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7.1. SR 01-20-2015City of Elk River Request for Action To Item Number Mayor and City Council 7.1 Agenda Section Meeting Date Prepared by Public Hearings January 20, 2015 Tina Allard, City Clerk Zack Carlton, Planner Item Description Reviewed by Ordinance Amendments for Zoning and Liquor Cal Portner, City Administrator Licensing Regarding Taproom, Brew Pubs, Reviewed by Wineries, and Similar Businesses Ordinances reviewed by Peter Beck Action Requested 1. Adopt, by motion, an ordinance amendment incorporating new license types in the liquor licensing section of the city code. 2. Mayor Dietz to open and close the public hearing for the zoning ordinance amendment. 3. Adopt, by motion, an ordinance amendment modifying the city's zoning ordinance to define and permit brewpubs, taprooms, farm wineries, and microbreweries. Background /Discussion The state legislature has made law changes allowing cities to issue new types of liquor licenses if adopted into the city code. Taproom and Cocktail Room Licenses Cities in Minnesota can allow taprooms and cocktail rooms with a license. Think of these types of businesses being similar to wineries that have a tasting room versus a bar. The room is an accessory use to the manufacturing of the product. Taprooms are for malt liquor, such as beer, and cocktail rooms are for distilled spirits, such as rums and vodkas. These types of businesses may only sell their own product. Surly is an example of a taproom. City Code already allows for the licensing of taprooms. Tbis ordinance amendment will allow for cocktail rooms. Small Brewer's Off Sale License (Sale of Growlers) Taprooms can sell growlers for patrons to take -home for consumption. These products are a half -gallon in size. This ordinance amendment will allow for the off sale of growlers. Off -sales are limited to 500 barrels per year and hours would be limited to the same hours of the liquor stores. Cocktail rooms are not allowed to sell their product for take -home consumption. Patrons may visit a cocktail room to try a product, but that product can only be sold to a wholesaler, who then distributes to a retailer, such as a liquor store. Brewpubs /Microbrewer Off -Sale License (Sale of Growlers) There is no legislative definition for a brewpub. Staff has defined it as a state - licensed brewer under State Statute 340a.301 Subd. 6(d) and having a restaurant. A brewpub is required to get an on -sale intoxicating license from the city. PV0WIBEO BI INAMUR A brewpub can't distribute their house -made products to other retailers or wholesalers. They may only sell their product for on -sale consumption (drinking on the premises) or they can get a Brewpub / Microbrewer Off -Sale License through the city to sell only their product to their customers from their pub in the form of a growler. This type of business is similar to a Granite City. Off -sales are limited to 500 barrels per year and hours would be limited to the same hours of the liquor stores. Expansion of Temporary On -sale Intoxicating License This is not a new license and it currently is limited to club, charitable, religious, or non - profit organizations. State law has expanded to allow brewers, who manufacture fewer than 3,500 barrels of malt liquor in a year (taprooms, brewpubs, or microbrewers) to get this license. The brewer has to be the sponsor of the social event being held. This allows the brewer to sell on -sale intoxicating liquor (products such as rums and vodkas that they don't manufacture). And the event could be held at other locations in the city, similar to how the Rotary may get a license for the annual wine - tasting event. Zoning Current ordinances do not permit brewpub, taproom, farm winery, or microbrewery uses in any zoning district. The following changes are necessary to permit the new businesses in the city. Brewing Staff s current recommendation includes adding three types of brewing establishments to the city ordinances. Brewpubs brew on site and include a restaurant or food service, taprooms brew beer on site and may or may not include food service, and microbreweries are of an industrial nature and primarily brew beer for off -site distribution; however they may sell limited amounts on -site. The off -sale of beer will be permitted via growlers (64 -ounce containers) depending on the specific liquor license held. Staff recommends allowing brewpubs as a permitted use in the C -1 (Central Commercial), C -3 (Highway Commercial), and DD (Downtown) zoning districts. Taprooms are recommended as permitted and conditional uses in the C -1, C -3, and DD districts depending on production volume. Microbreweries are recommended as a permitted use in the I -2 (Medium Industrial) district, and as a conditional use in the I- 1 (Light Industrial) and BP (Business Park) districts. Microbreweries will also be permitted to construct a taproom with a conditional use permit and in accordance with all state statutes. Production for all uses will be limited by statute and the type of license the brewer holds. Wine Making Staff recommends allowing wineries in the R -1a zoning district. A winery would be a permitted use when a retail component is not included and a conditional use when retail sales of any type are introduced. By only allowing on -site sales with a conditional use permit, the city has an opportunity to evaluate and mitigate traffic and other impacts within a residential district, protecting the character of the area. Financial Impact An amendment to the fee schedule will be brought forward to Council at a future meeting in order to include fees for the new license types. Attachments • Ordinance amendment to allow new types of liquor licenses • Ordinance amendment amending the zoning ordinance N: \Public Bodies \Agenda Packets \01 -20- 2015 \FINAL \LASERFICHE \x7.1 sr Liq Ord.docx City 4k=�-.- E River Ordinance 15 - to be removed Underlines to be added An Ordinance Amending Chapter 6, Regarding Alcoholic Beverages of the City of Elk River, Minnesota, City Code The City Council of the City of Elk River does hereby ordain as follows: SECTION 1. That § Section 6 -1, Definitions, of the City of Elk River Code of Ordinances shall be amended to add the following: Breoub means a state licensed brewer under Minnesota Statutes 340A.301, Subdivision 6(d� with a restaurant use operated on the same premises as the brewery. To sell their own malt liquor, a brewpub is required to obtain an intoxicating on -sale liquor license and may obtain an on -sale Sunday liquor license if they want to be open on Sundays. Cocktail Room means an area for the on -sale consumption of distilled spirits produced by the state - licensed distillery for consumption on the premises of the distillery or an abutting property in common ownership of the distiller. Growler means a container used in the package and sale of malt liquor, sixty -four (64) ounces in size (or one -half gallon) Microdistilleru means a distillery producing premium, distilled spirits in total quantity not to exceed forty thousand (40,000) proof gallons in a calendar year as regulated by Minnesota Statutes. Microbreweru means a facility that is licensed under MN Statute Section 340A.301, Sub. 6(c), (i1, or 0) and may brew no more than 20,000 barrels of its own brands of malt liquor annually. Tai Room means a state licensed brewer under Minnesota Statutes 340A.301 (c), (i1, or 0) permitting the on -sale consumption of malt liquor produced by the brewer for consumption on the premises of a brewery or an abutting property in common ownership of the brewer, which may include the sales of malt liquor produced and packaged at the brewery for off premises consumption as allowed by Minnesota Statutes. SECTION 2. That � 6 -52, Types of Licenses, of the City of Elk River Code of Ordinances shall be amended to add the following: (5) Temporary licenses. a. Temporary on -sale licenses. The city may issue to a club, or charitable, religious, or non- profit organization, or a state licensed brewer who manufactures fewer than 3,500 barrels of malt liquor in a year for the on -sale of intoxicating liquor in existence for at least three years a temporary license for the on -sale of intoxicating liquor in connection with a social event within the city sponsored by the licensee. The license may authorize the sale of intoxicating liquor for not more than four consecutive days and may allow on -sales on premises other P O W E 8 E 0 B Y 'I* M'A f U R E to be removed Underlines to be added than premises the licensee owns or permanently occupies. The license may provide that the licensee may contract for intoxicating liquor catering services with the holder of a full-year on -sale intoxicating liquor license issued by any municipality. Temporary on -sale intoxicating liquor licenses require approval of the commissioner of public safety. Licenses are subject to terms and license fees normally imposed by the city. (9) Brewer taproom license. A brewer taproom license authorizes on -sale of malt liquor produced by a state licensed brewer for consumption on the premises of or adjacent to one brewery location owned by the brewer. a. Eligibility. 1. A brewer may only have one taproom license and may not have an ownership interest in another brewery. 2. A brewer taproom license may not be issued to a brewer if the brewer seeking the license or any person having an economic interest in the brewery seeking the license is a brewer that brews more than 250,000 barrels of malt liquor annually or a winery that produces more than 250,000 gallons of wine annually. 3. Not eligible to hold an on -sale intoxicating liquor license. 4. Section 6 -58 regarding liability insurance shall apply to a license issued under this subdivision. 5. A holder of a brewer taproom license may also operate a restaurant. 6. May be open and conduct on -sale business on Sundays. 10 Cocktail room license. May be granted to distillers licensed under MN Statute 340a.301 Subdivision 6c. A cocktail room license authorizes on -sale of distilled liquor for consumption on the premises of or adjacent to one distillery location owned by the distiller. a. Eli ibili . 1. A distiller may only have one microdistillery cocktail room license and may not have an ownership interest in another distiller3L 2. Section 6 -58 regarding liability insurance shall apply to a license issued under this subdivision. 3. No single entity may hold both a microdistillery cocktail room and taproom license, and a cocktail room and taproom may not be co- located. 4. A holder of a microdistillery cocktail room license may also operate a restaurant. 11 Small Brewer's o fsak malt license. Maybe granted to brewers licensed under MN Statute 340A.301 Sub (c�, (i1, or_( a. Eligibility P 0 W E A E 0 0 V UREJ to be removed Underlines to be added off -sale shall be limited to 64 oz. containers known as "growlers" of malt liquor produced and packaged on the licensed premises which have been labeled and sealed in accordance with statutory specifications; 2. off -sale may not exceed 500 barrels per year 3. off sale hours shall be limited to the hours of operation of the Municipal Dispensary [Section 6 -94 (d)l. The off -sale growlers must be removed from the premises before the applicable closing time of the Municipal Dispensary. 4. A brewer may only have one license under this subdivision. 5. The city can't issue a license under this subdivision to a brewer seeking the license, or any person having an economic interest in the brewer seeking the license or exercising control over the brewer seeking the license, is a brewer that brews more than 20,000 barrels of its own brands of malt liquor annually or a winery that produces more than 250,000 gallons of wine annually. (12) BreoublMicrobrewer 04Sale license. May be granted to brewers licensed under MN Statute 340a.301 Sub 7(bl. a. Eligibility. 1. off -sale shall be limited to 64 oz. containers known as "growlers" of malt liquor produced and packaged on the licensed premises which have been labeled and sealed in accordance with statutory specifications; 2. off -sale may not exceed 500 barrels per year 3. total of on sale and off sale by the Brewer's off sale license holder cannot exceed 3 500 barrels per year; 4. off sale hours shall be limited to the hours of operation of the Municipal Dispensary [Section 6 -94 (d)l. SECTION 4. That this ordinance shall take effect upon adoption and be published as provided by law. Passed and adopted by the City Council of the City of Elk River this 20th day of January, 2015. John J. Dietz, Mayor ATTEST: Tina Allard, City Clerk P 0 W E A E 0 0 V 'I* M'AfUR City E iver Ordinance 15 - Stfikethfoughs to be removed Underlines to be added An Ordinance Amending Chapter 30 of the City of Elk River, Minnesota, City Code of Ordinances to Permit Brewing and Wine Manufacturing Uses The City, Council of the City, of Elk River does hereby, ordain as follows: SECTION 1. That § 30 -01, of the City, of Elk River Code of Ordinances shall be amended to add the following definitions: Brewer Taproom means a state licensed brewer under Minnesota Statutes 340A.301 Subdivision 6(c) . (il, or (j) permitting the on -sale consumption of malt liquor produced by the brewer for consumption on the premises of a brewery or an abutting property in common ownership of the brewer, which may include the sales of malt liquor produced and packaged at the brewery for off premises consumption as allowed by Minnesota Statutes. Breoub means a state licensed brewer under Minnesota Statutes 340A.301, Subdivision 6(d) with a restaurant use operated on the same premises as the brewery. To sell their own malt liquor, a brewpub is required to obtain an intoxicating on -sale liquor license and may obtain an on -sale Sunday liquor license if they want to be open on Sundays. Growler means a container used in the package and sale of malt liquor, sixty -four (64) ounces in size (or one -half gallon) Microbrewery — A microbrewery is a facility licensed under Minn. Statute Section 340A.301, Subdivision 6(c), (il, or (j) and may brew no more than 20,000 barrels of its own brands of malt liquor annually.. The on -site sale of malt liquor is limited to off -sale only. Off -sale malt liquor shall be sold in 64 -ounce growler or in 750 milliliter bottles, and is limited to 500 barrels annually. Microbreweries are not permitted to sell more than 10% of their product on -site. Farm Vinery — A Farm Winery means an agricultural processing facility used for the fermenting and processing of grape and other fruit juices into wine or the re- fermenting of wine into sparkling wine. When on -site sales are included the facility shall be licensed and follow all provisions of Minn. Statute Section 340A.315. SECTION 2. That § 30 -991 (b) and (d), of the City, of Elk River Code of Ordinances shall be amended to add the following permitted and conditional uses: (b) Permitted uses. Permitted uses in the R -1 district are as follows: (14) Farm Wineries in the R -1a zoning district provided the use does not include on -site sales of any type. (d) Conditional uses. Conditional uses in the R -1 district are as follows: (21) Farm Wineries in the R -1a zoning district when on -site sales are included. 'N'A UREJ to be removed Underlines to be added SECTION 3. That § 30 -1022 (b) and (d), of the City of Elk River Code of Ordinances shall be amended to add the following permitted and conditional uses: (b) Permitted uses. Permitted uses in the C -1 district are as follows: (12) Brewer Taprooms producing less than 10,000 barrels of malt liquor annually (13) Brewpubs (d) Conditional Uses. Conditional uses in the C -1 district are as follows: (18) Brewer Taprooms producing 10,000 or more barrels of malt liquor annually SECTION 4. That § 30 -1024 (b) and (d), of the City of Elk River Code of Ordinances shall be amended to add the following permitted and accessory uses: (b) Permitted uses. Permitted uses in the C -3 district are as follows: (12) Brewer Taprooms producing less than 10,000 barrels of malt liquor annually (13) Brewpubs (d) Conditional Uses. Conditional uses in the C -3 district are as follows: (26) Brewer Taprooms producing 10,000 or more barrels of malt liquor annually SECTION 5. That § 30 -1026 (b) and (d), of the City of Elk River Code of Ordinances shall be amended to add the following permitted and conditional uses: (b) Permitted uses. Permitted uses in the DD district are as follows: (11) Brewer Taprooms producing less than 10,000 barrels of malt liquor annually (12) Brewpubs (d) Conditional Uses. The following uses shall be conditional uses in the downtown district, subject to the design standards set forth in subsections (e) and ( and the procedures and standards for the approval of conditional use permits set forth in sections 30 -651 through 30 -659 of this chapter: (17) Brewer Taprooms producing 10,000 or more barrels of malt liquor annually SECTION 6. That § 30 -1292 (d), of the City of Elk River Code of Ordinances shall be amended to add the following conditional uses: (d) Conditional Uses. Conditional uses in the I -1 district are as follows: (13) Microbreweries (14) Brewer Taprooms SECTION 7. That § 30 -1293 (b) and (d), of the City of Elk River Code of Ordinances shall be amended to add the following permitted and conditional uses: (b) Permitted uses. Permitted uses in the I -2 district are as follows: (11) N icrobreweries (d) Conditional Uses. Conditional uses in the I -2 district are as follows: (14) Brewer Taprooms P 0 W E A E 0 0 V 'I* M'AfUR to be removed Underlines to be added SECTION 8. That § 30 -1294 (d), of the City of Elk River Code of Ordinances shall be amended to add the following conditional uses: (d) Conditional Uses. Conditional uses in the BP district are as follows: (12) Microbreweries (13) Brewer Taprooms SECTION 9. That this ordinance shall take effect upon adoption and be published as provided by law. Passed and adopted by the City Council of the City of Elk River this 20th day of January, 2015. John J. Dietz, Mayor ATTEST: Tina Allard, City Clerk P 0 W E A E 0 0 V 'I* M'AfUR City E iver Ordinance 15 - Stfikethfoughs to be removed Underlines to be added An Ordinance Amending Chapter 30 of the City of Elk River, Minnesota, City Code of Ordinances to Permit Brewing and Wine Manufacturing Uses The City, Council of the City, of Elk River does hereby, ordain as follows: SECTION 1. That § 30 -01, of the City, of Elk River Code of Ordinances shall be amended to add the following definitions: Brewer Taproom means a state licensed brewer under Minnesota Statutes 340A.301 Subdivision 6(c) . (il, or (j) permitting the on -sale consumption of malt liquor produced by the brewer for consumption on the premises of a brewery or an abutting property in common ownership of the brewer, which may include the sales of malt liquor produced and packaged at the brewery for off premises consumption as allowed by Minnesota Statutes. Breoub means a state licensed brewer under Minnesota Statutes 340A.301, Subdivision 6(d) with a restaurant use operated on the same premises as the brewery. To sell their own malt liquor, a brewpub is required to obtain an intoxicating on -sale liquor license and may obtain an on -sale Sunday liquor license if they want to be open on Sundays. Growler means a container used in the package and sale of malt liquor, sixty -four (64) ounces in size (or one -half gallon) Microbrewery — A microbrewery is a facility licensed under Minn. Statute Section 340A.301, Subdivision 6(c), (il, or (j) and may brew no more than 20,000 barrels of its own brands of malt liquor annually.. The on -site sale of malt liquor is limited to off -sale only. Off -sale malt liquor shall be sold in 64 -ounce growler or in 750 milliliter bottles, and is limited to 500 barrels annually. Microbreweries are not permitted to sell more than 10% of their product on -site. Farm Vinery — A Farm Winery means an agricultural processing facility used for the fermenting and processing of grape and other fruit juices into wine or the re- fermenting of wine into sparkling wine. When on -site sales are included the facility shall be licensed and follow all provisions of Minn. Statute Section 340A.315. SECTION 2. That § 30 -991 (b) and (d), of the City, of Elk River Code of Ordinances shall be amended to add the following permitted and conditional uses: (b) Permitted uses. Permitted uses in the R -1 district are as follows: (14) Farm Wineries in the R -1a zoning district provided the use does not include on -site sales of any type. (d) Conditional uses. Conditional uses in the R -1 district are as follows: (21) Farm Wineries in the R -1a zoning district when on -site sales are included. 'N'A UREJ to be removed Underlines to be added SECTION 3. That § 30 -1022 (b) and (d), of the City of Elk River Code of Ordinances shall be amended to add the following permitted and conditional uses: (b) Permitted uses. Permitted uses in the C -1 district are as follows: (12) Brewer Taprooms producing less than 10,000 barrels of malt liquor annually (13) Brewpubs (d) Conditional Uses. Conditional uses in the C -1 district are as follows: (18) Brewer Taprooms producing 10,000 or more barrels of malt liquor annually SECTION 4. That § 30 -1024 (b) and (d), of the City of Elk River Code of Ordinances shall be amended to add the following permitted and accessory uses: (b) Permitted uses. Permitted uses in the C -3 district are as follows: (12) Brewer Taprooms producing less than 10,000 barrels of malt liquor annually (13) Brewpubs (d) Conditional Uses. Conditional uses in the C -3 district are as follows: (26) Brewer Taprooms producing 10,000 or more barrels of malt liquor annually SECTION 5. That § 30 -1026 (b) and (d), of the City of Elk River Code of Ordinances shall be amended to add the following permitted and conditional uses: (b) Permitted uses. Permitted uses in the DD district are as follows: (11) Brewer Taprooms producing less than 10,000 barrels of malt liquor annually (12) Brewpubs (d) Conditional Uses. The following uses shall be conditional uses in the downtown district, subject to the design standards set forth in subsections (e) and ( and the procedures and standards for the approval of conditional use permits set forth in sections 30 -651 through 30 -659 of this chapter: (17) Brewer Taprooms producing 10,000 or more barrels of malt liquor annually SECTION 6. That § 30 -1292 (d), of the City of Elk River Code of Ordinances shall be amended to add the following conditional uses: (d) Conditional Uses. Conditional uses in the I -1 district are as follows: (13) Microbreweries (14) Brewer Taprooms SECTION 7. That § 30 -1293 (b) and (d), of the City of Elk River Code of Ordinances shall be amended to add the following permitted and conditional uses: (b) Permitted uses. Permitted uses in the I -2 district are as follows: (11) N icrobreweries (d) Conditional Uses. Conditional uses in the I -2 district are as follows: (14) Brewer Taprooms P 0 W E A E 0 0 V 'I* M'AfUR to be removed Underlines to be added SECTION 8. That § 30 -1294 (d), of the City of Elk River Code of Ordinances shall be amended to add the following conditional uses: (d) Conditional Uses. Conditional uses in the BP district are as follows: (12) Microbreweries (13) Brewer Taprooms SECTION 9. That this ordinance shall take effect upon adoption and be published as provided by law. Passed and adopted by the City Council of the City of Elk River this 20th day of January, 2015. John J. Dietz, Mayor ATTEST: Tina Allard, City Clerk P 0 W E A E 0 0 V 'I* M'AfUR Liquor Licensing Liqu( Taprooms & Cocktail Rooms .1 ■ May operate a restaurant ■ Taprooms serve malt liquor ■ Cocktail Rooms serve distilled spirits ■ Similar to wine tasting rooms ■ Can only sel products & serve their own Liquor Licensing Taprooms & Cocktail Rooms r Liqu Brewpubs ■ No legislative definition ■ Licensed differently through the state, more a retailer than a brewer ■ Must operate a restaurant ■ Must obtain an on -sale intoxicating license (can sell any type of liquor) ■ Beer they make may only be sold from the restaurant Liquo Growler Half gall Purchas May be Liquo Off -Sale Licensing of Growlers Two types of licenses 1. Small Brewer's Off -Sale (Taprooms) 2. Brewpub /Microbrewer's Off -Sale Liqu Off -Sale Licenses Requirements: ■ Can only sell growlers of their own product ■ Off -sale can't exceed 500 barrels per year ■ Off -sale hours are limited to the liquor store hours What is a qrowler9 IT'S 2 G 0 0 Liquo Temporary On -Sale Intoxicating ■ Expanded to include brewers who produce fewer than 3,500 barrels of malt liquor per year ■ May sell on -sale intoxicating liquor (hard liquor, beer, wine) ■ May hold events at other locations around the city ■ Brewer has to be the sponsor of the social event being held 1 7iRotary 6f of Elk River Liquo NOW-- Recap License Types Taproom 1. Cocktail Room (city code) 2. Small Brewer Off -Sale 3. Brewpub /Microbrewer Off -Sale 4. Expansion of Temporary On- Sale Intoxicating License Rim? 1W ree4 H II�U�Y �Icense? Liqu Council Action ■ Motion adopting ordinance incorporating new license types in the liquor licensing section of the Elk River City Code x Gear as mud Ordinance Amendment Taprooms, Brewpubs,Wineries OA 14 -I 1 ccy or Elk 'ver Background ■ City is interested in encouraging a growing industry to locate within the city. • Received interest from potential businesses. • Add permitted locations and definitions. Microbreweries • Manufacturing in nature. Noise and truck traffic. • Limited on -site sales ■ Off -sale by growlers only • Conditional Use in I -1 and BP • Permitted in I -2 Taprooms and Brewpubs • Licensed by state and city • Food service permitted • Manufacturing and retail component • On and off -sale permitted (growlers) • Permitted/ Conditional Use in C -1. C -3, and DD ■ Conditional Use when production exceeds 10k barrels Wineries • Agricultural component requires larger lots • Industrial, retail, and agricultural use • Require state license to sell on site • Permitted use in R -1 a when no retail sale occurs ■ CUP when retail component included ■ Evaluate impacts to residential context Planning Commission • PC recommended approval 7-0 • No one spoke during public hearing • No comments for or against Action Request ■ Staff and PC recommend approval of the zoning ordinance amendment