Lincoln aldermen continue liquor ordinance struggle

 

[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.

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]