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VII.3. First Reading of Ordinance Amending Chapters 4 and 102 and Appendix A of the Hopkins City Code Regarding On-Sale Intoxicating Liquor Licenses and Experience-Based Entertainment; DomeierJuly 14, 2020 Council Report 2020-054 ORDINANCE AMENDING CHAPTERS 4 AND 102 AND APPENDIX A OF THE HOPKINS CITY CODE REGARDING ON-SALE INTOXICATING LIQUOR LICENCES AND EXPERIENCE-BASED ENTERTAINMENT Proposed Action Staff recommends adoption of the following motion: Move to adopt for First Reading Ordinance 2020- 1147 An Ordinance Amending Chapters 4 and 102 and Appendix A of the Hopkins City Code Regarding On-Sale Intoxicating Liquor Licenses and Experience-Based Entertainment. Overview The purpose of amending the City Code is to support the sale of liquor for businesses aimed at providing experience based activities. By adding “exclusive liquor stores” in our City Code, businesses would have the option to serve liquor without the requirement to be a restaurant, hotel or bowling alley. Also, businesses would not be required to have 50% of their sales come from food and non-alcoholic beverages. Initially, staff referred to this license as a Special Entertainment Liquor License; however, state law only authorizes the issuances of certain types of licenses. Instead, we are treating this as exactly what it is – an on-sale license issued to exclusive liquor stores. Information about Exclusive Liquor Stores can be https://www.revisor.mn.gov/statutes/cite/340A.412#stat.340A.412.14 under Section 14. The City Attorney has reviewed the attached ordinance. We currently have one business owner that is ready to pursue this license. The applicant has reviewed the terms and conditions of the license and is in general agreement with the proposed ordinance. The proposed schedule for this ordinance and applicant process is as follows: First Reading: July 14, 2020 Planning Commission Public Hearing: July 28, 2020 Second Reading: August 4, 2020 Date of Publication/Ordinance Takes Effect: August 13, 2020 Applicant’s Liquor License Consideration: August 18, 2020 Primary Issues to Consider  No more than two on-sale liquor licenses may be issued to exclusive liquor stores, subject to requirements: 1. The store must be located in the City’s B-2 zoning district. (Because the proposed ordinance includes a zoning component it requires a zoning ordinance amendment. It is anticipated that the public hearing will be held on Tuesday, July 28.) 2. The license may only be issued to an exclusive liquor store that offers live entertainment during all hours of operation. 3. Intoxicating liquor may only be served to paid, ticketed customers while participating in a live entertainment activity offered by the store. 4. Applicants must submit a business plan that includes a detailed overview of the activities that will be provided to customers. 5. State law does not authorize exclusive liquor stores to sell intoxicating liquor on Sundays. 6. The proposed license fee for the license is $3,000 per year, July 1 to June 30. Supporting Documents  Proposed Ordinance 2020-1147 . Amy Domeier, City Clerk 2 CITY OF HOPKINS COUNTY OF HENNEPIN ORDINANCE NO. 2020-1147 ORDINANCE AMENDING CHAPTERS 4 AND 102 AND APPENDIX A OF THE HOPKINS CITY CODE REGARDING ON-SALE INTOXICATING LIQUOR LICENCES AND EXPERIENCE-BASED ENTERTAINMENT WHEREAS, pursuant to Minn. Stat. §§ 340A.404, subd. 1(a)(7), 340A.101, subd. 10, and 340A.412, subd. 14, the City is authorized to issue on-sale intoxicating liquor licenses to exclusive liquor stores that offer live or recorded entertainment; and WHEREAS, pursuant to Minn. Stat. § 340A.509, the City may adopt regulations governing the sale and possession of alcoholic beverages within its jurisdiction that might otherwise be more restrictive than state law; and WHEREAS, the City desires to attract groups of individuals to its central business district area by allowing a limited number of businesses that provide experience-based entertainment activities to sell intoxicating liquor to their customers for on-premise consumption, all within the confines of the aforementioned statutory authority; and WHEREAS, the City finds that authorizing the sale of intoxicating liquor to participants of such activities will provide benefits to the downtown area, and that creating a licensing mechanism to do so is in the best interests of the City’s residents. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF HOPKINS HEREBY ORDAINS AS FOLLOWS: SECTION 1. Hopkins City Code, Part II, Chapter 4, Article II, Section 4-36(a) is hereby amended by adding the double-underlined language and deleting the stricken language as follows: Sec. 4-36. - On-sale licenses. (a) Intoxicating. On-sale intoxicating liquor licenses shall be subject to the following: (1) On-sale intoxicating liquor licenses may be issued only to hotels, clubs, restaurants, bowling centers, exclusive liquor stores, and clubs or congressionally chartered veterans organizations meeting the qualifications contained in M.S.A. § 340A.404, subd. 1(a)(4). Not more than ten on-sale intoxicating liquor licenses may be granted by the city. (2) No on-sale intoxicating liquor license shall be issued to a restaurant unless the applicant makes a bona fide estimation that at least 50 percent of the gross receipts of the restaurant during its first year of business will be attributable to the sale of food. (3) Each restaurant granted an on-sale intoxicating liquor license under this section shall attribute at least 50 percent of gross annual receipts from the sale of food. The calculation for this requirement shall include only the food and beverage portion of 3 any multi-service establishment. Financial records for the food and beverage portion must be maintained separately from any other records. Additionally, "sale of food" shall include gross receipts attributable to the sale of food items, soft drinks and nonalcoholic beverages. It shall not include any portion of gross receipts attributable to the nonalcoholic components of a plain or mixed alcoholic beverage, such as ice, soft drink mixes or other mixes. (4) The city may require the production of such documents or information, including, but not limited to, books, records, audited financial statements, or pro forma financial statements, as it deems necessary or convenient, to enforce these provisions. The city may also obtain its own audit or review of such documents or information, and all licensees shall cooperate with such a review, including prompt production of requested records. (5) In addition to other remedies that it may have available, the city may place the licensee on probationary status for up to one year when the sale of food is reported, or found to be, less than 50 percent of gross receipts for any business year. During the probationary period, the licensee shall prepare any plans and reports, participate in any required meetings, and take other action that the city may require to increase the sale of food. (6) The provisions of this section related to food sales shall not apply to any restaurant having a city on-sale intoxicating liquor license prior to July 1, 1999 and will not affect future renewals of such licenses. The provisions shall also not apply to new licenses issued for existing restaurants due to sale or transfer of ownership, unless the restaurant has been closed and without an on-sale intoxicating liquor license for at least 90 days. (7) No more than two on-sale intoxicating liquor licenses may be issued to exclusive liquor stores, and such licenses shall be further subject to the following requirements: (i) An on-sale intoxicating liquor license may only be issued to an exclusive liquor store that offers live entertainment in the form of “experience-based entertainment,” as that term is defined in section 102-4 of the Hopkins City Code, during all hours of operation. (ii) An exclusive liquor store that obtains an on-sale intoxicating liquor license may only sell intoxicating liquor to paid, ticketed customers while said customers are participating in the entertainment activity offered by the establishment. Intoxicating liquor may only be sold to each customer for a successive two -hour period, although the experience-based entertainment activity may last longer than that. (iii) The city may establish a separate fee for on-sale intoxicating liquor licenses issued to exclusive liquor stores, which shall be subject to any express fee limitation contained in state law. 4 (iv) No sale of intoxicating liquor for consumption on the licensed premises of an exclusive liquor store may be made between 2:00 a.m. and 8:00 a.m. on the days of Monday through Saturday or after 2:00 a.m. on Sundays. SECTION 2. Hopkins City Code, Part II, Chapter 4, Article II, Section 4-55 is hereby amended by adding the double-underlined language as follows: Sec. 4-55. – License application. (a) Every application for a license or permit issued under this chapter shall be on a form provided by the city. The form shall be verified and filed with the city. No person shall make a false statement on an application. (b) Every application shall state the name of the applicant, the applicant's age, representations as to the applicant's character, with references as the city may require, the type of license applied for, the business in connection with which the proposed license will operate and its location, a description of the premises, whether the applicant is owner and operator of the business, how long the applicant has been in that business at that place, the name and date of birth of the manager of the business, and any other information as the city may require. (c) In addition to all other information required by the city, every application shall contain a description of the premises, including the street address and legal description of the property, and plans depicting the design of the premises where alcoholic beverages may be dispensed and consumed. The plans shall show room dimensions and shall indicate the number of persons intended to be served in each room. An exclusive liquor store seeking an on-sale intoxicating liquor license pursuant to subsection 4-36(a)(7) must also submit a business plan that includes a detailed overview of the experience-based entertainment activities that it provides to its customers. SECTION 3. Hopkins City Code, Part III, Chapter 102, Article I, Section 102-4 is hereby amended by adding the double-underlined language as follows: Experience-Based Entertainment: An establishment offering team or group entertainment activities such as bocce ball, game shows, escape rooms, painting classes, cooking classes, axe throwing, and arts and crafts workshops. Experienced-Based Entertainment uses shall not include commercial recreation, bingo or other forms of charitable gambling, live music, karaoke, massage therapy, arcade games, video games, hookah lounges, oxygen bars, spas, event centers, art galleries, or adult-oriented businesses. SECTION 4. Hopkins City Code, Part III, Chapter 102, Article VII, Section 102-214 is hereby amended by adding the double-underlined language as follows: Permitted Uses B-1 B-2 B-3 B-4 Experience-Based Entertainment X SECTION 5. Hopkins City Code, Appendix A, which contains the City’s fee schedule, is hereby amended by adding the double-underlined language as follows: LICENCE FEES 5 Intoxicating alcohol On-sale exclusive liquor store $3,000.00 Per year SECTION 6. The effective date of this ordinance shall be the date of publication. First Reading: July 14, 2020 Second Reading: August 4, 2020 Date of Publication: August 13, 2020 Date Ordinance Takes Effect: August 13, 2020 By: ____________________________ Jason Gadd, Mayor ATTEST: ______________________________ Amy Domeier, City Clerk