Lincoln aldermen continue liquor
ordinance struggle
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[January 31, 2019]
LINCOLN
On Tuesday evening, a large portion of the discussion at the Lincoln
City Council's Committee of the Whole focused on the city’s liquor
license. The issue at hand was supposed to be reviewing corrections
made to an ordinance passed a few weeks ago. However, the
conversation veered off topic and became more about the manner in
which the ordinance was passed and the basic rules contained within
the ordinance.
On January 7th, the council voted to approve a new ordinance that
brought about significant changes to the liquor laws and also had an
impact on video gaming or gambling within city limits. The city has
no control over video gaming with the exception of how gaming
figures into the ratio of total gross revenues within a business.
In 2014, the city approved a motion to allow video gaming to
qualified businesses requiring that 60 percent of gross revenues
must come from the sale of products or services other than gaming
The city liquor commission was to monitor the individual
establishments to assure the percentage requirements were met.
Businesses were required to show proof of income with application of
liquor license renewal each May.
In 2018, City Administrator Beth Kavelman struggled with explaining
the ordinance and rules to the council and was unable to provide
evidence that the liquor commission was monitoring establishments
for compliance to the percentage rules. She noted that some
businesses were “grandfathered” in because they already had long
standing licenses and were not required to report income. New
businesses that received a license after May first of any year had
more than a year to comply, consequently the monitoring process had
been hindered, and though several years have passed since the rules
were established, compliance was unproven with most of the
businesses.
At that time, Kavelman was asking for clarification on what the city
wanted within the ordinance, and sought to combine the class B and C
licenses.
The liquor commission also asked that the license be combined, but
in addition they wanted to do away with the limit on licenses within
the city. The 2014 ordinance changes had specified that there would
be a certain number of class B and a certain number of class C
licenses available. This was done in order to avoid having an
over-run of liquor establishments within the city and to also help
control how much video gambling was permitted.
In December of 2018, the council appeared unwilling to increase the
number of licenses available. Kavelman asked to combine the classes
of licenses because there were licenses available in one class and
none in the other. Combining the two would permit Class C requests
to be granted without increasing the overall allowable number of
liquor establishments within the city.
Over the next few weeks the ordinance changes evolved into a
completely re-vamped code that took off the limits for the number of
establishments allowed, drastically lowered the percentage ratio for
gaming versus other sales, and combined the Class B and C licenses.
The new ordinance also made it clear there would be no
grandfathering of existing businesses, greater control and
monitoring, and fines imposed for non-compliance to the percentage
rules.
The new ordinance was supposed to be written to reflect that at any
establishment offering gaming, at least 30 percent of the total
revenue should come from a source other than gaming, a significant
decrease from the previously required 60 percent.
Issues arose at the January 14th meeting of the council when Heidi
Browne noted that portions of the ordinance had been written with
the percentages reversed to what was intended by the council.
This week, city attorney John Hoblit presented the corrected draft
to the council for review. He noted that all the percentages were
now correct, lettering of the various license classes had been
spelled out and he felt that the ordinance was now what the council
had intended for it to be. He had a few questions about application
of the rules to classes other than the newly combined B/C Class that
has now been renamed to just a B Class.
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Aldermen were satisfied with the changes made and fielded questions from the
attorney about the language of revocation versus non-renewal. The new ordinance
states that non-compliant businesses will be fined $500 per year each year they
are non-compliant, and after three years of non-compliance the licensee will not
be able to have a license. Hoblit wanted to know if this would be a revocation
of license or non-renewal. Because the review takes place only once per year at
renewal time, aldermen agreed that it would be a non-renewal. Hoblit said there
was some additional changes that would need to be made to the language.
Steve Parrott noted that the percentage rule applies only to businesses with
video gaming. The license would not be renewed, but, if the business then got
rid of its video games, they could re-apply.
Newly appointed liquor commissioner Rick Hoefle was in the gallery along with
co-commissioner Dan Wheat. Hoefle asked how many liquor establishments currently
have gaming. Wheat said it was 17. Hoefle noted that the city is earning a
percentage of the gaming revenue and that is coming in at more than $250,000 per
quarter. He said based on that, the licensees are making a good amount of money
off the machines. He feels that the $500 penalty for non-compliance is way too
low and will not prevent licensees from breaking the percentage rule.
Parrott said that a separate committee that made the original recommendations
for change, had discussed a stiffer penalty. He said it was talked down, but he
personally would be in favor of a stiffer penalty.
It was also said that some of these businesses, if they could not have the video
gaming, they would go out of business. Parrott said that the committee had given
all the businesses a big allowance by saying that only 30 percent of the revenue
had to come from something other than gaming. He said if they couldn’t adhere to
the much more lenient rule, he really didn’t have a problem with them closing.
Tracy Welch, who opposed the original vote along with Jeff Hoinacki said that
all the struggles the council has had with this ordinance, is proof that the
group ‘fast-tracked’ the ordinance without giving it the proper consideration.
He noted that while there is now an ordinance, there are still no outlines of
how the ordinance will be enforced, no policy rules for the commission to go by.
He said he was opposed in the first vote, and he will also vote no when these
changes come before the council again.
On a couple of occasions during the discussion, Hoblit explained that the
upcoming vote will serve only to correct errors made in the original draft. He
said that voting “no” will only indicate that aldermen do not wish to correct
the errors. He said that if the ordinance is still not what the council wants it
to be, then aldermen need to recommend additional amendments or changes to the
ordinance.
Parrott said that the push to pass an ordinance had come primarily from pressure
from the liquor commission and businesses seeking new license. He said he saw no
issues with continuing to work on the monitoring rules while licenses are being
issued. It had been noted at previous meetings compliance to the new rules is
more than a year away, with the first full year reporting period coming in 2020.
Parrott said then, and reiterated this week, that the city and the commission
has plenty of time to work out how the new ordinance will be monitored and
enforced.
As the discussion came to an end, Hoblit said he felt confident he knew what the
city wanted in additional language changes. He said that the council could vote
on the corrections next week, or they could wait for another Committee of the
Whole so as to review the ordinance fully corrected.
Dayne Dalpoas said that he would prefer to wait for the next COW and see the
changes in place. Parrott agreed.
Therefore, this item will not be on the agenda for voting next week. Hoblit will
make the corrections, the council will then review document at the February 12th
COW, and possibly vote to approve it at the February 18th Regular meeting.
[Nila Smith] |