5.3. SR 06-05-1995ITEM 5. 3.
MEMORANDUM
ver
TO: Mayor and City Council
FROM: Sandra Thackeray, City Clerk ~,''`
DATE: June 5, 1995
SUBJECT: Charitable Gambling in the City of Elk
River
On May 8, 1995, the council discussed several aspects of the City's existing
Charitable Gambling Ordinance as it relates to pull tab operations in the
City of Elk River. The Council's main concern is regulating outside
charitable gambling organizations who violate the City's ordinance
requirement of expending 75% of the lawful purpose expenditures in the
City's trade area (Elk River, Otsego, Ramsey, Rogers and Zunmerman). The
Council has requested the City Attorney to research the possibility of setting
some type of residency requirements for charitable gambling organizations
who operate within the City of Elk River in order to regulate this 75%
requirement. The Council has also considered raising the 75% requirement
to 80%.
BACKGROUND:
Residency Requirements:
I have reviewed charitable gambling ordinances from several cities as shown
on the attached table. Although a number of cities include residency
requirement restrictions in their charitable gambling ordinances, some
attorneys feel that these types of restrictions could be subject to challenge. It
has been suggested that ordinances that treat certain types of organizations
differently than other types, e.g. property owners versus those who lease
facilities, raise equal protection questions.
City Attorney Peter Beck has suggested that the Council could include
provisions in the City's ordinance restricting outside organizations from
receiving a license. He indicated that it would probably be less arbitrary for
S the Council to deny a license request from an outside organization with
provisions included in the city ordinance. He further indicated that there is
no guarantee that this measure would eliminate court challenges.
13065 Orono Pazkway • P.O. Box 490 • Elk River, MN SS330 • (612) 441-7420 • Fax: (612) 441-'1425
City Council Memo/Charitable Gambling
June 5, 1995
Page 2
• If the Council adopts an ordinance allowing only local charitable gambling
organizations to operate in the City, it may want to consider grandfathering
in existing outside organizations. Celebrity Bowl Charities currently holds a
license for pull-tabs at Elk River Bowl. This gambling organization has
contributed 100% of its expenditures to the city's trade area during the past
two years. (See attached letter from Celebrity Bowl Charities).
Trade Area Expenditure Requirements:
The City's ordinance currently requires gambling organizations to spend 75%
of their yearly lawful purpose expenditures in the City's trade area. I have
received some opposition to an increase in this percentage from local
organizations. Opposition to the increase pertains to the following issues:
• Fraternal and veteran organizations support activities outside of their
trade area; e.g. some local VFW Posts support the Veterans Home or
Veterans Hospital. Trade area restrictions would curtail this support.
• Many local charitable organizations are chapters of national
organizations; e.g. National Cancer Society, American Heart Association,
the National Red Cross, etc. Trade area restrictions impose limitations on
• these forms of organizations.
The Council has been asked to consider these issues prior to increasing the
75% requirement. Of the 25 cities surveyed, only three have a requirement
of 75% or more.
Gambline' Oreanizations
All of the gambling organizations operating in the City of Elk River have
been informed in writing of this meeting. There maybe representatives from
some of the organizations present to speak on this issue.
CONCLUSION
The Council has several options regarding this matter. They are as follows:
1. Recommend that the City's gambling ordinance be amended to include
some type of residency requirement restricting outside organizations
from receiving a gambling license in the City. (See attached page
listing residency requirement options from other cities).
•
Ciry Counci] Memo/Chazitable Gambling
June 5, 1995
Page 3
2. Recommend that the City's gambling ordinance be amended to include
residency requirements which would restrict outside organizations
from receiving a gambling license in the City, but grandfather
existing outside organizations.
3. Increase the existing requirement of spending 75% of the yearly lawful
purpose expenditures.
4. Do nothing.
•
It is staffs intention to amend the City's entire charitable gambling
ordinance. Staff would prefer to do this following direction from the City
Council regarding the 75% percent and residency requirement issues being
resolved.
ACTION REQUESTED:
Staff is requesting direction from the City Council regarding the 75% percent
and residency requirement issues.
TRADE AR EA PERCENTAGE CHART
ORGANIZATION 1991
TRADE AREA
PERCENTAGE 1992
TRADEAREA
PERCENTAGE 1993
TRADEAREA
PERCENTAGE 1994
TRADE AREA
PERCENTAGE
Jaycees g4% gg% 100% ---
Am. Legion $g% 89% 84% 94%
0 93% 99% 94% 96%
Eagles 85% 90% 87% 90%
Camp Confident $1% 71% 75% 0%
Celebrity Bowl 100% 100%
E.R. Hockey
Elk River Lions 100%
•
City Council Memo/Charitable Gambling
June 5, 1995
Page 4
•
CHARITABLE GAMBLING SURVEY - 25 CITIES
•
CITY YEAR
ADOPTED TRADE AREA
PERCENT RESIDENCY
UIREMT.
Chanhassan 1991 50% es
Hanover 1992 50% es
Little Canada 1992 0 es
Blaine 1991 100% es
Braham 1988 0 no
Brainerd 1991 0 es
Cambrid a 1988 0 no
Chisohn 1987 51% no
Coon Ra ids ? 0 no
Cotta e Grove 1991 0 no
Eden Prairie 1989 30% no
Ea an 1987 0 es
Gem Lake 1987 50% es
Golden Valle 1991 0 es
Hawle 1992 0 no
Ma le Grove 1994 50% no
New Hoe 1988 0 es
Ste hen 1993 75% ?
Prior Lake 1988 0 es
Fridle 1991 50% no
Shoreview 1982 0 no
Rochester 1990 0 no
Andover 1991 50% es
Litchfield 1991 60% es
Ramse 1993 75% no
RESIDENCY REQUIREMENT LANGUAGE FROM OTHER CITIES:
Five active members of the organization must reside in the City.
2. For the last three years organization must have held regular meetings
in the City, and demonstrates that the organization has performed
City Council Memo/Charitable Gambling
June 5, 1995
Page 5
• substantial services with the City or on behalf of the residents of the
city.
3. Organization is located within the city.
4. Organization has 15 residents that are members of the City.
5. The physical site for the organization headquarters or the registered
business office of the organization is located within the City and has
been located within the city for at least two years
6. The organization owns real property within the City.
7. The activities of the organization or its local subdivision directly and
primarily benefit the citizens of the city.
Organization must be organized to operate in the city with not less
than 60 percent of its members city residents. If the organization is
state or nationally chartered, the charter must designate the city as its
location.
• 9. That at least 15 of the organization members either live or work in the
City.
10. Organization must be located in the county.
(Many ordinances waive existing outside organizations if operating
within the City during time of ordinance amendment).
s: \council\gamblin g. da c
•
Celebrity Bowl Charities
PO Box 819, Mankato MN 56002-0819
May 25,1995
Sandra Thackeray
Ells River City Clerk
PO Box 490
Ells River, MN 55330
Dear Sandra:
]n response to your letter dated May 10, 1995, I would like to address the
following issues regarding changes in your City's charitable gambling
ordinance.
Currently our internal operating procedures require us to distribute 809„ of
the money raised in a community within that community- In the fiscal year
ending March 31, 1995 Celebrity Bowl Charities has donated over 530,000 to
civic and government organizations in the City of Elk River. (See enclosed
list of donations). We would support an amendment that would require an
SO% spending requirement.
The issue regarding establishing eligibility requirements is much mare
complicated and requires more careful analysis. If the idea behind any
ordinance change is to make sure that local dollars stay in the community,
then I believe the changes listed above would be sufficient.
I do not think it would be good public policy, however, to establish eligibility
requirements if the intent is simply to keep outside organizations from
conducting business in Elk River. If the City Council does consider an
eligibility requirement I would propose the following:
1.) Allow Celebrity Bowl Charities to be "grandfathered" in to any
ordinance change, or
2.) Allow Celebrity Bowl Charities to designate Elk River Bowl as it's
satellite office and require that organizations maintain an office in the
community.
City of Elk River Page 2
At this time we aze not planning to send a representative to the June 5
Council meeting. I don't believe there is anything more I could add that I
haven't already addressed. If you would be so kind as to distribute this letter
and enclosure to the Council members, the Mayor, the City Manager and the
City Attorney I would appreciate it.
Sin/c}erely,
L-' ~~--
glas J. DeMarce
ambling Manager, Celebrity Bowl Charities
RES FUND-029
5/19/95
.Gate
TRANSACTION REPORT SY CATEGORY
4/ 1/94 Through 3/31/95
ELK RIVER
Num Description Memo Category
INCOMEIEXPENSE
EXPENSES
DONATION:
Page 1
Clr Amount
CITY
7/28/94 99091 CITY OF ELK RIVER 794029004 APP DONATION:CITY -2,500.00
2/ 1/95 9313 CITY OF ELK RIVER 95012902 DONATION:CITY/EL -5,000.00
3/31/95 9390 CITY OF ELK RIVER 95032943 DONATION:CITY/EL -3.023.78
3/31/95 9391 LEK RIVER AREA HIG 95032944 DONATION:CITY -4,000.00
TOTAL CITY -14,523.78
COMMUNITY
1/ 5/95 99174 ABBA CRISIS PREGNA 94122923 DONATION:COMMUNI -250.00
2/ 1195 9314 FRIENDS OF ELK RIV 95012903 DONATION:COMMUNI -2,000.00
3/31/95 9389 ELK RIVER JAYCEES 95032942 DONATION:COMMUNI -300.00
TOTAL COMMUNITY -2,550.00
YOUTH
4/ 5/94 8223 ELK RIVER SOFTBALL APPROVED 3-24 DONATION:YOUTH -2,SOO.DO
4/ 5/94 8224 VIKING TROPHIES APPROVED 3-24 DONATION:YOUTH -647.18
5/ 3/94 99054 ELK RIVER SCOUT TR 59429003 AP DONATION:YOUTH -1,500.00
5/ 3/94 99055 ELK RIVER YOUTH BA 54429002 APP DONATZON:YOUTH -300.00
5/ 3/94 99056 ANOKA SPORT SHACK 59429001 APP DONATION:YOUTH -457.40
11/ 8/94 99118 SPED UNLIMITED 11940290061 A DONATION:YOUTH/E -1,000.00
12/13/94 99141 ANOKA SPORTS SHACK DONATION:YOUTH -1,114.70
1/ 5/95 99158 GIRLS YOUTH SOFTBA 94122909 DONATION:YOUTH -500.00
1/ 5/95 99165 BOY SCOUT TROOP 11 94122915 DONATION:YOUTH -250.00
1/ 5/95 99172 ELK RIVER AQUATICS 94122921 DONATION:YOUTH -1,500.00
1/ 5/95 99173 ELK RIVER AQUATICS 94122922 DONATION:YOUTH -1,500.00
2/ 1/95 9312 V.S. VOLLEY BALL A 95012901 DONATION:YOUTH/E -1,483.00
3/ 1/95 9335 THREE RIVERS SOCCE 95022901 DONATION:YOUTH -200.00
3/ 1/95 9336 PHEASANTS FOREVER 95022902 DONATION:YOUTH -250.00
TOTAL YOUTH -13,202.28
TOTAL DONATION -30,276.06
TOTAL EXPENSES -30,276.06
TOTAL INCOME/EXPENSE -30,276.06
r ~