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8.1. SR 05-18-2009REQUEST FOR ACTION To Item Number Ci Council 8.1. Agenda Section Meeting Date Prepared by Administration Ma 18, 2009 Tina Allard, Ci Clerk Item Description Reviewed by Ordinance Amending City Code Regarding Legalized Gambling Lori ohnson, Ci Administrator Reviewed by Action Requested Council motion to adopt an ordinance amending Section 38, Article V, regarding legalized gambling. Background/Discussion This item is continued from the May 4, 2009 Council meeting. Section 1 Per state law the trade area must include cities and townships that axe contiguous to Elk River. The following cities and townships were added as they are contiguous to the city. See attached map from the Census Bureau website. City of Nowthen City of St. Francis City of Dayton Big Lake Township Livonia Township Orrock Township Additional communities (not contiguous to the city) can be included in the trade area. The current ordinance lists Zimmerman and Rogers as being in the trade area. It is unclear in past city history why these two communities were included in the ordinance originally but the VFW organization is officially known as the Elk River-Rogers VFW. Section 2 Organizations will be allowed up to two premises permits. Section 3 The trade area is already in the definition section of the ordinance so it should be removed from this section. The trade area for lawful purpose expenditures must include cities and townships contiguous to Elk River. Organizations are required to spend 75% of their lawful purpose expenditures in the city's trade area. The language in our current ordinance states the 75% must be calculated based on an organizations gross profits. The State Gambling Control Board stated this language could be a burden on organizations and may be legally challenging to enforce. Based on conversations with the Board and other communities, staff recommends the 75% requirement be calculated from total lawful purpose expenditures, which are submitted on tax forms by the organizations. S:\Administration\Council RCA\Licensing\Gambling\2009\Final Adoption Memo.doc Attachments ^ Ordinance Amending Section 38, Article V, Legalized Gambling ^ Map of surrounding communities ^ Current Ordinance Action Motion by Second by Vote Follow Up S:\Administration\Council RCA\Licensing\Gambling\2009\Final Adoption Memo.doc ORDINANCE 09- CITY OF ELK RIVER AN ORDINANCE OF THE CITY OF ELK RIVER AMENDING SECTION 38, ARTICLE V, LEGALIZED GAMBLING, OF THE CITY CODE OF ORDINANCES The City Council of the City of Elk River does hereby ordain as follows: Section 1. Section 38-161 titled, Definitions, of the Ciry of Elk River Code of Ordinances shall be amended to add the following definition: Trade area means al} the following cities and townships: ' g-the City of Elk River, the City of Otsego, the Ciry of Rogers, the City of Ramsey, the Citv of Nowthen, the City of St. Francis, the City of Dayton, a~ the City of Zimmerman, Big Lake Township, Livonia Township, and Orrock Township. Section 2. Section 38-164 (c) titled, Restrictions on issuance of premises permit, of the City of Elk River Code of Ordinances shall be amended as follows: (c) Only one premises permit shall be allowed per premises for lawful gambling operations. ~e Up to two premises permit shall be allowed per organization fox lawful gambling operations in the City. Section 3. Section 38-165 titled, Lawful purpose expenditures by organizations conducting gambling, of the City of Elk River Code of Ordinances shall be amended as follows: ~~ ~~ • , {b} ~ Any organization holding a premises permit to conduct lawful gambling within the city shall be required to expend 75 percent of its grass-~ra€rt=s lawful ose expenditures on lawful purposes conducted or located within the city's trade area. {e~ ~b An organization that conducts gambling on fewer than five days in a calendar year is exempt from the requirements of this section. Section 4. That this ordinance shall take effect upon publication as provided by law. Passed and adopted by the City Council of the City of Elk River this 18th day of May, 2009. Stephanie Klinzing, Mayor ATTEST: Tina Allard, Ciry Clerk S:\Administration\Council RCA\Licensing\C~ambling\2009\Ordin Amdment Draft.DOC ARTICLE V. LEGALIZED GAMBLING* ARTICLE V. LEGALIZED GAMBLING* Page 1 of 3 'State law references: Lawful gambling and gambling devices, Minn. Stats. ch. 349; laca! regulation of gambling, Minn. Stats. § 349.213. Sec. 38-161. Definitions. The following words, terms and phrases, when used in this article, shall have the meanings ascribed to them in this section, except where the context clearly indicates a different meaning; Gambling control division means the state agency that licenses and regulates gambling. Lawful gambling means the operation, conduct, or sale of bingo, raffles, paddlewheels, tipboards, and pull-tabs. Lawful purpose means 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 Minn. Stats. § 349.154. Net profit means gross profit less reasonable sums actually expended for allowable expenses. Organizafion means a religious, fraternal, ve#erans', 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 far the purpose of conducting gambling. Premises permit means atwo-year permit granted by the state gambling control board for each premises where lawful gambling is to be conducted. Trade area means 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. (Code 1982, § 716.00) Cross references: Definitions generally, § 1-2. Sec. 38-162. Purpose of article. It is the. stated policy of the city council 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. (Cade 1982, § 716.02) Sec. 38-163. Licenses and permits generally. (a) It shall be unlawful to operate lawful gambling without a license issued by the state gambling control division. (b) Licenses to operate gambling devices or to conduct raffles shah be issued only to a fratemal, religious, veterans', or other nonprofit organization covered by Minn. Stats. § 349,16. (c) The organization desiring a gambling license must obtain an application from the state gambling control division. http://library4.municode.com/default-test/DocView/13427/1154/59 04/29/2009 ARTICLE V. LEGALIZED GAMBLING* Page 2 of 3 (d) 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 ofi application for the new or renewed permit or license, (e) A premises permit issued by the gambling control division is valid for two years (Code 1982, § 716.04) State law references: License generally, Minn, Stats. § 349,16. Sec. 38-164. Restrictions on issuance of premises permit. (a) The city reserves the right to disapprove a premises permit application for individual binge occasions, raffle games, and pull-tab operations for any of the following reasons: (1} Violation by the applicant of any statute, rule, regulation or ordinance relating to gambling. (2) Failure to make reports required by any applicable ordinance, rule, regulation or statute. (3) Any reason which would justify the state gambling control board in denying an application for a license. (b) No premises permit or renewal will be approved unless: (1) The organization is conducting the lawful gambling on the premises of a church or a fraternal, veterans', or other nonprofit organization, or on the premises of an on-sale liquor license of the city. (2) The physical site for the organization's headquarters or the registered business office of the organization is located within the city or a city contiguous to the city. 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. (c) Only one premises permit shall be allowed per premises for lawful gambling operations. Only one premises permit shall be allowed per organization for lawful gambling operations, (Code 1982, § 716.06) Sec. 38-165. Lawful purpose expenditures by organizations conducting gambling. (a) F'or purposes of this section, the term "trade area" shall mean all of the following areas; the City of Elk River, the City of Ramsey, the City of Otsego, the City of Rogers, and the City of Zimmerman. (b) Any organization holding a premises permit to conduct lawful gambling within the city shall be required to expend 75 percent of its gross profits derived from lawful gambling within the city on lawful purposes conducted or located within the city's trade area. (c) An organization that conducts gambling on fewer than five days in a calendar year is exempt from the requirements of this section. {Code 1982, § 716.08} State law references: Authority to so provide, Minn. Stats. § 349.213, subd. 1. Sec. 38-166. Reporting requirements. http://library4.municode.com/default-test/DocView/13427/1154/59 04/29/2009 ARTICLE V. LEGALIZED GAMBLING* Page 3 of 3 (a) Every organization licensed to conduct gambling in the city shall file with the city clerk copies of the monthly state gambling report and schedule C required to be filed with the state lawful gambling control board pursuant to Minn. Stats. ch. 349. The records and repot#s shall be due at the same time they are due to the gambling control board. (b) Every organization licensed to conduct gambling in the city shall file with the city clerk an annual summary report of the expenditures for lawful purposes within the trade area. (c) Organizations conducting gambling activities in other communities as well as the city shall segregate the gross receipts, expenses, profits and expenditure of profits from the Elk River operation. (Code 1982, § 716.10) State law references: Records and reports, Minn. Stats. § 349,19. Secs.38-167--38-190. Reserved. http://library4.municode.com/default-test/DocView/1342711 /54/59 04/29/2009 Ttlanl: you for ihe~ notice of thz meeting, I'rn not quite sure «~l:cre we are on this, Keith has been in the hospital since hriday the 24`h of April, I knot~° he attended the last meeting aazd informed r1~e that research had to be done before the council decides on the .issue.. ~s far as the issues on the sheet: 1. The o~~~r,nizations ir1 the ciiv thai S~isl~ to de~pu11 tabs are already doizi~~ lhern at establishments, rind ~~it'rt them ot~l} being ailo~~ed ? c:stalilishrnent in toti~n, they can not take on rtnother establisl~nlel~t. Leav°in~a the only s~aurco of a Charity to do hull-tabs from out of ta~ti~n. ~ arxr not sure what the trade area percent is. ~. In a tune when boil tabs are declining, it is bcconling nor°e diftic.ult for the C~harrties to rnahe a pro it, by increasing the amount of booths that a Charity may have, that would increase the sales voh:r~ne ~~~hilc the administrative cost to operate one booth con~pr_trcd io tv;o booths would hardly change, ailawing the Clrari?y to irlcrcasu it's re~~enuc s and tl~~trs t}ie contributions of the charity.: 4. It you maragc, operat<~, or o~hn a inrsiness in Ilk Rig er, you are already hero visited 4 or more tunes a ~yeek looking for a donation, rind the art;a t1'iat the Iroul7s :-ire comin~~ trorn is growin`a, ~~e see people train St. ;Michael to Princeton and fr{>rn Monticello to ,Anoka looking for donations, the only tlZing since t}7e pull tats hay-=~ left, it has made us more selccti~ e in the cause for the donation ar~d the amount of the tionatit~n. ~~'e ten<I to look for Charities that are heipitlg the. most peopl4, like, an} time tie hay-e a band, the stig;~estud cover is a :food or cash donation to the CAI~;R food shelf, donations for individual causes are less lihcly to get a donation, and the schools ~~-i11 be basicall~° local this tear. "The rnaximunr ar~r establishn~er~lt can get from a puil- tab booth is ~I75C),t)U per month, and ia4t ~~car it ranked from ~6(1t~.00 -- ~l I OO.C?0 per rnor.th, so. 10"0 w~.~uld actur~llv he a <lecr::ase ire what we are currentl}~ donating. 5, ~ gambling tci~? , -Chat would in~~olve a Ii>t of items. I mean. gambling involves paying to play a gar3~e ol~chance for money or a prize, so that wc7uld have to i~zclude bull tabs. hir~go. raffles, latter°~-, rand scratch offs, all are legal within cit} lirlxits and are perlc~rr-ncd b~' vrgani7atons of all t~-pes, including t}~, state. 11.1.] are I~>>~., of garnblinY~, and all are. c~per:~ted by C~harit}, can you discrinunate from ont form of g~nnbling or another. or onc~chrtritahle group or another. Due to T~eith being ire the hospital, T carp not attend; for i have to work, being short handed for the time being, if }°ou hav-e any questions or concerns, pl€ ase feel free to give me a call at home 1~londay until 3:30 at 763-'74-C}7~ti, after x;30, I will be at Time Out at 763-441-4443 ar you n~a}~ email n~~c at,~ipkat~lrtz~~rol corn, 'hhank } otr for your tine and consideration. ~~ .Tohr~ J haul ~'reneral i~~Ianrr~cr _. Tir<re Out Restanz•ant & parts Sat Q m O U n ~~~ ^ O O G' ~~ ,O oQo Z m^ p OC O ~ p ~ :; O o <~-fTO a^ JO r O O ,.. 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~) ~~ .. 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