liquor licenses based upon population as determined by the most recent Metropolitan
Council population estimates.
In the mid 1990's I considered opening an off -sale liquor store in Rosemount. I
contacted city administration and was advised that there could only be two off- -sale
licenses, with a distance limitation of their not being within one mile of one another as a
requirement. City administration informed me that an ordinance change to allow another
liquor store was unlikely. Accordingly, I negotiated with McFarland, the owner of Mac's
Bottle Shop for the purchase of his licensed business. I paid a premium price for the
business believing for the foreseeable future, Rosemount would allow two off -sale liquor
establishments. Thus, I had investment - backed expectation in investing in a business in
Rosemount based upon the current ordinance. However, since 1999 off -sale liquor
ordinances have changed several times, costing Rosemount Liquors, Inc. thousands of
dollars. One of those ordinance changes was the issuance of license based upon
population. The guidelines and standards set were that off -sale intoxicating liquor
licenses may be issued dependent upon the population of the City of Rosemount where an
off -sale liquor license may be issued for each 6,500 of city population attained, as
determined by the more recent Metropolitan Council population count (estimates) for
said city. The population numbers were not based upon any objective criteria or
Your one stop location for aN your Wine, Liquor, and Beer needs.
1
rationale, but one that was arrived at arbitrarily. There was no open discussion or input
from affected parties for the rationale at arriving at the current population numbers per
off -sale liquor license.
FINDINGS OF FACT -
A survey of the surrounding communities concerning off -sale retail liquor
restrictions was indeed instructive.
I have surveyed and researched the communities
surrounding the city of Rosemount because it clearly reflects the same trade area with
somewhat identical demographics.
Thus, the comparison is relevant, fair and equitable.
The following represents population data per off -sale liquor licenses:
City Name Population (Approx.)
No. of Licenses Avg Pop. /Store
Apple Valley 42,000
2 21,000
Burnsville 60,500
8 7,500
Farmington 16,200
2 8,100
Lakeville 60,500
3 15,333
TOTAL 164,700
15 10,980
The above statistics showed that the average population per off -sale liquor
licenses is 11,000 (approximately). Rosemount ordinance is 6,500 attained population
per liquor license, a number far less than the average by 4,500 population estimate.
Burnsville's ordinance does an admirable job in balancing the occasional proliferation of
liquor stores and the investment- backed expectations of current liquor store owners.
Among Burnsville's notable restrictions, liquor stores must be one mile apart, and be
located in a free stgnding building. The owners are, in essence, required to make a
substancial investment in the business, and in return, the distance limitation provides for
equitable competition within a reasonable trade area. In short, the ordinance fosters
successful and presentable businesses in that community.
Although Farmington, Apple Valley, and Lakeville are municipal liquor cities,
their desire to have well run and profitable businesses serving their community have
resulted in liquor store per population figures of one liquor store per eight thousand,
twenty -one thousand, and fifteen thousand of population respectfully. As in the case of
Farmington, one of the two stores is very small and serves as a convenient stop rather
than a profitable store. This indicates that those cities realized, by their cost/benefit
analysis, that it takes a large population to support a reasonably successful retail liquor
store in their communities, especially as the. drinking population is continually
decreasing.
2
The liquor industry differs from most other commercial activities by virtue of the
numerous regulations and constraints imposed upon them. Although a free market
approach is seductive, the liquor industry is not. It is regulated at all levels of
government, from the Federal government level to the local government level. Unlike
most commercial activities which cities may regulate through land use zoning ordinances,
Minnesota law through legislative enactment, rule- making regulations, and court
decisions has long upheld the requests of cities and local governing jurisdictions to
regulate the sale of liquor, a controllable substance under Minnesota law. The liquor
industry is not a free enterprise sector, and as such severe constraints are placed upon
liquor businesses by these regulations. These regulations impact all aspects of the
business, including but not limited to the purchase, sale, distribution, payment, and
day -to -day operations of liquor establishments. These regulations reduce flexibility and
make it much more difficult for liquor retailers to compete amongst themselves in the
same manner as other commercial activities compete amongst themselves in a free
market system.
Rosemount has limited commercial retail space and efforts should be directed to
business diversity, rather than duplicating businesses. The city of Rosemount
should , expend efforts to carefully plan for balanced business activities. This will retain
disposable incomes and increase our tax base for the City of Rosemount.
Although population growth is the best measure used to make determination on
the issuance of liquor licenses, the industry research shows that the drinking population is
diminishing annually. This is due to many factors and the most predominant is that of
restrictive regulation, new laws and safety factors. The current population definitions in
the city of Rosemount's ordinance and its demographics cannot support more than two
off- -sale liquor establishments today or the foreseeable future.
The current ordinance will result in a possible issuance of another off -sale liquor
license very soon, given the current population growth of the city of Rosemount. If this
license is issued to a "big, box" that engages in unfair pricing, it is possible that none of
the current off -sale liquor establishments will be operational. Thus, we will end up with
the same practices that have plagued the city of Rosemount of replacing one business
with another without`,Ty possible advantage to the community.
EFFECT / IMPACT
The current population. definitions in the ordinance need to be re- examined in
light of the above facts. Failure to re- examine and revise the current population
definitions and provide equity will have the following impact:
• Major financial,loss and loss of tax revenue to the city can occur. Failure to
"level the playing field" can be extremely detrimental to the investment- backed
expectation of our current liquor store owners without any benefit to- our
community.
3
• The city of Rosemount, with its limited commercial space, will not be abic t6:
attract a diverse business base. Business duplication is detrimental to the business
community and to the residents themselves. Business diversity retains shoppers
in the community and provides for a stronger tax base for the city.
• The city of Rosemount can hardly support two reasonably small liquor stores.
Failure to revise the said ordinance will result in marginal liquor store business
with reduced profitability, thereby hindering the ability of retail liquor stores to
employ qualified individuals of suitable age and maturity to ensure compliance
with liquor sales laws and regulations.
• In view of the fact that liquor is a controlled substance, the issuance of any
additional off -sale licenses will incur increased costs of the enforcement of its
numerous laws, ordinances, and regulations at all levels of government. This,
however, is not appropriate or responsible under the current budget cuts that.all
levels of government are experiencing.
' COMMENDATIONS
The above compelling facts and the impact of the current ordinance relating to the
population standard on the issuance of off -sale liquor licenses support the review,
deliberations, and revisions of the liquor ordinances. I am recommending that the
population standards be revised from 6,500 to 11,000 attained per retail liquor store. This
will provide for a fair and equitable playing field consistent with our surrounding cities.
The revision will foster effective competition, convenience, and accessibility to our city's
residents, while protecting the investment- backed expectations of our current liquor store
retail businesses. The revisions will send a strong message to current and prospective
small business owners that the City of Rosemount values its business community.,
Tha for your time and consideration in addressing this matter. I would
appreciate the opportunity to discuss and answer any questions on this matter. I hope we
can adopt the recommended revisions as early as possible. Again, thank you.
Very truly yours,
f
cc: Jamie Verbrugge
4
e
April 11, 2003
To: The Rosemont City Council
Mayor: Bill Droste
Council Members: Mark DeBettignes, Kim Shoe - Corrigan,
Mary Riley, Kevin Strayton
Dear Mayor and Council Members:
My name is Sarah Dostal and I am representing my family's business, Shenanigan's Fine Wine
& Spirits. I am writing this letter to ask for your consideration in a matter concerning the issu-
ance of off -sale liquor licenses in the city of Rosemount. I am asking for a revision of
Rosemount's current policy regarding the issuance of liquor licenses based upon population.
Our family has been in operating our business in Rosemount for the past 17 years. My sisters
and I manage Shenanigan's along with our semi - retired parents, Fritz and Pat Dolejs. Al-
though my parents are out of town during the winter months, they have'kept a long distance
hand in the day -to -day operations of the business. A few years ago, we made the decision to
invest in property on County Road -42 in order to build a new store triple the size of our original
location. A great deal of research and deliberation went into our decision as this was a major
financial commitment for our family. We have not regretted our decision as we °have been able
to expand our product lines in all categories due to the expanded size of our store. We are
pleased with the look and feel of our building and believe the extensive selections of wine and
spirits we offer is a significant enhancement to the city of Rosemount. Our intention is to con -
tinue.to use this building design style as we continue to develop the rest of the lot.
In a discussion with Rosemount's other off -sale liquor store owner, Richi Mohibar, it has come
to my attention that the communities around Rosemount
have also used population data to
determine off -sale liquor licenses. As follows:
Population Li censes
Average Population per Store
Apple Valley 42,000 2
21,000
Burnsville 60,500 8
7,500
Farmington 16,200 2
8,100
Lakeville 60,500 3
15,333
Total 164,700 15
. 10, 980
The figures above indicate that the average population in our neighboring communities per off -
sale liquor licenses is approximately 11,000. Currently Rosemount's ordinance stands at 6,500
population per liquor license. This number is less than the average by 4,500. The 11,000
population per store figure makes good business sense considering that a large population is
required to support a successful liquor store. This, coupled with the fact that the drinking popu-
lation is continually decreasing and that liquor retailers are limited by law to selling only liquor
products, gives credence to the fact that it is in any community's best interest to place popula-
tion limit. nn Iin or.tnrP nnPninn.
w
All liquor retailers have numerous constraints imposed upon them: Liquor is regulated at all
levels of government.from Federal to Local. The liquor industry is unique in that it operates
under highly restrictive laws and regulations that do not impact the free enterprise sector. .
These regulations, important as they are,. make it highly, difficult for liquor retailers to offer a
unique value proposition to distinguish their business.
Research proves that vibrant, .economically successful cities provide their residents with a
diverse offering of businesses. We believe that the addition of another off -sale Liquor store
establishment will negatively impact Rosemount rather than enhance the city's current offer -
ings. Research also indicates that the current population base of Rosemount would be unable
to support three liquor stores within such close physical proximity. In this scenario, one of the
three businesses would most certainly fail. Clearly, this outcome does not benefit the city nor
any of the investors associated with the businesses.
We recommend that the current ordinance relating to the population standard on the issuance
of off -sale licenses be revised from 6,500 to 11,000 per liquor store establishment. This stan-
dard will allow our city's residents to continue to benefit from fair competition and convenience
offered by the existing liquor stores, while also protecting investor's interests. The decision by
the City Council to revise this ordinance will clearly demonstrate that the City of Rosemount
values its business community and is interested in seeing the continued success of its existing
businesses.
We appreciate your thoughtful and serious consideration to this matter. We would be happy to
discuss and answer any questions. We are hopeful that the recommended revisions can be
adopted as soon as possible.
Sincerely,
Sarah Dostal
cc: Jamie Verbrugge