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4.7. SR 12-21-1995t ITEM 2— .V. ity of MEMORANDUM kPF1 TO: Mayor and City Council iver FROM: Sandra Thackeray, City Clerk DATE: December 18, 1995 SUBJECT: Ordinance Amendment to Section 716 (Raffles and Gambling Devices) of the City Code INTRODUCTION The City's existing gambling ordinance is outdated and must be revised to reflect current state law. On June 5, 1995, the City Council took no action on a request for an amendment to the City's gambling ordinance. The main issue of concern was outside organizations operating in the City and not meeting the requirement of spending 75% of lawful expenditures in the trade • area. • BACKGROUND The City's ordinance currently requires that 75 percent of the lawful expenditures be spent within the City's trade area. The trade area consists of cities that are contiguous with Elk River (Rogers, Ramsey, Zimmerman, Otsego, and Elk River). Currently, all charitable gambling organizations in the City have met this requirement. There was one outside organization that did not meet this requirement, however, this organization is no longer operating in Elk River. percentage requirement Under the present ordinance, an organization that does not meet the 75% requirement takes the chance of not having its premises permit renewed by the City Council. A premises permit is a two year permit. Discussion took place at the June 5th Council meeting about the possibility of raising the 75% requirement to 80 %. Some members of the Council felt that this would discourage outside organizations from operating in the City. I had received some comments from existing organizations who were opposed to this 13065 Orono Parkway • P.O. Box 490 • Elk River, MN 55330 • (612) 441 -7420 • Fax: (612) 441 -7425 . increase. They felt that the current requirement of 75% was fair and that they should be allowed to spend the remaining 25% as they wished. residency requirement On June 5, the Council discussed the issue of residency requirement. A residency requirement clause in the ordinance would require that the organization headquarters be located in the City or in a city contiguous to Elk River. It was felt that this might ensure that the charitable gambling funds would be spent in the City's trade area. The City received some opposition to this requirement from Elk River Bowl. Celebrity Bowl Charities is an outside organization that operates pull tabs from Elk River Bowl. Celebrity Bowl Charities contends that it has more than met the 75% requirement during the past two years. The Council can verify this from the expenditure of funds report attached to the agenda item for the premises permit renewal for Celebrity Bowl Charities. After discussion of these two issues on June 5, Council requested staff to prepare a draft ordinance amendment including both the 80% requirement and the residency requirement. These have both been prepared and are ready for council review. Draft A This ordinance amendment includes the residency requirement as follows: • The physical site for the organization's headquarters or the registered business office of the organization is located within the City of Elk River or a city contiguous to the City of Elk River. The Council may exclude contiguous cities in this clause. This ordinance also grandfathers in existing outside organizations as follows: • This requirement may be waived for an existing organization which does not comply with this requirement if approved by the City Council at the time of the premises permit renewal. Draft B This ordinance amendment includes the percentage requirement as follows: • Any organization holding a premises permit to conduct lawful gambling within the City of Elk River shall be required to expend • eighty percent (80 %) of its lawful purpose expenditures conducted or located within the City's trade area. (There is no residency requirement with this amendment.) ACTION REQ UESTED The Council can adopt either of the draft ordinance amendments or request the staff to draft an ordinance amendment leaving the 75% requirement as it is. s: \council \gambling. doe • ORDINANCE 95- CITY OF ELK RIVER AN ORDINANCE OF THE CITY OF ELK RIVER AMENDING SECTION 716 (RAFFLES AND GAMBLING DEVICES) BY REPEALING SECTION 716 (RAFFLES AND GAMBLING DEVICES) AND ENACTING A NEW SECTION 716 IN LIEU THEREOF RELATING TO THE SAME SUBJECT ENTITLED LAWFUL CHARITABLE GAMBLING The City Council of the City of Elk River does hereby ordain as follows: Section 1. That Section 716 of the City of Elk River code of Ordinances, Raffles and Gambling Devices, is hereby repealed and one new section adopted in lieu thereof, which shall read as follows: 716 - LAWFUL CHARITABLE GAMBLING 716.00 - DEFINITIONS Unless the context clearly indicates otherwise, the words, combinations of words, terms and phrases as used in Section 716.00 et sea. shall have the meanings set forth in the following paragraphs: LAWFUL GALLING: The operation, conduct, or sale of bingo, raffles, paddlewheels, tipboards, and pull -tabs. ORGANIZATION: A religious, fraternal, veterans, or other nonprofit entity which has been in existence for at least three years, has at least 15 active members and is not in existence solely for the purpose of conducting gambling. GALLING CONTROL DIVISION: The state agency that licenses and regulates the gambling. NET PROFIT: Gross profit less reasonable sums actually expended for allowable expenses TRADE AREA: All cities contiguous to the City of Elk River including the City of Elk River, the City of Otsego, the City of Rogers, the City of Ramsey, and the City of Zimmerman Page 1 • PREMISES PERMIT: A two -year permit granted by the State Gambling Control Board for each premises where lawful gambling is to be conducted. LAWFUL PURPOSE: Any expenditure by, or contribution to, a 501(c)(3) organization, provided that the organization and expenditure or contribution are in conformity with standards prescribed by the Gambling Control Board under Section 349.154. 716.02 LAWFUL GAMBLING 1. Statement of Purpose. It is the stated policy of the City Council of the City of Elk River that, to the extent lawful, regulated gambling is permitted within the City, the net profits and proceeds of gambling shall directly benefit the citizens of the City of Elk River. 716.04 - LICENSE REQUIRED; REQUIREMENTS FOR ISSUANCE It shall be unlawful to operate lawful gambling without a license issued by the Minnesota Gambling Control Division. 1. Licenses. Licenses to operate gambling devices or to conduct raffles shall be issued only to a fraternal, religious, veterans, or other nonprofit organization covered by Minnesota Statutes, Section 349.16. 2. Licensing Procedure. A. The organization desiring a gambling license must obtain an application from the Minnesota Gambling Control Division. B. The Gambling Control Division may not issue or renew a premises permit or bingo hall license unless the organization submits a resolution from the city council approving the premises permit or bingo hall license. The resolution must have been adopted within 60 days of the date of application for the new or renewed permit or license. C. A premises permit issued by the Gambling Control Division is valid for two years. 716.06 - LICENSE RESTRICTIONS 1. City may Disapprove Premises Permit based on the followincz 0 Requirements Page 2 • A. The City reserves the right to disapprove a Premises Permit application for individual bingo occasions, raffle games, and pull -tab operations for any of the following reasons: i. Violation by the applicant of any statute, rule, regulation or ordinance relating to gambling. ii. Failure to make reports required by any applicable ordinance, rule, regulation or statute. iii. Any reason which would justify the Minnesota Gambling Control Board in denying an application for a license. 2. No Premises Permit or renewal will be approved unless: A. The organization is conducting the lawful gambling on the premises of a church, a fraternal, veterans, or other nonprofit organization, or on the premises of an on -sale liquor license of the City of Elk River. 0 B . Unless the following requirements are met: 716.08 - EXPENDITURES FOR LAWFUL PURPOSES WITHIN TRADE AREA 1. Trade Area: The term "trade area" shall mean all of that area described below: The City of Elk River, the City of Ramsey, the City of Otsego, the City of Rogers, and the City of Zimmerman. 2. Expenditures for Lawful Purposes: Any organization holding a Premises Permit to conduct lawful gambling within the City of Elk River shall be required to expend seventy -five percent Page 3 • (75 %) of its lawful purpose expenditures conducted or located within the City's trade area. A. An organization that conducts gambling on fewer than five (5) days in a calendar year is exempt from the requirements of this Section. 716.10 - REPORTING REQUIREMENTS 1. Every organization licensed to conduct gambling in the City of Elk River shall file with the City Clerk copies of the monthly State gambling report and Schedule C required to be filed with the Minnesota Lawful Gambling Control Board pursuant to Minnesota Statutes, Chapter 349. The records and reports shall be due at the same time they are due to the Gambling Control Board. 2. Every organization licensed to conduct gambling in the City of Elk River shall file with the City Clerk an annual summary report report of the expenditures for lawful purposes within the trade area. 3. Organizations conducting gambling activities in other communities as well as Elk River shall segregate the gross receipts, expenses, profits and expenditure of profits from the • Elk River Operation. Section 2. That this ordinance shall take effect and be in full force from and after the date of its publication. Passed and adopted by the City Council of the City of Elk River this day of , 1995. s: \ document \or dinanc\ gamble a. doe • Page 4 • • • ORDINANCE 95- CITY OF ELK RIVER AN ORDINANCE OF THE CITY OF ELK RIVER AMENDING SECTION 716 (RAFFLES AND GAMBLING DEVICES) BY REPEALING SECTION 716 (RAFFLES AND GAMBLING DEVICES) AND ENACTING A NEW SECTION 716 IN LIEU THEREOF RELATING TO THE SAME SUBJECT ENTITLED LAWFUL CHARITABLE GAMBLING The City Council of the City of Elk River does hereby ordain as follows: Section 1. That Section 716 of the City of Elk River code of Ordinances, Raffles and Gambling Devices, is hereby repealed and one new section adopted in lieu thereof, which shall read as follows: 716 - LAWFUL CHARITABLE GAMBLING 716.00 - DEFINITIONS Unless the context clearly indicates otherwise, the words, combinations of words, terms and phrases as used in Section 716.00 et sea. shall have the meanings set forth in the following paragraphs: LAWFUL GALLING: The operation, conduct, or sale of bingo, raffles, paddlewheels, tipboards, and pull -tabs. ORGANIZATION: A religious, fraternal, veterans, or other nonprofit entity which has been in existence for at least three years, has at least 15 active members and is not in existence solely for the purpose of conducting gambling. GALLING CONTROL DIVISION: The state agency that licenses and regulates the gambling. NET PROFIT: Gross profit less reasonable sums actually expended for allowable expenses TRADE AREA: All cities contiguous to the City of Elk River including the City of Elk River, the City of Otsego, the City of Rogers, the City of Ramsey, and the City of Zimmerman Page 1 PREMISES PERMIT: A two -year permit granted by the State Gambling Control Board for each premises where lawful gambling is to be conducted. LAWFUL PURPOSE: Any expenditure by, or contribution to, a 501(c)(3) organization, provided that the organization and expenditure or contribution are in conformity with standards prescribed by the Gambling Control Board under Section 349.154. 716.02 LAWFUL GAMBLING 1. Statement of Purpose. It is the stated policy of the City Council of the City of Elk River that, to the extent lawful, regulated gambling is permitted within the City, the net profits and proceeds of gambling shall directly benefit the citizens of the City of Elk River. 716.04 - LICENSE REQUIRED; REQUIREMENTS FOR ISSUANCE It shall be unlawful to operate lawful gambling without a license issued by the Minnesota Gambling Control Division. 1. Licenses. Licenses to operate gambling devices or to conduct • raffles shall be issued only to a fraternal, religious, veterans, or other nonprofit organization covered by Minnesota Statutes, Section 349.16. 2. Licensing Procedure. A. The organization desiring a gambling license must obtain an application from the Minnesota Gambling Control Division. B. The Gambling Control Division may not issue or renew a premises permit or bingo hall license unless the organization submits a resolution from the city council approving the premises permit or bingo hall license. The resolution must have been adopted within 60 days of the date of application for the new or renewed permit or license. C. A premises permit issued by the Gambling Control Division is valid for two years. 716.06 - LICENSE RESTRICTIONS 1. City may Disapprove Premises Permit based on the following 0 Requirements: Page 2 • A. The City reserves the right to disapprove a Premises Permit application for individual bingo occasions, raffle games, and pull -tab operations for any of the following reasons: i. Violation by the applicant of any statute, rule, regulation or ordinance relating to gambling. ii. Failure to make reports required by any applicable ordinance, rule, regulation or statute. iii. Any reason which would justify the Minnesota Gambling Control Board in denying an application for a license. 2. No Premises Permit or renewal will be approved unless the organization is conducting the lawful gambling on the premises of a church, a fraternal, veterans, or other nonprofit organization, or on the premises of an on -sale liquor license of the City of Elk River. 716.08 - EXPENDITURES FOR LAWFUL PURPOSES WITHIN TRADE AREA • 1. Trade Area: The term "trade area" shall mean all of that area described below: The City of Elk River, the City of Ramsey, the City of Otsego, the City of Rogers, and the City of Zimmerman. A. An organization that conducts gambling on fewer than five (5) days in a calendar year is exempt from the requirements of this Section. 716.10 - REPORTING REQUIREMENTS 1. Every organization licensed to conduct gambling in the City of Elk River shall file with the City Clerk copies of the monthly State gambling report and Schedule C required to be filed with the Minnesota Lawful Gambling Control Board pursuant to Minnesota Statutes, Chapter 349. The records and reports shall be due at the same time they are due to the Gambling Control Board. Page 3 • 2. Every organization licensed to conduct gambling in the City of Elk River shall file with the City Clerk an annual summary report report of the expenditures for lawful purposes within the trade area. 3. Organizations conducting gambling activities in other communities as well as Elk River shall segregate the gross receipts, expenses, profits and expenditure of profits from the Elk River Operation. Section 2. That this ordinance shall take effect and be in full force from and after the date of its publication. Passed and adopted by the City Council of the City of Elk River this day of , 1995. s:\document\ordinanc\gambleb.doc • Page 4