ACTION REQUESTED:
Title
Communication from the City Manager and the Corporation Counsel with a Request to ADOPT One of the Following Ordinances Amending Chapter 3 of the Code of the City of Peoria Regarding Liquor Regulations Relating to Proposed Establishments that Will Operate Video Gaming Terminals:
A. An ORDINANCE Amending Section 3-92 of CHAPTER 3 of the CODE of the City of Peoria, Requiring Newly Site Approved Class A, B, B-1, G-A, or G-B Liquor Licensee to Have a MINIMUM AVERAGE MONTHLY SALE of at Least $10,000 from the Sale of Food, Alcoholic or Non-Alcoholic Beverages, and/or General Merchandise For One Year Prior to Adding Video Gaming Machines;
B. An ORDINANCE Amending Section 3-92 of CHAPTER 3 of the CODE of the City of Peoria, Requiring Newly Site Approved Class A, B, B-1, G-A, or G-B Liquor Licensee to Have a MINIMUM AVERAGE MONTHLY SALE of at Least $10,000 from the Sale of Food, Alcoholic or Non-Alcoholic Beverages, and/or General Merchandise For One Year Prior to Adding Video Gaming Machines AND No Video Gaming Terminals Will be Allowed in Any New Liquor Establishment which is Located within 1500 feet from an Already Established Liquor Establishment with Video Gaming Terminals;
C. An ORDINANCE Amending Section 3-92 of CHAPTER 3 of the CODE of the City of Peoria, Requiring Newly Site Approved Class A, B, B-1, G-A, or G-B Liquor Licensee to Have a MINIMUM AVERAGE MONTHLY SALE of at Least $10,000 from the Sale of Food, Alcoholic or Non-Alcoholic Beverages, and/or General Merchandise For One Year Prior to Adding Video Gaming Machines, No Video Gaming Terminals Will be Allowed in Any New Liquor Establishment which is Located within 1500 feet from an Already Established Liquor Establishment with Video Gaming Terminals; AND Limit the Number of Liquor Establishments that can Operate Video Gaming Terminals to 5 Per City Council District.
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BACKGROUND:
As a home-rule municipality, the City has broad powers to regulate the business of the sale and service of alcoholic liquors within its corporate boundaries. The primary requirement to obtaining a video gaming license is to have the local authority's approval for the drawing, pouring, mixing, or otherwise serving alcohol liquors for consumption on the liquor licensed premises. Although the Illinois Gaming Board has the full authority to grant video gaming licenses to qualified liquor licensed establishments, municipalities have broad powers to regulate how these establishments operate as liquor licensed establishments.
During the policy discussion on this topic, there were concerns regarding the business model presented by proposed video gambling cafes. The business model for these video gambling cafes is to have the sale of alcohol only as an accessory to the business of operating a gambling establishment. This turns upside down the purpose of the Video Gaming Act which was to allow video gaming machines in qualified liquor licensed businesses, not add a very minuscule sale of alcohol as an accessory to gambling establishments.
The Video Gaming Act does not specifically prohibit a municipality from imposing these additional conditions and it is clear that a home-rule municipality can broadly regulate the operation of liquor establishments. How a liquor licensed establishment operates within the community is of a local concern that the City Council has repeatedly voiced during its deliberations on liquor site applications. It is within the City Council's purview to require minimum operating conditions prior to the liquor establishment adding a secondary component that may have deleterious impact to the community.
Based upon the feedback from members of the City Council during its meeting on October 7, 2014, when the initial proposed ordinance amending Chapter 3 of the City Code was presented for a first reading, staff has drafted three options amendment to Chapter 3 of the City as follows. Each of the option contains amendment Chapter 3 of the City Code, specifically Section 3-92, to put in place a one-year period in which a tavern or a restaurant under Class "A" (tavern), "B" (restaurant with at least 50% sale of food), "B-1" (restaurant with at least 25% sale of food) ,"G-A" (tavern with beer and wine only), or "G-B" (restaurant with beer and wine only) must operate as a responsible liquor licensed establishment with an average monthly sales amount of at least $10,000 from the sale of food, alcoholic or non-alcoholic beverages, and/or general merchandise prior to adding video gambling machines. This will ensure that these businesses will truly operate as liquor licensed establishments prior to adding video gambling machines. This restriction will apply only to newly site approved taverns and restaurants.
The proposed amount of $10,000 is the median obtained from average monthly gross sale of alcohol from currently licensed taverns. There are 21 taverns whose average monthly gross sale of alcohol fall below $10,000 and 21 taverns whose average monthly gross sale of alcohol are above the $10,000 amount. The proposed threshold amount of $10,000 for newly site approved licensee would include the sale from a combination of alcoholic beverages, non-alcoholic beverages, food or other general merchandise.
Option 1 is a proposed amendment to Chapter 3 that requires a newly site approved liquor licensee for one of the liquor classes listed above to maintain a minimum average monthly sale of $10,000 from the sale of food, alcoholic or non-alcoholic beverages, and/or general merchandise for one year prior to the establishment adding video gaming terminals.
Option 2 is a proposed amendment to Chapter 3 that requires a newly site approved liquor licensee for one of the liquor classes listed above to maintain the minimum average monthly sales amount of $10,000 for one year prior to the establishment adding video gaming terminals, but also adds the provision that if the liquor establishment is located within 1500 feet from an already existing liquor establishment that has video gaming terminals, the newly site approved establishment will be prohibited from adding video gaming terminals. This restriction will end upon the already existing liquor establishment ceasing the full operation of video gaming terminals or upon the lapse or revocation of the liquor site approval. Unlike the first prong of the proposed amendment, this restriction applies to all liquor establishment that authorizes on-site consumption of alcoholic beverages and are eligible to operate video gaming terminals, including Class E and E-1 (clubs).
Option 3 is a proposed amendment to Chapter 3 that requires a newly site approved liquor licensee for one of the liquor classes listed above to maintain the minimum average monthly sales amount of $10,000 for one year prior to the establishment adding video gaming terminals, restricts the addition of video gaming terminals if the newly site approved establishment is located within 1500 feet from an already existing liquor establishment that has video gaming terminals, and restricts the number of liquor establishments that can have video gaming terminals to 5 per city council district.
FINANCIAL IMPACT: The City will not realize its portion of the tax from the video gaming revenue for one year after site approval of a Class A, B, B-1, G-A, or G-B establishment and from any establishment that is eligible for video gaming terminals and from certain newly site approved establishments.
NEIGHBORHOOD CONCERNS: Not applicable.
IMPACT IF APPROVED: Will set a minimum operation standards for one year before a liquor licensed establishment can add video gambling machines and will place additional restrictions for a newly site approved establishment from adding the component of video gaming terminals
IMPACT IF DENIED: Will not have a minimum standard in which a business must operate as a liquor establishment prior to adding video gaming terminals.
ALTERNATIVES: As directed by City Council.
EEO CERTIFICATION NUMBER: Not applicable.
WHICH OF THE GOALS IDENTIFIED IN THE COUNCIL'S 2014 - 2029 STRATEGIC PLAN DOES THIS RECOMMENDATION ADVANCE?
1. Attractive Neighborhoods with Character: Safe and Livable
WHICH CRITICAL SUCCESS FACTOR(S) FROM THE COMPREHENSIVE PLAN DOES THIS RECOMMENDATION IMPLEMENT?
1. Keep taxes and fees competitive.
DEPARTMENT: Legal