Loading...
Memo-10% Fund ;;f~ .. Department of Administration Memorandum To: Hopkins City Council Jim Genellie From: Date: Subject: September 12,2003 10% Fund The Hopkins City Council amended Legislative Policy 4-A, Lawful Gambling, by adding Section 2.15 which required organizations conducting gambling in leased premises to contribute 10% of their net profits to the City. I spoke to Tom Barret of the Minnesota Lawful Gambling Commission regarding establishing a "10% fund." During the course of this conversation, I asked him about limiting contributions to such a fund to only those gambling organization that conduct gambling in leased premises. He said that he was not aware of any other City that limited contributions to those organizations conducting gambling in leased premises. However, he also stated that he was not aware of any law against it. I requested that the City Attorney give an opinion on this issue. City Attorney Miller's opinion is attached. Based upon his research he is recommending that the City require all organizations conducting lawful gambling to contribute to this fund. The City Council has three alternatives: 1. Proceed with the current plan to limit contributions to those organizations that conduct gambling in leased premises. Staff would prepare an ordinance and bring it to the Council for first reading at the next Council meeting. 2. Require all lawful gambling organizations to contribute 10% of their net profits to a fund set up by the City. Staff would prepare an ordinance and bring it to the Council for first reading at the next Council meeting. Staff would prepare a resolution amending Legislative Policy 4- A, Lawful Gambling, Section 2.15 to require all lawful gambling organizations to contribute 10% of their net profits to a fund set up by the City. Staff would also notify all organizations conducting lawful gambling of the proposed policy change and ordinance. 3. Decide not to set up a "10% fund." Staff would prepare a resolution amending Legislative Policy 4-A, Lawful Gambling by eliminating Section 2.15. . \Admin MEMO.doc . . . MILLER, STEINER & CURTISS, P.A. ATIORNEYS AT LAW 400 WELLS FARGO BANK BUILDING 1011 FIRST STREET SOUTH HOPKINS, MN 55343 JERRE A. MILLER JEREMY S. STEINER * WYNN CURTISS KIRSTEN A. HOLSETH *Real Property Law Specialist, certified , by the Minnesota State Bar Association (952) 938.7635 FAX (952) 938-7670 Writer's Direct Dial No. (952) 253-0070 Date: August 26, 2003 To: James Genellie From: Jerre Miller Re: Gaming Statute At the last Council Meeting, Council Person Johnson asked if the City could require contributions of 10 percent of net profits annually from organizations that lease their space and exclude organizations that own their own space. As a practical matter, this would mean the VFW, Legion and Elks Clubs would not be tapped for the 10 percent. I have a concern that this could be construed as an unequal demand on lessees while excluding the private organizations that happen to own their own premises where the gaming is conducted. My recommendation is if a 10 percent of net profits is to be imposed on gaming organizations, that it should be imposed upon all who engage in the activity and exclude no one. With respect to adjusting the 10 percentile number, subdivision 1 of M.S. 349.213 says that a City has not been given the authority to require an organization to make a specific expenditure of more than 10 percent annually. Within the same subdivision, the City is allowed to adopt an ordinance that requires a 10 percent contribution of net profits which go into a fund administered by the City for lawful purposes. Paragraph b) in subdivision I says that a City may by ordinance require an organization to expend all of its expenditures for lawful purposes. The only hook here is that such an ordinanc~ expands the area of lawful purposes within the trade area which includes contiguous cities. The ordinance also requires that the percentage of expenditures which must be expended within the trade area be specified. ~:;>" -;. . . . Subdivision 1 seems to make the following points: a) A City is limited to requiring no more than 10 percent of an organization's net profits annually for specific expenditures. b) An ordinance may be adopted requiring that gaming organizations contribute 10 percent annually of their net profits which would go into a fund maintained by the City and expended for "lawful purposes." The only requirement is that an annual report must be filed with the gaming board outlining the amount collected and what it was spent for. c) An ordinance may be adopted that directs all or a substantial portion of a gaming organization's expenditures be spent for lawful purposes within the City's trade area. The statute gives the City three options: i) let the gaming organization select its own beneficiaries; ii) pass an ordinance requiring 10 percent of net profits annually be paid into a city account where it would distribute the funds for lawful purposes; iii) pass an ordinance requiring all or a substantial amount of gaming proceeds be expended within the City's trade area (this statute is silent on whether the City can designate the specific beneficiary and the perc ta e of contribution). JAM/drs v Hopkins\Genellie -2- ,,' "l . . . . MILLER, STEINER & CURTISS, P .A. ATTORNEYS AT LAW 400 WELLS FARGO BANK BUILDING 1011 FIRST STREET SOUTH HOPKINS, MN 55343 JERRE A. MILLER JERE~S.STE~R* WYNN CURTISS KIRSTEN A. HOLSETH "'Real Property Law Specialist, certified by the Minnesota State Bar Association (952) 938-7635 FAX (952) 938-7670 Writer's Direct Dial No. (952) 253-0070 Date: September 9, 2003 To: James Genellie From: Jerre Miller Re: Gaming Commission This will supplement my memorandum of August 26, 2003 concerning the question whether the City can exclude private establishments from its requirement that all other establishments contribute 10% of their net profits to the City as provided for in the statute. My original concern was the discriminatory nature of the exclusion and whether this could be challenged as a violation of the equal protection theory that all parties in a class must be dealt with on an equal basis. My opinion has been re-enforced by a telephone conversation with the compliance officer ofthe Gaming Commission and further fortified by my conversation with Joe Newton, who is the Assistant Attorney General assigned to the Commission. .' Although the issue had not arisen in the past, both felt this would be discriminatory and unequal application or the terms of this statute and ordinance. JAM/jw If you need anything further, let me know.