8.1 SR 04-20-2020City of
Qk*'
River
Request for Action
To
Item Number
Mayor and City Council
8.1
Agenda Section
Meeting Date
Prepared by
General Business
April 20, 2020
Jessica Miller, Deputy Clerk
Tina Allard, City
Clerk
Item Description
Reviewed by
Liquor License Fees
Cal Portner, City
Administrator
Reviewed by
Action Requested
1. If Council wants to implement a credit due to ceased operations:
Approve, by motion, a two -month credit for the following liquor license types:
■ On -Sale Liquor
■ Sunday Liquor
■ Wine
■ 3.2 On -Sale
■ Club
■ Brew Taproom
2. Staff direction regarding installment payments. An ordinance could be adopted as soon as May 4.
Background/Discussion
Due to the COVID-19 pandemic, Governor Tim Walz signed Executive Order 20-04 on March 16, 2020,
which required the closure of bars/restaurants beginning March 17. Per the Order, restaurants can provide
takeout/delivery but are not allowed to sell/serve alcohol (There is a bill currently at the legislature to allow
alcohol -to -go). The closures impacted 19 businesses in Elk River.
Liquor licenses run July 1 through June 30. Renewals are due mid -May. Unfortunately, in order to meet state
deadlines, we are unable to modify this timing.
Staff has received calls from several businesses who expressed they are experiencing revenue losses due to
the executive order and inquired about options to alleviate licensing fees. Options include:
A. Prorate Refund Credited Towards the Renewal
The following language is in Minnesota Statutes §340A.408 and Elk River City Code §6-56:
Refunds.
The Elk River Vision
A welcoming community with revolutionary and spirited resourcefulness, exceptional,` 01 e
service, and community engagement that encourages and inspires pi ospei ly INAWRE1
A pro rata share of an annual license fee for a retail license to sell intoxicating or 3.2 percent malt
liquor, either on -sale or off -sale, may be refunded to the licensee or to the licensee's estate if-
(1) the business ceases to operate because of destruction or damage;
(2) the licensee dies;
(3) the business ceases to be lawful for a reason other than a license revocation; or
(4) the licensee ceases to carry on the licensed business under the license.
If bars/restaurants can open in early May, operations would have ceased for a little under two months.
Council could remove two months of fees from the renewal for those ceased operations.
B. Installment Payments
The attorney general has ruled on several occasions that a Council may allow payment of liquor license
fees in installments, but three criteria must exist:
1. An ordinance amendment is required.
2. Payment of each installment should come due before the beginning of the period to which it relates.
3. The licensee bears responsibility for the full year's license fee upon receiving the license, whether or
not the business continues to operate. A city can seek to recover the unpaid installments as they fall
due even if the business ceases operation. To minimize problems, the ordinance should contain an
express provision to this effect.
Financial Impact
Prorating a two -month refund would decrease licensing revenue by $12,483.52.
Installment payments would require more staff time and resources for follow-up each quarter. If Council
chose this option, staff would recommend it only be valid one time for the July 1, 2020 - June 31, 2021
licensing year. Council may need to consider license suspensions for non-payment if an installment is not
paid. The business would not be allowed to sell liquor until the payment has been made and the
suspension removed by Council.
Council has no authority to financially support a business and there is no public purpose for such an
expenditure. But Council could consider other financial assistance options through the Economic
Development Authority.
Attachments
■ Financial Impact Detail
License Type
License
amount (full)
per licensee
#
establishments
Pro -rated "credit"
amount per
establishment
Total financial
impact for this
license type
3.2. on -sale
$225.00
3
$37.50
$112.50
On -Sale Intoxicating
$5,000.00
14
$833.34
$11,666.76
On -Sale Sunday
$200.00
15
$33.34
$500.10
Club
$300.00
1
$50.00
$50.00
Wine
$700.00
1
$116.66
$116.66
Brew Taproom
$225.00
1
$37.50
$37.50
Total
$12.483.52
The figures above are done assuming the business will be unable to sell alcohol for two months.
Here are some examples specific businesses would see:
Pompeii holds a Wine and 3.2. On -Sale so their "credit" would be $154.16
■ The restaurants in town with full liquor (On -Sale and Sunday) would receive a "credit" of $866.68.
■ The Eagles hold Club and Sunday licenses so their "credit" would be $ 83.34