Lincoln aldermen examine availability of liquor licenses, gaming and impacts

 

[December 14, 2018] 

LINCOLN 

On Tuesday evening the Lincoln City Council spent quite a bit of time discussing what to do about the number of liquor licenses available for issuance within the city. At issue is whether or not there should be changes and increases in available licenses, and the impact video gaming establishments have in the city.

The topic has been ongoing since early this fall. In September the owners of Apollo Mart in Lincoln, as well as Greg (Haji) Patel came to the city to request that there be additional liquor licenses added to the city code. Both business owners were seeking a license specifically so they could add video gaming.

Apollo Mart planned to divide the current building and make one portion of it a gaming area. According to state law, the gaming area can only be an establishment that serves liquor.

Patel plans to build a new facility close to Thornton’s/Steak and Shake and the motels on the west side. The new facility would be a stand-alone building that offers gaming and alcohol.

The issue in September was that both establishments required class B liquor license and there were none available. City Administrator Beth Kavelman asked that the city consider combining the Class B and Class C license into one because there were licenses available in Class C, so the city would not be increasing the overall number of licenses, but would also be able to accommodate the requests of the two businesses.

At that time, questions came from the council about the current licenses and compliance with the regulations regarding sales of food and alcohol in comparison to the revenues from gaming. The city had established that any business offering gaming must show proof that at least 60 percent of the annual revenues of the business come from some source other than gaming. However, there were also ‘grandfather rules’ that had made it difficult for the city administrator to determine if businesses were filing the appropriate reports because it was not required from businesses that held their license prior to the changes made in 2012, when the door for video gaming was opened.

In September, Alderman Steve Parrott was the most vocal that the city should not open the door to more video gaming. He was also quite concerned that the city could not produce adequate reports on the breakdown of revenues by the establishments that already have gaming.

Kavelman worked then to explain why the reporting was so complicated, and it involved the timing of the license issuance verses the annual review. She said that businesses had to have had their license a full year before they were required to report, and then that report would be due following the beginning of the city’s fiscal year (May 1) when all licenses are reviewed.

At the end of those early conversations, the city decided to put this matter back in the hands of the Lincoln Liquor Commission, who would work with a city committee to bring back the appropriate recommendation for council consideration.

December 11, 2018

This week Lincoln Liquor Commissioner Dan Wheat came to the council with the new recommendations. Alderwoman Heidi Brown along with Mayor Seth Goodman had worked with Wheat.

Browne said the committee was recommending that the city combine the Class B and C licenses, remove the maximum number of licenses allowed within the city, eliminate the percentage clause, and take out the cap on video gaming.

This would leave the two licenses wide open for any and all businesses to apply for a liquor license if in compliance with all other liquor license requirements.

Wheat reported that there has been at least one business that had been for sale in Lincoln, a buyer had come forth but could not get the license needed, so the buyer moved on. In this particular case, the business, a restaurant, didn’t intend to do gaming, but did intend to serve alcohol with food.

He said that the city really needed to open the license up so that it could attract new business. This was also Browne’s concern, that the city was hurting itself by not having what was desirable for new restaurants.

Again Parrott was very vocal that the city should not open the license up, saying it would lead to unlimited bars and unlimited video gambling. He said that the University of Illinois has done state wide research on the impact of these establishments within communities. He read of a list of pitfalls that included increased crime rates ranging from theft and robbery to drug crimes and domestic abuse. He noted that the state of Illinois has the highest number of video gambling machines in the country and even exceeds the state of Nevada.

Wheat said that the city has no real control over the issuance of gaming license. He said the city may only control the liquor license and once the city issues a license, then the state must issue a liquor license and only then can a business apply for gaming. The gaming application is also a state application that the city cannot deny within its cap.

Currently, the city has capped video gaming machines at 120 total within the city limits. The state puts an additional restraint that no business may have more than five machines. Lincoln is maxed out on licenses and nearing the cap on gaming.

If the aldermen approve the recommendations of the committee then the door would be open to new businesses. Wheat also noted that the last three businesses to inquire about the liquor license were not seeking to put gaming in their establishments.

Parrott said he felt that by dropping all the restrictions the committee had chosen “the easy way out.” He said it would be detrimental to the city on the whole, currently Lincoln doesn’t “look good” and this would make it worse. He said as aldermen the group needs to do what is best for the city.

Alderman Tracy Welch said that he understood Parrott’s concerns, but the city doesn’t look good when they drag these issues out for so long. There needs to be decisions made.

Police Chief Paul Adams was asked his opinion and he said that he had to agree with the information Parrott had shared. There are going to be increases in crime that come along with the gaming. However, he said the city needed to consider other aspects. He said the city is not going to solve the state wide problems and the aldermen need to weigh their concerns against what it can capture in revenues.

Fire Chief Mark Miller was also asked to comment and he said about the same thing. He told the council that alcohol does indeed contribute to behavioral problems, but he called in a “two-sided knife” because the city also needs the money that would come from the additional licenses and subsequent tax and gaming revenue.

Welch came back to the fact that video gaming is not controlled by the city, that it feels like the city is trying to resolve the liquor licensing issues for the sake of gaming.
Questions were also raised whether or not the city could do anything to hinder the gaming.

Wheat explained that moment had passed. He said the city had discussed and adopted rules that allowed the video gaming into the city in 2012. After saying the gaming would be allowed, the situation is then controlled by the state. The only control the city has is to issue or deny liquor license.

Discussion then moved to how the city determines if a license should be issued.

Wheat said every applicant must be fingerprinted and pass a background check. Parrott asked what else the commission did, and Welch asked if there was a checklist the commission used to determine if the business and the location of the business were a good fit and needed in Lincoln.

Wheat said that there had been site inspections done, and he also noted that in the past there have been cases when the city issued a license but the state denied the license. Without a state liquor license the business cannot open, even if the city does want it.

Welch asked Parrott what he wanted to see happen?

Parrott said he did not want to see the restrictions removed. Again, he said the committee had taken the easy way out on their recommendation. He said that he didn’t want to increase revenue if it was also going to increase the burden on the city.

Mayor Seth Goodman weighed in regarding the proposed changes saying the reason the restrictions had been lifted and the license opened up more was because within the city, no other businesses are scrutinized in this fashion. He felt like it was unfair to those who were seeking to serve liquor that they should have to comply with sales rules that other businesses do not.

Browne commented that if the city were to adopt a new percentage ratio for gaming she would want to eliminate the grandfather rules. That would put everyone on the same plane and would require proper annual reporting by every business offering gaming.

City Treasure Chuck Conzo also warned against doing away with gaming all together saying that the city is gaining $275,000 per year from gaming revenue. If the gaming is abolished then the city would need to figure out how to make up for that loss.

Parrott said that he never said anything about abolishing gaming or eliminating existing gaming, he just is not interested in doing anything that will expand the number of gambling machines in the city.

Other discussion included the impact new gaming machines would have on existing machines. Each business is allowed up to five machines. Currently there are 113 machines in the city and a cap of no more than 120 allowed. Welch said that regardless of the number of machines in town, there were only so many using them. The number of gamers isn’t going to increase just because the number of machines increase.

Comments were made that adding new businesses with new machines would hurt other businesses that are already here. The comment was made that the strong businesses with loyal customers will survive, while others will not. Welch also noted that revenue from gaming is leveling off, so maybe that isn’t the real issue.

For Browne the issue is that the city has lost at least one, if not more, opportunities to bring new businesses into Lincoln because they could not provide the liquor license. Goodman said it was true that there were restaurants not interested in gaming that could not get a license for liquor, so they could not or would not come to Lincoln.

As the discussion came to an end, there were a few goals established. The committee would go back to the table and consider the caps and revamping the restrictions. Parrott, who was unaware that a committee had met, asked to participate in a future meeting. Alderman Dayne Dalpoas said he wanted to see a written criteria for license approval. It was also mentioned that this topic needs to be resolved and the city needs to take action. Welch had stated that it makes the city look bad when they drag things out for so long with no decision. He wants the city to act sooner rather than later on this matter and Goodman agreed that the city needs to make a decision soon.

Aldermen then left this topic and moved on to other business matters before the council. There were no specific announcements made concerning a future meeting of the liquor commission/committee, but Browne did say she would speak with Parrott about setting a date in the near future for the next meeting.

[Nila Smith]