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9.2. SR 11-18-2019 EGty1� ,.,�� Request for Action River To Item Number Mayor and City Council 9.2 Agenda Section Meeting Date Prepared by Work Session November 18, 2019 Tina Allard, City Clerk Item Description Reviewed by Gambling Ordinance Amendments Cal Portner, City Administrator Reviewed by Action Requested Provide staff direction regarding amendments to the gambling ordinance. Background/Discussion Per Minn. Stat. §349.213 the city may adopt gambling regulations more stringent than state law or prohibits lawful gambling all together. At the October 7, 2019, meeting, Council discussed the gambling ordinance at the request of local organizations and liquor establishments. Consensus was not reached but some items under discussion included the following. Does Council want to change the trade area? A city can require organizations to spend all or a portion of their lawful purpose expenditures within the city's trade area. Elk River requires 75% be spent in the trade area. Elk River defines trade area as: ■ Elk River ■ Dayton ■ Otsego ■ Zimmerman ■ Rogers ■ Big Lake Township ■ Ramsey ■ Livonia Township ■ Nowthen ■ Orrock ■ St. Francis ■ Township Per Minn. Stat. §349.213, subd. 1(g) a trade area must include every city and township contiguous to the defining city. Staff confirmed the definition of contiguous with the state gambling control board as noted in the attached. Council could remove Rogers and Zimmerman from the trade area. This means expenditures made in those communities would no longer qualify as meeting the 75% threshold and would need to be re-disbursed to the other trade area communities. Does the city have the authority to limit permits to organizations with corporate headquarters in Elk River? The city can be stricter than state law,with some exceptions. Council can limit permits to organization within Elk River. The City of Anoka only allows organizations with a physical headquarters in their city but will grant waivers if there is no interest by local organizations. The Elk River Vision A Pehoming community Pitb revolutionary and spirited resourcefulness, exceptional ,`POWERED service, and community engagement that encourages and inspires prosperzty INAMIRE1 There are a couple of differences to note with the City of Anoka if this is the model Council would like to consider. 1. There is no set limit on the number of permits an organization is allowed. Does Council want to keep the permit limit at three per organization? 2. Any organization can apply for a permit as long as they meet the eligibility criteria. Does Council want to limit the waiver to organizations in Elk River and the trade area or open it up to organizations located in any community? If adopted Council should discuss whether the VFW (Otsego headquarters) and Zimmerman Fire Relief would be grandfathered to keep their permits. Past practice has been to grandfather organizations in until the permit was discontinued. Financial Impact N/A Attachments ■ August 19, 2019,Minutes ■ October 7, 2019,Minutes ■ Gambling Control Board Opinion on the definition of Contiguous ■ Map ■ City Anoka Ordinance N:APublic Bodies\Agenda Packets\11-18-2019\Final\x9.2 sr Gambhng.docx City Council Minutes August 19, 2019 Page 7 Councilmember Wagner stated she is uncertain how she feels about keeping the sinking fund allocation. Acting Mayor Westgaard stated he'd like to evaluate the possibility of raising the Elk River Municipal Utilities contribution rate from 4 to 4.5 percent, which would net about $150,000. He stated it appears Elk River may be on the lower end of average compared to peer cities. He wanted to make it clear this wouldn't mean creating a pass-through fee increase to rate payers. Councilmember Ovall noted Elk River Municipal Utilities has assisted in other ways, such as the water tower and light poles. Council consensus was for staff to approach Elk River Municipal Utilities about having a review of the rate contribution to the city. Council would like to continue to work on reducing the budget after setting the maximum tax levy. Mr. Partner stated none of the territory acquisition was added into the accounting for the four percent, which was done purposely to ensure Elk River Municipal Utilities had the funding to buy into Minnesota Municipal Power Association. 9.2 Ordinance Amendment: Gambling Ms. Allard presented the staff report. Acting Mayor Westgaard stated he is not interested in increasing the number of premise permits an organization can have expressing concerns with monopolization. He noted youth hockey has repeatedly requested to increase the number of permits allowed and he would like to leave room for other organizations to have an opportunity at getting permits. Councilmember Wagner agreed stating other organizations may be upset by this change. Councilmember Ovall stated he is curious if other organizations realize they can have more than one permit, and is surprised more of them don't. Mayor Dietz's comments were read into the record, noting he is against increasing the number of permits. The majority of Council was not interested in allowing an organization outside of Elk River's trade area to have a permit. Mayor Dietz's concurred in his submitted comments_ Council was unsure of the pros and cons for allowing more than one organization at one location but noted it could solve the issue of one organization monopolizing the permits. Council consensus is to invite the stakeholders; gambling organizations and on -sale liquor license establishments to discuss the requested ordinance amendments. K I I I R E I 8 7 City Council Minutes Page 6 October 7, 2019 10.1 Gambling Ordinance Ms. Allard presented the staff report. Desiree Hillman, Elk River Youth Hockey Gambling Manager stated she would Eke to see the amount of permits one organization can have increase because they have had establishments approach them but are not able to accommodate them because they are at their permit limit. She stated there are four charitable gambling organizations located in Elk River and questioned why the city would allow other trade area organizations to operate. She noted youth hockey has a location in the City of Otsego but are being kicked out because the kids don't go to school in Elk River. She further stated youth hockey tried to locate in Zimmerman Bowl but were not allowed. She stated they want to keep the money raised in Elk River and don't want to see limited permits. Jessie Hartung, Tipsy Chicken, stated he approached some local organizations but there was no interest so he was looking at organization in/out of the city trade area. Ryan Eason, Elk River Youth Hockey President expressed concerns regarding a comment made at a previous meeting about creating a monopoly. Councilmember Westgaard reviewed the history of ordinance amendments brought forth by youth hockey and discussed the concerns of other organizations and with being able to spend funds toward other community needs besides hockey. Mr. Eason suggested removing the limit and approving permits on a case-by-case basis. Dave Williams, Youth Sports Commission and Elk River Football stated he would be interested in a gambling license to operate pull tabs but has concerns with investing in permits and training if he can't be guaranteed a location to operate. He further stated youth baseball and basketball are interested in getting a gambling license. Former youth baseball president, Greg Loidolt, stated they are in the process of getting a gambling license and expressed the same concerns noted by Mr. Williams. Amy Berthiaume, Lions Club Gambling Manager, stated she would love profits to stay in Elk River. She stated they operated at Tipsy Chicken but discontinued due to profit losses. She further stated they have another location in Orono Township. Councilmember Westgaard asked if there is a downfall to: allowing one organization to have more permits. allowing more than one organization at one establishment. Mayor Dietz stated he feels three permits are enough for one organization because other organizations should be allowed an opportunity to obtain pull -tab permits. He 0'EREI 1Y NATURE] City Council Minutes Page 7 October 7, 2019 expressed concerns with profitability if there are two organizations competing at the same location. Councilmember Christianson questioned the benefit/loss on the city by allowing two to three organizations at one establishment because competition would decide who is profitable. Councilmember Wagner concurred with Councilmember Christianson noting the monopoly issue would work itself out. She stated an organization will discontinue operations quickly if they are losing money. She questioned if there is enough space for everyone to locate in Elk River knowing other organizations have a desire to get gambling licenses. She stated she is hesitant to raise the limit from three but is not opposed to revisiting this matter in 12-18 months in order to allow other organizations a chance to get their permits. Mr. Eason stated they are okay with the other youth sports getting a pull tab operation and the Council denying youth hockey for that purpose if need be. Councilmember Wagner stated it would be difficult for Council to pick based on who they may like/dislike. Ms. Allard noted a Council can't typically deny a request for a permit without having valid findings for denial. Mr. Hartung suggested after an organization has three permits, if they apply for a fourth one, require them to wait 30-45 days in order to give an opportunity to another organization. Mayor Dietz stated he has concerns with competing organizations in an establishment because they are both non -profits trying to raise money for good causes for the community. He stated if youth hockey has three permits, why youth baseball can't have one of their own versus having the two compete against each other. Mr. Eason expressed concerns with allowing competition because it could create gambling issues with the gambling workers and the establishment employees. He stated employees who have done gambling for a long time can drive more traffic to their booth. Mr. Williams stated he wouldn't go into a location if youth hockey was already located there, expressing concerns with competition, which defeats the whole purpose of why the funds are being raised. Ms. Berthiaume stated the establishments liked the idea initially because they believe they'll get more lease revenue, which is not true per state law. PO/EAEE I I NAVRE City Council Minutes October 7, 2019 Page 8 Mayor Dietz stated the only way he could see allowing more than three permits to an organization is if there is a process where other gambling organizations have an opportunity first before youth hockey could be allowed a fourth location. Councilmember Ovall stated pull tabs are more about convenience then the organization and if you have some that are more assertive, then by default the other organizations can't get established. He suggested the city set a limit, and then if a need can't be met for an establishment, city staff provide them a list of the organizations they are required to contact first. If those organizations don't have any interest, then open up the number of permits allowed to that first organization. Council questioned if the city had the authority to limit permits to organizations with the corporate headquarters in Elk River versus the trade area and suggested checking with the city attorney. Mayor Dietz made note the Zimmerman Fire Relief Association donates a lot of money in the Elk River area. Councilmember Wagner noted this would come back to another work session for further discussion. 10.2 Special Events: Road Closures and General Fees Ms. Allard outlined current city process and noted staff is looking for policy direction on the questions outlined in the staff report. Chief Nierenhausen stated conditions added to a permit are not being followed by applicants. He stated some races can be more challenging than others and he has a difficult time covering shifts and overtime costs to staff races. Mr. Femrite stated staff can take on any event but questioned how much staff resources Council expects and whether there should be fees for time and equipment. Councilmember Wagner noted she plans events and it is not normal practice to provide bleachers and port -a -potties for an event. Mr. Femrite noted further that some of these requests come last minute and are not part of the original application. Debbie Rydberg, Chamber representative stated events have a place in the community and there is an expectation that the only people who have the services can provide them. She stated part of the challenge with races is there is difficulty in choosing where in Elk River they can occur due to the city's unique geography (with the highways and railroad). She stated it is impossible to force runners to stay on a sidewalk and using public infrastructure shouldn't be a major concern. She addressed the comment in the staff report about limiting use of Main Street stating people run From:Wilson, Peter D (GCB) To:Miller, Jessica Subject:RE: [EXTERNAL] FW: City Trade Area Date:Thursday, October 31, 2019 4:27:21 PM Hi Jessica- Thank you for your email. The short answer here would be “Yes”. As it has been explained to me, the essence of contiguous cities (townships, etc) is that you do not need to pass through through another city / township to get from one to the other. Regards, Pete Pete Wilson | Lawful Gambling Compliance Specialist Minnesota Gambling Control Board Suite 300 South 1711 West County Rd B Roseville, MN 55113 Telephone: 651.539.1921 FAX: 651-639-4043 E-mail: Peter.Wilson@state.mn.us Website: http://www.mn.gov/gcb/ Confidentiality/Data Privacy Notice: This email and any attachment(s) are for the sole use of the specifically emailed recipient and may contain information that is confidential, nonpublic, or private data. If you are not the intended recipient, any unauthorized review, use, disclosure, copying, or distribution of the information included in this message and any attachments is prohibited. If you have received this communication in error, please contact the sender by reply email and immediately and permanently delete the message and any attachment(s) without copying or disclosing the original. Information requested may become public information when received by the board, and will be used to determine your compliance with Minnesota statutes and rules governing lawful gambling. From: Miller, Jessica <JMiller@ElkRiverMN.gov> Sent: Thursday, October 31, 2019 4:20 PM To: Wilson, Peter D (GCB) <Peter.Wilson@state.mn.us> Subject: RE: [EXTERNAL] FW: City Trade Area Pete,   Thank you so much for your response!  That helps a ton!   One more side question. If a river divides two cities (for example, Elk River and Otsego), are they still considered contiguous if they have no land borders?   Thank you! Jessica   From: Wilson, Peter D (GCB) [mailto:Peter.Wilson@state.mn.us] Sent: Thursday, October 31, 2019 4:13 PM To: Miller, Jessica Subject: [EXTERNAL] FW: City Trade Area Hi Jessica- Thank you for your email. It was forwarded to our administration (Chris Mau), and his reply to your question is shown below. Regards, Pete Pete Wilson | Lawful Gambling Compliance Specialist Minnesota Gambling Control Board Suite 300 South 1711 West County Rd B Roseville, MN 55113 Telephone: 651.539.1921 FAX: 651-639-4043 E-mail: Peter.Wilson@state.mn.us Website: http://www.mn.gov/gcb/ Confidentiality/Data Privacy Notice: This email and any attachment(s) are for the sole use of the specifically emailed recipient and may contain information that is confidential, nonpublic, or private data. If you are not the intended recipient, any unauthorized review, use, disclosure, copying, or distribution of the information included in this message and any attachments is prohibited. If you have received this communication in error, please contact the sender by reply email and immediately and permanently delete the message and any attachment(s) without copying or disclosing the original. Information requested may become public information when received by the board, and will be used to determine your compliance with Minnesota statutes and rules governing lawful gambling. From: Mau, Christopher (GCB) <Chris.Mau@state.mn.us> Sent: Wednesday, October 30, 2019 12:29 PM To: Wilson, Peter D (GCB) <Peter.Wilson@state.mn.us> Cc: Mancuso, Peggy S (GCB) <Peggy.Mancuso@state.mn.us> Subject: RE: City Trade Area Pete, I just saw the email attachment. Pete, You can tell Jessica from Elk River that the definition used in the redistricting guide is not the common usage of the term “contiguous”. Our opinion is that two cities are contiguous if their borders touch (even at a single point). The redistricting guide provides a special definition and explanation of contiguous because their definition is different from the normal definition. Chris From: Miller, Jessica <JMiller@ElkRiverMN.gov> Sent: Tuesday, October 29, 2019 4:18 PM To: Larsson, Kim A (GCB) <Kim.Larsson@state.mn.us>; Wilson, Peter D (GCB) <Peter.Wilson@state.mn.us> Subject: City Trade Area Good afternoon,   We are in the process of amending our lawful gambling ordinance (at the request of our City Council and local gambling organizations). We are struggling a little with the definition of trade area. Our Council expressed an interest in exploring limiting the city’s trade area but we want to make sure we’re following the law. Our current trade area includes: the City of Elk River, the City of Otsego, the City of Rogers, the City of Ramsey, the City of Nowthen, the City of St. Francis, the City of Dayton, the City of Zimmerman, Big Lake Township, Livonia Township, and Orrock Township.   According to the League of MN Cities Lawful Gambling Memo – Trade areas Minn. Stat. § 349.213, subd. 1(g). See Regulating Lawful Gambling, LMC Model Ordinance. A city may by ordinance require those organizations conducting lawful gambling within its jurisdiction to expend all or a portion of their expenditures on lawful purposes conducted or located within a city’s trade area. The ordinance must define the trade area. A city’s trade area must include every city and township contiguous to the defining city. The ordinance must also specify the percentage of expenditures an organization must make within the trade area.   Our city clerk found the attached redistricting guide for elections outlining a definition of contiguous. We are wondering if this definition of contiguous would meet the guidelines for lawful gambling purposes.   Any assistance you can provide will be greatly appreciated!!   Thank you for your time! Jessica   Jessica Miller City of Elk River – Deputy Clerk 13065 Orono Parkway, Elk River, MN 55330 763.635.1004    ElkRiverMN.gov Q m O U n O O G' ~~ ,O oQo Z m^ p OC O ~ p ~O o <~-fTO a^ JO rOO ,.. O =` p .c0 C)rr~x k to~;vnsin{~ o I_Iv<~nia O ioti~ntihip O O O fl O O O O G ~ p o it~ o p p O O O O O O O O O a Q u p :: O o 0 0 0 c D o (~'e Q o 0 t+ O O c O ii O C Ov £T ~~ 4 o Q C Q>o C Q o a ~p'C ©O ~ Q o {~ o p ci O ~; Q c 0 j _ . d Ih9' Q 1 3w~,.; . tr 7 Q j T Q e O C J Q Q C.n!~1 ~_L) t;ic~ Lake ~ Q 475>6 n~s':~11jf11~) ~~ ..C1 O I~'IC~7~ G M f'.euri 1: q W00 n boa o O ~ - 1 n U o Ci O -, QJ O :: O ::O ~.: O :: O c O :: O .: Q -. O .. O .:. O '. v tj •;, ~ o gu p ont; t7 .a~7 n Sk~R6URlVE ~o~,~t,a~ p da WRIGHT 171 p c 5 ~ L] i~i~: River o nc ,. 1 p i Ian; G. i)tti~•i;o 4 o Ran~nc~• ~?II_~r'>,1i a >>~; r~ a G~U~ o c:=a~onc,_t~ p O oO I e~iC:Onpep0cOo0o0o0o0o0oO caat?o4<.CO hertnlir o ~p h mmJ 11 CV G ~ 1 ~1':~ ~.J~y/r~O CAW ~ 'Q CONTIGUOUS CITIES 58.2009 El GAMBLING ORDINANCE DRAWN ev: cML 1 1 River scA~: NOT TO SCALE CITY OF ANOKA CITY CODE CHAPTER 14; ARTICLE V 1 of 4 CHAPTER 14. LICENSING; AMUSEMENTS AND ENTERTAINMENT ---------- ARTICLE V. Charitable & Legalized Gambling *State law reference--Legalized gambling, Minn. Stats. Ch. 349; Local Regulation of Gambling, Minn. Stats. § 349.213. *State law reference--Local approval of licenses, Minn. Stats. § 349.213, subd. 2; local investigation fees, Minn. Stats. § 349.16, subd. 8. ---------- Section 14-181. Purpose. The purpose of this Article is to closely regulate and control the conduct of gambling and to ensure that profits derived from gambling activities in the City of Anoka provide, to the extent authorized by law, direct benefit to the citizens of Anoka. Section 14-182. Definitions. For the purpose of this Article, the following words and terms will have the meanings given them: Board. Minnesota State Gambling Control Board. Lawful gambling. The operation of gambling activities by an organization eligible for a license from the Board to conduct such activities. Lawful purpose. Will have meanings as provided in Minnesota Statutes Chapter 349, as may be amended from time to time. Main Physical Office Location. Will mean the physical site for the organization headquarters or the registered business office of the organization, which is located within the City and has been located within the City for at least two (2) years immediately preceding the application, and which is the physical site where the organization regularly holds its meetings and conducts its activities, other than lawful gambling and fundraising. Post Office box numbers do not qualify as the main physical office location. Net profits, lawful purpose, and allowable expenses. Will have meanings as provided in Minnesota Statutes Chapter 349, as may be amended from time to time. Premise Permits. The authorization given by the Board, after passage of a resolution of recommendation and support by the City Council, for a named organization to operate lawful gambling activities at a specified location in the City. Trade Area. The cities of Anoka, Andover, Champlin, Coon Rapids and Ramsey. Section 14-183. Statute incorporated. The current provisions of Minn. Stats. Ch. 349 are adopted and made a part of this Article as if set out in full. Section 14-184. Licensing Requirements. (a)State License or Permit Required. No organization shall directly or indirectly conduct gambling activities in the City without obtaining the necessary approval, license or permit from the Board. CITY OF ANOKA CITY CODE CHAPTER 14; ARTICLE V 2 of 4 Section 14-185. Process for Consideration. A copy of the application to be submitted to the Board, which describes the gambling activity and states where the gambling activity will be conducted, shall be supplied to the City Clerk at least thirty (30) days prior to the start date of the requested activity. The application shall be verified by a duly authorized officer of the organization or the designated gambling manager. Section 14-186. Organizations Eligible. (a) Organizations eligible to conduct gambling activities in the City shall be limited to fraternal, religious, veterans, or other non-profit organizations, which have been in existence for at least three (3) years. (b) Organizations must meet all qualifications for a gambling license issued by the Board. (c) Organizations may pay rent only up to the maximum rent allowed in leases to charitable organizations which is in compliance with what is set forth in Minnesota Statutes. (d) Organizations eligible to conduct gambling activities in the City shall be limited to organizations that have their main physical office located in the City of Anoka. Existing organizations and their premise permit locations that have been approved by the Anoka City Council prior to August 1, 2007 are exempt from this requirement as long as there is no lapse in their premise permit. (e) Organizations that are not eligible due to the main physical office location requirement, may be granted a waiver from the City Council, if within thirty (30) days from the date of submittal of their Premise Permit application to the City, no eligible organization meeting the physical office location requirement, has expressed to the City a desire to operate gambling activities at the premises applied for by the ineligible organization. The waiver would be granted only for the specific location set forth in the Premise Permit application and would remain in effect for the duration of the original Premise Permit license. Upon the need for renewal of a Premise Permit location, a non-eligible organization would follow the same process of approval as stated herein. The priority set by the City Council for granting approval of a premise permit application and its location shall be as follows: 1. First priority given to organizations whose main office location is within the corporate limits of the City of Anoka. 2. Second priority given to organizations whose main office location is located within the Anoka Area Chamber of Commerce limits and whose main office location is within a City that allows an Anoka based organization to hold a premise permit within their corporate limits, and who is eligible to be granted a waiver from the eligibility requirements by the Anoka City Council. 3. Third priority is given to all other organizations that are eligible to be granted by waiver from the eligibility requirements by the Anoka City Council. Section 14-187. Disapproval of Premises Permit Issuance. (a) The City shall recommend disapproval of an application for a premise(s) from the Board if: