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City Council Workshop

Regular Meeting

Oakdale, MN · August 14, 2024

AgendaMinutes

Minutes

WORKSHOP MINUTES OAKDALE CITY COUNCIL AUGUST 14, 2024 The City Council held a workshop on Tuesday, August 14, 2024 at Oakdale City Hall, 1584 Hadley Avenue North, Oakdale, Minnesota. The meeting began at 5:00 PM. Present: Mayor Kevin Zabel Council Members: Noah Her Jake Ingebrigtson Andy Morcomb Susan Willenbring City Staff Members: Christina Volkers, City Administrator Sara Ludwig, City Clerk Rachel Tierney, Assistant City Attorney Brian Bachmeier, Consulting City Engineer Greg Brady, Chief Building Official Melanie Lee, Human Resources Director Luke McClanahan, City Planner Nick Newton, Police Chief Lori Pulkrabek, Communications Manager Kyle Stasica, Finance Director Julie Williams, Recreation Superintendent Kevin Wold, Fire Chief Others Present: Marc Cove, Oakdale Resident Larry Eberhard, Oakdale Resident Pam Jungmann, Oakdale Resident Kari Moore, Guest (Council Candidate) Angie Propp, Oakdale Resident Paul Reinke, Oakdale Resident OAKDALE SUMMERFEST COMMUNITY ORGANIZATION (OSCO) DEBRIEF WITH COUNCIL ABOUT SUMMERFEST 2024 Oakdale resident and OSCO Officer Paul Reinke shared his appreciation for the City Council’s support and City staff efforts that made Summerfest successful. In reference to OSCO’s 2024 Summerfest financial summary that was handed out, Mr. Reinke made note of an outstanding invoice and one transposed number that has yet to be corrected, but stated overall it is current. Oakdale resident and OSCO Officer Larry Eberhard addressed minor weather issues and the success of the festival due to Saturday’s weather. He echoed Mr. Reinke’s sentiments about the City Council and City staff. OSCO has already started meeting for Summerfest 2025. WORKSHOP MINUTES AUGUST 14, 2024 PAGE TWO Oakdale resident and OSCO Officer Angie Propp thanked the City Council and City staff for their support. She stated that the inflatables were a positive addition this year. Oakdale resident and OSCO Officer Pam Jungmann added that they are discussing adding an additional inflatable and extending the hours next year. She stated that the petting zoo was well received. Echoing the others, she said it takes City support to make the festival successful. Mr. Reinke mentioned that two bands are booked already for next year, and OSCO has over two dozen ideas to review and possibly implement in 2025. Thinking long term, OSCO is working toward having a field manual that can be passed on to others who may take over the planning and execution of Summerfest in the future. Mayor Zabel said that the kids and family programming received very positive feedback. He asked about the focus for 2025 and how the City can help support those efforts. Mr. Reinke asked that OSCO have some time to debrief before determining a focus for next year. Mr. Eberhard stated that OSCO is still committed to getting the festival as close to the financial break-even point as possible. Mayor Zabel mentioned the three-year transition plan discussed in early 2023, noting that 2025 is Year 3, but stated there can be some flexibility from the City. Mr. Reinke pointed out that realistically the break-even point would exclude City staff costs. City Administrator Chris Volkers asked about feedback on the parade. Ms. Propp heard only positive feedback. In response to Mayor Zabel’s question about 2025 dates, Mr. Eberhard said the picnic will be on June 18th from 11:30 AM – 1:00 PM, location TBD. It is being moved to earlier in the month for a number of reasons. Ms. Propp added that it may be used as a “preview for Summerfest”, but that is just one idea being considered. Mayor Zabel brought up the possibility of converting the picnic into the previously City-hosted Safe Summer Nights picnic which has been held on the first Tuesday in August (National Night Out / Night to Unite). Mr. Eberhard said the dates of Summerfest 2025 will be June 26th-28th, with the golf tournament taking place on Monday, June 23rd which will coincide with the first day of the medallion hunt. Mr. Reinke praised the Oakdale Area Chamber of Commerce (OACC) for the planning and execution of the OACC Community Golf Fundraiser. Mayor Zabel shared that the structure of events was very cohesive. A possibility for future years would be tying Summerfest events into current City events, i.e. the Farmers Market. WORKSHOP MINUTES AUGUST 14, 2024 PAGE THREE Council Member Ingebrigtson stated that for a family with young kids this was the most fun Summerfest. Council Member Her agreed. He added that OSCO might consider finding a partner for a sports-themed activity, i.e. basketball tournament. Council Member Morcomb asked if there might an opportunity for charitable gambling at Summerfest next year. Mr. Reinke pointed out several challenges with offering charitable gambling that may not be feasible to overcome. Mr. Eberhard noted that OSCO is working toward getting larger sponsorships that may outweigh the need for charitable gambling. Oakdale resident and OSCO Officer Marc Cove stated that the break-even point will realistically not include City staff costs. He reiterated that OSCO is hopeful to obtain more sponsors, and is proud of the fact there were no public safety issues. Mr. Eberhard asked that during the Business Retention, Expansion, and Attraction visits, the Council, as appropriate, start the conversation about a possible Summerfest sponsorship. Council Member Her mentioned looking into legacy sponsors. In response to Council Member Her’s question about the headcount over the weekend, no one was able to give a certain number, but Mr. Cove thought approximately 20,000 people. Mr. Cove was thankful to the Council for attending the festival, and complimented the public safety staff for their work at Summerfest. Mr. Reinke thanked Recreation Superintendent Julie Williams and Administrative Assistant Laura Linzmeyer for their organization and execution of the parade. GENERAL FUND BUDGET Mayor Zabel brought up the need for Council to decide whether the $605,000 Franchise Fee increases (due to the change to 3% for franchise fee) will remain in the General Fund or be allocated elsewhere. If the Council decides the latter then the tax levy will increase unless additional expenses are reduced. Council Member Ingebrigtson was supportive of leaving the Franchise Fee increases in the General Fund, but using the funds for public safety expenses. Council Member Morcomb agreed to keep the Franchise Fee increases in the General Fund to avoid an increased tax levy. Mayor Zabel mentioned that the Franchise Fee increases have not been budgeted as increases in 2024 using the new percentage-based model so there is potential to use that excess from 2024 to offset the $605,000 gap in the General Fund if the Council decides to allocate that money elsewhere. WORKSHOP MINUTES AUGUST 14, 2024 PAGE FOUR In response to Council Member Her’s question about the impact of the $605,000 Franchise Fee increases within the General Fund, City Administrator Chris Volkers noted that the tax levy would be about four percent higher to cover the $605,000. Mayor Zabel summarized that the Franchise Fee increases will allow the City to either tax less or take out less bonds. Mayor Zabel proposed using the non-budgeted 2024 excess Franchise Fee increases to partially fill the $605,000 gap if the funds are moved out of the General Fund. The remaining gap could be filled by budgeting for a lower cash balance in future years within the Vehicle and Equipment Replacement Fund (VERF). Finance Director Kyle Stasica pointed out that there is a ladder truck slated for 2036 with a current cost of $2 million. Mayor Zabel said his preference is to allocate the Franchise Fee increases to the Street Improvement Fund permanently. Council Member Willenbring recalled a past workshop discussion in which the justification for increasing the Franchise Fees was to put those funds toward future street improvement projects. Ms. Volkers noted that there were past discussions about using the Franchise Fee increases for a dedicated purpose, but no formal Council direction. After recalling this conversation, Council Member Ingebrigtson was supportive of dedicating the Franchise Fee increases to the Street Improvement Fund. The Council was in agreement to allocate the $605,000 increase in Franchise Fees (which is currently in the General Fund) to the Street Improvement Fund. The non-budgeted excess Franchise Fee increases and shaving off of the VERF levy could fill most of the $605,000 gap in the General Fund. Council was supportive of adding around $100,000, or slightly more, to the levy to replace the rest of the $605,000 from Franchise Fees moved to the Street Improvement Fund. The levy increase from 2024 to 2025 would be around 6% with this addition. Mr. Stasica stated that the non-budgeted excess Franchise Fees for 2024 will go into the General Fund balance. The 2025 budget will show a Use of Fund Balance for this projected excess 2024 amount. Mayor Zabel noted that at this point it is too early to project the Franchise Fee increases, but the already-budgeted $500,000 will remain in the General Fund. Mr. Stasica gave an overview of several items staff addressed since the June 11, 2024 Workshop, noting that the proposed property tax levy increase (from 2024 to 2025) went from 9.1% down to 5.4%. WORKSHOP MINUTES AUGUST 14, 2024 PAGE FIVE In response to Mayor Zabel’s question about what contributed to the increase in Debt Service, Mr. Stasica said it is due primarily to the Willowbrooke 2024 bonds and slight updates to the 2024 Street Improvement bonds. In reference to the proposed General Fund decreases adding up to approximately $825,000, Council Member Morcomb was supportive of removing the New FTE Start Date Delay – Police Sgt to ensure that the Police Department has the staffing needed to adequately support the City. Police Chief Nick Newton clarified that the reality of the Police Sergeant starting January 1, 2025 is unlikely so this proposed decrease is actually in line with the hiring timeline. In response to Mayor Zabel’s question about the specifics of the Police Body Camera Program Build-Up, Mr. Stasica explained that the $60,000 annual subscription fee is currently being paid out of the Forfeited Proceeds Fund, but in order to avoid moving the entire $60,000 cost to the General Fund in one year, staff is suggesting moving it over gradually. Mayor Zabel asked for more information about what is included in Supplies (Police, Fire, Parks, Streets, Facilities). Mr. Stasica said the cuts were primarily from Parks and Streets using 2023 actuals, the current 2024 budget, and projected increases for 2025. Mayor Zabel pointed out that as additional staff are added that likely means more supplies will be needed. Mayor Zabel suggested that the Department Heads weigh in on the suggested budget cuts related to Supplies (Police, Fire, Parks, Streets, Facilities). Ms. Volkers agreed. Council was supportive of adding back some of the supplies Dcut. Regarding Training Funds (Finance, Police, Fire, Parks, Streets), Ms. Volkers clarified that these are mandatory safety trainings for City staff. Council Member Willenbring and Mayor Zabel were uncomfortable cutting any trainings related to safety. Council was supportive of keeping these training funds. Mr. Stasica pulled up a spreadsheet of the current status of the Pandemic Business Loan repayments, noting that there is a $50,000 fund balance, with a proposed $20,000 being transferred into the General Fund to reduce the levy. Council Member Morcomb suggested leaving the Pandemic Business Loan Fund unallocated unless absolutely needed elsewhere. Mayor Zabel suggested transferring the remaining Pandemic Business Loan Fund balance into the General Fund to offset the few changes made to the proposed General Fund decreases. The Council was supportive of this suggestion and a total of $50,000 will be transferred to the General Fund to offset proposed General Fund decreases. Council Member Her reminded the Council to keep the Parks Capital Improvement Plan (CIP) and forthcoming Park System Plan top of mind when making budget decisions. Mayor Zabel added that the Parks CIP has been underfunded for many years, but strides have been made to increase funding for the City’s parks. Once the Park System Plan results become available, WORKSHOP MINUTES AUGUST 14, 2024 PAGE SIX the Council will have to prioritize projects and decide between replacement versus repair and maintenance. Mr. Stasica went over the Pandemic Business Loan repayments in greater detail. The Council was supportive of transferring the remaining Pandemic Business Loan Fund balance into the General Fund. Given the Council’s direction during the discussion, and the budgets presented by staff, the proposed property tax levy increase (from 2024 to 2025) was roughly 6%. The Council was comfortable with this increase. Mr. Stasica stated that the City Council will certify the 2025 proposed property tax levy maximum at the September 10, 2024 regular meeting. In response to Mayor Zabel’s question about fiscal disparities, Mr. Stasica reported that the fiscal disparities contribution to the City came back higher than expected which slightly offsets the tax capacity decrease. REVIEW OF CITY OF OAKDALE CODE OF ORDINANCES, CHAPTER 10 – LIQUOR CONTROL AND CHARITABLE GAMBLING, CONTINUED Ms. Volkers explained that based on Council feedback from the July 9, 2024 Workshop, Assistant City Attorney Rachel Tierney is in attendance to walk the Council through the proposed changes and answer questions accordingly. In response to Council Member Willenbring’s question about the reasoning for keeping Article II, Sec. 10-16(7)(i), Attorney Tierney said that many other cities have some sort of language in their city code to ensure that liquor establishments do not spill over into the category of adult entertainment. She added that Article II, Sec. 10-16(7)(i) flows nicely with the proposed League of Minnesota Cities (LMC) model language provided for Council consideration. Mayor Zabel was comfortable with leaving Article II, Sec. 10-16(7)(i) as proposed. Council Member Morcomb added this is another avenue for the City to maintain liquor license compliance. Attorney Tierney recommended including the LMC model language at a minimum, and that it was up to the Council whether to keep Article II, Sec. 10-16(7)(i). Mayor Zabel was in favor of the LMC model language and Article II, Sec. 10-16(7)(i). In response to Council Member Willenbring’s hesitation about leaving Article II, Sec. 10- 16(7)(i) as proposed, Attorney Tierney suggested removing “any person” from the first sentence. Council Member Willenbring asked if the Council does indeed want to regulate this type of conduct. Council Member Ingebrigtson was supportive of limiting the City’s regulation of this WORKSHOP MINUTES AUGUST 14, 2024 PAGE SEVEN type of conduct. Mayor Zabel pointed out that the regulation would only come into play as it relates to the establishment’s liquor license. He was supportive of leaving the regulatory language in Article II, Sec. 10-16(7)(i) as proposed. Council Member Morcomb was hesitant to remove Article II, Sec. 10-16(7)(i) due to the fact a liquor establishment could transition into an adult establishment without going through the proper approval process. Chief Newton stated that the City should have a safeguard to address this type of conduct. It was unclear to Council Member Willenbring why the City needs to regulate this type of conduct. Attorney Tierney clarified that the LMC language is written to deter criminal behavior. Council Members Morcomb, Her, and Ingebrigtson, and Mayor Zabel were supportive of including the LMC language as proposed. Mayor Zabel asked that the LMC language be included in a tracked changes version and sent to the Council for review. When it comes before the Council at a future regular meeting, it will be under Administrator’s Report as changes may be made at that time. In response to Attorney Tierney’s question to include (c) from the LMC model language, the Council was supportive of not including it. In reference to Article III – Charitable Gambling, Ms. Volkers asked Attorney Tierney if it is possible to leave the current language as is. Attorney Tierney explained that due process and equal protection require the Council to treat similarly-situated businesses similarly. Without regulations or adopted standards, it is hard for the ruling court to ensure that the Council is doing so. In response to Mayor Zabel’s question about using past tradition as a form of standards, Attorney Tierney stated that is not likely sufficient. Attorney Tierney reviewed the State statute that governs local authority of charitable gambling, noting the statute references the trade area which includes Oakdale, but also contiguous cities. When making a determination, if the Council uses a policy preference that the organization is benefitting Oakdale, then it must clearly have a rational explanation as to why it is using this policy preference. In reference to the proposed language in Article III, Sec. 10-29(3)(g), Mayor Zabel was unsure how to verify the reasonable benefit. Attorney Tierney explained that the proposed language was to provide examples of how the Council may explain a policy preference of explicit connections to the City. In response to Council Member Her’s question about defining reasonable benefit as the core function of the organization, Attorney Tierney stated the Council has many options when defining what they are looking for in terms of reasonable benefit to the City. WORKSHOP MINUTES AUGUST 14, 2024 PAGE EIGHT Council Member Willenbring expressed her desire to not limit the number of charitable gambling organizations within the City. Mayor Zabel added that the Council should not regulate the choice of local businesses as long as the ordinance criteria is met. In response to Council Member Her’s question about grandfathering in current charitable gambling organizations within the City if the ordinance is amended, Attorney Tierney confirmed that is allowable. Council Member Morcomb clarified that the Council does have local discretion even though it is a State license, but it must demonstrate rational reasoning for its decision. WORKSHOP RECESSED FOR REGULAR MEETING AT 6:57 PM WORKSHOP RECONVENED AT 7:51 PM after the Regular City Council Meeting Mayor Zabel was supportive of leaving the Code as is due to the difficulty of trying to rewrite the Code to reflect the Council’s intent given the State statute. In response to Council Member Morcomb’s question about the definition of the trade area and the reasonable benefit to the City, Attorney Tierney clarified that the Council is allowed to restrict where the dollars raised in the City are spent, and that restriction can be the dollars are only spent within the trade area. Council Member Ingebrigtson was supportive of leaving the Code as is. Mayor Zabel was open to suggestions from legal counsel on how the Council can define its goals for charitable gambling in the City. Council Member Ingebrigtson noted that there are varying Council Member opinions so it may be hard to determine agreed-upon goals. Council Member Morcomb was supportive of leaving the Code as is. Council Member Willenbring pointed out that leaving the Code as is does not solve any future problems related to reasonable benefit determination. Attorney Tierney stated that as the Code is written now, the standards of reasonable benefit are unclear. She encouraged the Council to adopt some of the proposed language so that it reflects current State statute. Mayor Zabel noted that in his time on the Council, the standard applied to charitable gambling applications has been if the organization is within the trade area as defined by State statute. Ms. Volkers requested that Attorney Tierney provide a tracked changes version of Article III including required updates due to the current State statute. Attorney Tierney confirmed she will provide a repeal and replace version, but remove the proposed reasonable benefit language that the Council is uncomfortable with. WORKSHOP MINUTES AUGUST 14, 2024 PAGE NINE Ms. Volkers asked the Council if they would like to continue asking for the citizenship status of liquor license applicants. If it is not the Council’s intent to deny the license based on this question, then her recommendation is to remove the question. Ms. Volkers continued, if the Council would like to keep the question, there is data storage concerns to think about. Attorney Tierney clarified that regardless of the State’s requirements regarding liquor licenses, the Council must decide if liquor license holders within the City must be U.S. citizens. Attorney Tierney offered to research the State’s requirements regarding liquor licenses so the Council can make a more informed decision about whether citizenship status should remain a question on the liquor license application. Moving back to Article III, regarding the City's choice to charge an investigation fee of $250 or a local gambling tax of up to 3%, the Council agreed to charge an investigation fee of $250, which covers the administrative costs to administer this permit. This decision effectively strikes out the proposed Sec. 10-33, Local Gambling Tax. In reference to the proposed language in Sec. 10-35, Designated Trade Area, Attorney Tierney clarified that this restriction can only apply to how the money earned in the City is spent. The Council has the discretion to require that up to one hundred percent be spent within the City’s trade area. The Council agreed not to adopt this language. The Council was in agreement to maintain the City's requirement that ten percent of an organization's net profits be paid to the City. Lastly, the Council agreed not to add a background check and associated fee for this application. ADMINISTRATOR UPDATE Ms. Volkers reported that the Willowbrooke Commons Ribbon Cutting and Grand Opening is scheduled for Saturday, October 12, 2025. She went over the communications plan including an event flyer and social media promotion. Council Member Morcomb requested that the Parks and Recreation Commission be invited. Mayor Zabel pointed out that parking is limited near that park. Ms. Volkers stated that the Communications Department has a communications plan for the Local Option Sales Tax extension. Also, the Suburban Cable Commission will be doing an informational video. Ms. Volkers asked the Council to promote this video outside of official spaces. Mayor Zabel added that the OACC is writing a letter of support. In reference to the City-wide clean up event flyer, Ms. Volkers stated that Washington County will not be onsite to collect hazardous waste. WORKSHOP MINUTES AUGUST 14, 2024 PAGE TEN This year, only cash and check will be accepted, but in future years, the City will have the software to accept debit and credit cards. Ms. Volkers asked the Council to volunteer at the event. Council Member Morcomb suggested that the scrap metal line item should list the acceptable quantities. Fire Chief Kevin Wold explained that a Community Service Officer will coordinate the traffic flow. He stated that the event is being held at the Public Works facility because that location is already set up for some of the collection. Mayor Zabel suggested looking into Minnesota Pollution Control Agency grants to offset staff costs for these types of events. Ms. Volkers said that staff will look into this. In reference to the communications plan, Mayor Zabel suggested that the payment options and possible traffic delays be clearly articulated. COUNCIL TOPICS There were no Council Topics. ADJOURNMENT The workshop was adjourned at 8:26 PM. Respectfully submitted, Sara Ludwig, City Clerk

Agenda

AGENDA City Council Workshop Meeting August 14, 2024 Hadley Conference Room 5:00 PM 5:00 PM Oakdale Summerfest Community Organization (OSCO) Debrief with Council about Summerfest 2024 (No attachment – verbal discussion only) 5:25 PM General Fund Budget 6:15 PM Review of City of Oakdale Code of Ordinances, Chapter 10 – Liquor Control and Charitable Gambling, Continued 6:35 PM Administrator Update 6:40 PM Council Topics 6:55 PM Adjournment Continue after Regular City Council Meeting, if needed General Fund Budget COUNCIL MEMORANDUM To: Honorable Mayor and City Council From: Kyle Stasica, Finance Director Christina Volkers, City Administrator Date: August 14, 2024 Subject: General Fund Budget BACKGROUND At the June 11, 2024 City Council Workshop, baseline budgets for General, Enterprise, and Special Revenue Funds were reviewed, including the detailed budgets on the OpenGov budget software. A baseline 2025 total levy of $19,712,269, a 9.1% increase from $18,065,658 in 2024, was presented including the individual General Fund, Capital Improvement Plan, and Debt Service levies. The City Council asked staff to address the following items: • Adding a vacancy factor to personnel and benefits expenditures. • Review the assumption for new Full-time Equivalents (FTEs) beginning January 1st. • Review the budget and levy to remove the effects of one-time expenditures. • Analyze the budget for further options to reduce the General Fund levy regarding personnel and benefits. • Support for a 5-6% levy increase, including the General Fund, Debt Service, and Capital Improvements. At the July 9, 2024 City Council Workshop, the City's future debt service was reviewed with an emphasis on the 2025 Debt Service levy. The 2025 Debt Service levy was estimated at $2,055,626, an increase of about $33,000 from 2024's Debt Service levy of $2,022,665. This levy is to pay for the annual principal and interest due on City issued bonds. For 2025, the new levy-supported debt includes the 2024 Street Improvement and the Willowbrooke Commons debt. At the July 30, 2024 Special City Council Workshop, the 2025 - 2029 Capital Improvement Plan and 2025 - 2034 Vehicle and Equipment Replacements (collectively the CIP) were reviewed. The total estimated expenditures for 2025 - 2029, excluding Vehicles & Equipment, totals approximately $140 million. The total estimated Vehicles & Equipment expenditures for 2025 - 2034 totals approximately $18.1 million. The 2025 CIP levy was estimated at $2,170,474, an increase of about $480,000 from 2024's CIP levy of $1,690,000. This levy pre-funds vehicle and equipment purchases and supports improvement projects to decrease the City's reliance on the more expensive debt funding. From City Council feedback, and review with the City Administrator and Department Heads, City staff made adjustments to the General Fund budget amounting to total budgeted expenditures of $23,321,543, a decrease of $824,820 from the June 11, 2024 workshop budget proposal of $24,146,363. The levy for the General Fund is now proposed at $14,817,790, with a total levy of $19,044,602, a 5.4% increase over the 2024 total levy of $18,065,658. 1 Remaining Budget Calendar August 27, 2024 Proposed Enterprise and Special Revenue Funds budgets are presented to City Council. September 10, 2024 City Council certifies 2025 Proposed Property Tax Levy and sets meeting date for the Truth in Taxation meeting. November 12, 2024 Council Budget Workshop to review final changes, if any. Mid-November 2024 Proposed Property Tax (Truth in Taxation) notices sent by County to all property owners in the City. December 10, 2024 Truth in Taxation meeting for 2025 Budget and Tax Levies. City Council adopts 2025 Budget, 2025 Tax Levy, and 2025-2029 CIP including the 2025-2034 Vehicle and Equipment Replacement Plan. FINANCIAL CONSIDERATIONS The current proposed decrease of $824,820 from the June 11, 2024 proposed General Fund comprises of: Note that the levy was further reduced due to increases to budgeted income (Intergovernmental aid, Interest) of about $75,000 and a transfer from the Pandemic Business Loan Fund of $20,000. The Pandemic Business Loan Fund tracks the loans the City of Oakdale offered during the pandemic to businesses, and its fund balance is made up of repaid loans. 2 Other Fund Balances available for use include the General Fund ($2.1 - 3.0 million at 50% or 45% 2023 minimum Fund balance, respectively), Pandemic Business Loan Fund (additional $30,000 available), Special Projects Fund (about $800,000 unallocated after the above changes). Currently this budget includes $605,000 of increases in Franchise Fees in the General Fund. There has been discussion of allocating the increases in Franchise Fees to streets capital improvements but staff has not received formal direction on this. If the Franchise Fees increases are moved out of the General Fund, another $605,000 in cuts will need to be found to reduce the levy. COUNCIL DIRECTION REQUESTED Staff requests feedback and intent from the Council on the General Fund budget, Franchise Fees increase allocation in 2025 and beyond, and the overall levy in preparation for the certification of the 2025 Proposed Property Tax Levy scheduled for the September 10, 2024 City Council meeting. The proposed property tax levy set is a maximum which can only be decreased prior to setting the final levy scheduled for the December 10, 2024 City Council meeting. 3 COUNCIL MEMORANDUM To: Honorable Mayor and City Council From: Christina Volkers, City Administrator Date: August 14, 2024 Subject: Review of City of Oakdale Code of Ordinances, Chapter 10 - Liquor Control and Charitable Gambling, Continued BACKGROUND At the July 9, 2024 City Council workshop, City staff walked through the proposed changes to Chapter 10 - Liquor Control and Charitable Gambling, Articles II and III. The City Council asked staff to address the following items and return to a future workshop for further discussion: • Origin and necessity of language in Section 10-16 (7) - Prohibited Acts; Conduct. • Is a clearer definition of "public place", as referenced in Section 10-17, warranted? • Further information about "social districts" and if/how State law preempts cities related to consuming alcohol in public places. • Origin of Section 10-27 related to the applicability of the Charitable Gambling Ordinance. • Further explanation of the City's choice to charge an investigation fee of $250 OR a local gambling tax of up to 3%, but not both, as found in Sections 10-29 and 10-33, respectively. • Look at other cities' language and legal challenges related to the "reasonable benefit" definition in Section 10-29 (3) (g). • Review the City's current local permit fee. • Further explanation of the City's choice to apply the "reasonable benefit test" to smaller operations (local permit applications). • Further explanation of the City's choice to continue to require 10% of an organization's net profits be paid to the City. • Further explanation of the City's choice to require up to 100% of the organization's expenditures be spent in the "trade area." Based on Council's initial feedback, an updated attachment with tracked changes is included. Assistant City Attorney Rachel Tierney will be in attendance to walk the Council through the proposed changes and answer questions accordingly. COUNCIL DIRECTION REQUESTED City staff is requesting that Council provide direction and intent on the proposed changes. Attachment Proposed Changes to Chapter 10 - Liquor Control and Charitable Gambling with Tracked Changes CHAPTER 10 LIQUOR CONTROL AND CHARITABLE GAMBLING Article I Application of State Law Article II General Conditions Article III Charitable Gambling ARTICLE I. APPLICATION OF STATE LAW Sec. 10-01. Provisions of State Law Adopted. The provisions of Minn. Stat., Chap. 340A, with reference to the definition of terms, application for license, granting of licenses, conditions of license, restrictions on consumption, provisions on sales, conditions of bonds on licensees, hours of sale, and the distribution or consumption of intoxicating liquor or 3.2 malt liquor are hereby adopted and made a part of this Chapter as if fully set out herein, except as hereinafter modified or changed. ARTICLE II. GENERAL CONDITIONS Sec. 10-02. License Required. No person may directly or indirectly, upon any pretense or by any device, sell, barter, keep for sale, charge for possession, or otherwise dispose of alcoholic beverages as part of a commercial transaction without having obtained the required license or permit. Sec. 10-03. Definitions. All words, terms and phrases when used in this chapter, shall have the meanings ascribed to them in Minn. Stat., Chap. 340A.101 et seq., except where the context clearly indicates a different meaning. (a) Distilled spirits is ethyl alcohol, hydrated oxide of ethyl, spirits of wine, whiskey, rum, brandy, gin, and other distilled spirits, including all dilutions and mixtures thereof, for nonindustrial use. (b) Microdistillery is a distillery operated within the state producing premium, distilled spirits in total quantity not to exceed 40,000 proof gallons in a calendar year. (Ord. 868, 02/23/21) (c) Brew pub is a brewer who holds one or more retail on-sale licenses and who manufactures fewer than 3,500 barrels of malt liquor in a year, at any one licensed premises, the entire production of which is solely for consumption on tap on any licensed premises owned by the brewer, or for off-sale from those licensed premises as permitted by state statute. (Ord. 889, 11/22/22) (d) Brewery taproom is an area on the premises of a brewery or on premises adjacent to a brewery owned by the brewer in which the brewer sells or otherwise provides malt liquor produced by the brewer for consumption within the brewery taproom. (Ord. 889, 11/22/22) Sec. 10-04. Types of Licenses. Licenses issued under this Chapter shall be of the following general types: (Ord. 898, 06/13/23) (1) On-Sale Intoxicating Liquor License. An on-sale intoxicating liquor license may only be issued to the following establishments: Oakdale MN Code of Ordinances: Chapter 10 - Page 1 a. Hotels; b. Restaurants, as defined by Minn. Stat., Chap. 340A, having a minimum seating capacity of 30 guests; c. Bowling centers; d. Clubs or congressionally chartered veterans’ organizations with the approval of the state commissioner, provided that the organization has been in existence for at least three years and liquor sales will only be to members and bona fide guests; e. Exclusive liquor stores; f. Brew pubs. (2) On-Sale Wine License. An on-sale wine license may only be issued with the approval of the state liquor control commissioner to a restaurant having facilities for seating at least 25 guests at one time. Subject to Council approval, the holder of an On-Sale Wine license, who is also licensed to sell 3.2 Malt Liquor at on-sale and whose gross receipts are at least sixty percent attributable to the sale of food, may be issued an endorsement to said On Sale Wine license permitting the sale of Intoxicating Malt Liquors at on-sale without an additional license. (3) Temporary On-Sale License. A temporary on-sale intoxicating license, authorizing the sale of intoxicating liquor for not more than four consecutive days, may be issued only to the following in connection with a social event occurring within the City sponsored by the licensee: a. A club or charitable, religious, or other nonprofit organization in existence for at least three years; b. A political committee registered under Minn. Stat. 10.A14; or c. A state university. (4) Off-Sale Intoxicating Liquor License. An off-sale intoxicating liquor license may be issued only to an exclusive liquor store in the City with the approval of the state liquor control commissioner. (5) On-Sale 3.2 Percent Malt Liquor License. An on-sale 3.2 percent malt liquor license may only be issued to restaurants, hotels, clubs, bowling centers, golf courses, and establishments used exclusively for the sale of 3.2 percent malt liquor with the incidental sale of food and soft drinks. (6) Off-Sale 3.2 Percent Malt Liquor License. An off-sale 3.2 percent malt liquor license may be issued permitting the sale of 3.2 percent malt liquor for consumption off the licensed premises only. (7) Temporary On-Sale 3.2 Percent Malt Liquor License. A temporary on-sale license for the sale of 3.2 percent malt liquor may be issued to a club or charitable, religious, or nonprofit organization and may authorize the sale of 3.2 percent malt liquor in any school or school buildings. Oakdale MN Code of Ordinances: Chapter 10 - Page 2 (8) On-Sale Sunday License. An On-Sale Sunday license authorizing the sale of intoxicating liquor on Sundays may be issued to a restaurant, club, bowling center, or hotel with a seating capacity for at least 30 persons and which holds an on-sale intoxicating liquor license. (9) Optional On-Sale 2 AM Closing License. A license may be issued to a licensee permitting the on-sale of intoxicating liquor or 3.2 percent malt liquor between the hours of 1:00 a.m. and 2:00 a.m. with the approval of the state liquor control commissioner. (10) Off-Sale Micro distillery License. A micro distillery may be issued an off-sale license of distilled spirits, with the approval of the Minnesota Alcohol and Gambling Control Commissioner. The license may allow the sale of a total of 750 milliliters per customer per day of product manufactured on site, provided that no brand may be sold unless it is also available for distribution by wholesalers. (11) On-Sale Brewery Taproom License. A brewery taproom may be issued an on-sale brewery taproom license for the on-sale of malt liquor produced by the brewer for consumption on the premises of or adjacent to one brewery location owned by the brewer and shall be subject to all conditions and restrictions contained in Minn. Stat., Chap. 340A.26. Such license may not be issued to the holder of a cocktail room license or at the same location as a cocktail room. (12) Off-Sale Small Brewery License. An off-sale small brewery license may be issued to a brewer subject to all conditions and restrictions contained in Minn. Stat., Chapter 340A.28 and Minn. Stat., Chap. 340A.285. (13) Off-sale Brew Pub License. An off-sale brew pub license may be issued to an establishment holding an intoxicating liquor-brew pub on-sale license and is further subject to the restrictions in Minnesota Statute Chapter 340A. (14) On-Sale Cocktail Room License. An on-sale license issued to the holder of a micro distillery license or distilled spirits manufacturer license issued under Minn. Stat. Chapter 340A authorizing on-sale of distilled liquor produced by the micro distiller for consumption on the Premises of or adjacent to one distillery location owned by the distiller. Such license may not be issued to the holder of a taproom license or at the same location as a taproom. Sec. 10-05. Persons eligible. No retail license may be issued to: (1) A person under 21 years of age; (2) A person who has had any intoxicating liquor or 3.2 percent malt liquor license revoked within five years of the license application, or to any person who at the time of the violation precipitating the license revocation owns any interest, whether as a holder of more than five percent of the capital stock of a corporation licensee, as a partner or otherwise, in the premises or in the business conducted thereon, or to a corporation, partnership, association, enterprise, business, or firm in which any such person is in any manner interested; Oakdale MN Code of Ordinances: Chapter 10 - Page 3 (3) A person not of good moral character and repute; or (4) A person who has been convicted of any crime directly related to the licensed business as prescribed by Minnesota Statutes, Section 364.03, subdivision 2, and has not shown competent evidence of sufficient rehabilitation and present fitness to perform the duties of a licensee as prescribed by Minnesota Statutes, Section 364.03, subdivision 3; or (5) A person who has a direct or indirect interest in any alcohol beverage manufacturer, brewer, or wholesaler. In addition, no new retail license may be issued to, and the city council may refuse to renew the license of, a person who, within five years of the license application, has been convicted of any felony or any willful violation of a federal or state law or city ordinance governing the manufacture, sale, distribution, or possession for sale or distribution of an alcoholic beverage. Sec. 10-06. Application for License; Initial, Renewal, Change of Ownership or Business Control of Licensed Premises. A properly completed application for a liquor license shall be required upon initial application, upon license renewal and upon any change of ownership or business control of a licensed premises. No person shall, under penalty of perjury, make a false statement in an application. Aside from such criminal penalties as may attach, the making of a false statement in connection with an application for license under this Chapter shall in and of itself constitute sufficient grounds for the immediate disqualification of the application or revocation of any license subsequently issued in reliance upon such false statement. Every application for a license to sell alcoholic beverages shall be verified and filed with the city licensing authority. Every application for a license under this Chapter shall be made on a form supplied by the City and shall minimally contain the following information: (1) If the applicant is a natural person: (a) The name, place and date of birth, residential street address, and telephone number of the applicant. (b) Whether the applicant is a citizen of the United States or a resident alien. (c) Whether the applicant has ever used or been known by another name other than the applicant’s current name, and if so, the name or names used and information concerning the dates and places when used. (d) The name of the business if it is to be conducted under a designation, name or style other than the name of the applicant and a certified copy of the certificate as required by Minnesota Statutes, Section 333.01. (e) All street addresses at which the applicant has resided during the preceding five (5) years. (f) The type, name, and location of every business or occupation in which the applicant has been engaged during the preceding five (5) years and the name(s) and address(es) of the applicant’s employer(s) and partner(s), if any, for the preceding five (5) years. (g) Whether the applicant has ever been convicted of a felony or misdemeanor level crime, or for the violation of any ordinance other than a traffic ordinance. If so, the applicant shall furnish information as to time, place and description of offense for which convictions were had. (h) The physical description of the applicant. Oakdale MN Code of Ordinances: Chapter 10 - Page 4 (i) Whether the applicant is married or single. If married, true name, place and date of birth, and street address of the applicant’s present spouse. (2) If the applicant is a partnership: (a) The name(s) and address(es) of all general and limited partners and all information concerning each partner as required in subpart (1) of this section. (b) The name(s) of the managing partner(s) and the individual percentage of ownership for each partner in the liquor business. (c) A true copy of the partnership agreement shall be submitted with the application. If the partnership is required to file a certificate as to a trade name pursuant to Minnesota Statutes, Section 333.01, a certified copy of such certificate shall be attached to the application. (3) If the applicant is a corporation or other organization: (a) The name of the corporation or business form, and if incorporated, the state of the incorporation. (b) A certified copy of the complete Certificate of Incorporation, Articles of Incorporation or Association Agreement shall be attached to the application. If the application is a foreign corporation, a Certificate of Authority as required by Minnesota Statutes, Section 303.06, shall be attached. (c) The name of the manager(s), proprietor(s), or other agent(s) in charge of the business and all information concerning each manager, proprietor, or agent as required under subpart (1) of this section. (d) A list of all persons who control or own any interest in such organization or business form or who are officers of the corporation or business form including the individual percentage of ownership for each affiliated member and all information concerning said persons as required in subpart (1) of this section. (4) For all applicants: (a) Whether or not the applicant holds a current liquor license from any other governmental unit. (b) Whether or not the applicant has ever been engaged in operating or as an employee of a saloon, hotel, restaurant, café, tavern or other business of a similar nature. If so, the applicant shall furnish information as to the time, place and length of time of such engagement. (c) Whether or not the applicant has previously been denied a liquor license from any other governmental unit. (d) The location of the premises upon which the applicant proposes to sell liquor and an exact description, including the proposed floor plan and seating capacity, for the particular location within the building structure where such sales are proposed. (e) The legal description of the business premises. (f) Whether or not all real estate and personal property taxes that are due and payable to the premises to be licensed have been paid, and if not paid, the years and amounts that are unpaid. Oakdale MN Code of Ordinances: Chapter 10 - Page 5 (g) Whenever the application is for premises either planned or under construction or undergoing substantial alteration, the application shall be accompanied by a set of preliminary plans showing the design of the proposed premises to be licensed. If the plans or designs are currently on file with the Oakdale Building Inspection Department, no additional drawings or plans need to be submitted. (h) Every application shall include a copy of any summons issued under Minn. Stat. 340A.802 and received by the applicant during the preceding year (i) Such other information as the City Council or the state liquor control commissioner may require. In all cases, the main applicant must be the individual who controls or owns the majority of the interest in the business for which the liquor license is being sought. Sec. 10-7. Liability Insurance. No retail license may be issued, maintained or renewed unless the applicant demonstrates proof of financial responsibility with regard to liability imposed by Minn. Stat. 340A.409. The minimum requirement for proof of financial responsibility may be given by filing a certificate of insurance providing coverage as required in state law. The operation of an "on sale" or "off sale" liquor business without having on file at all times with the city, proof of an effective bond, insurance policy, or other security as required, shall be sufficient grounds for immediate revocation of the involved license. Sec. 10-8. Payment of Fees. Each application for a license under this Chapter shall be accompanied by a payment in full of the required license fee as such fees are determined by the city Council. All such license fees shall be paid into the General Fund of this municipality. Upon rejection of any application for a license, the treasurer shall refund to the applicant, the amount paid. (1) License Fee. Each application for a license or license renewal must be accompanied by a payment in full of the required license fee, as determined by the City Council. Upon rejection of any application for license or upon withdrawal of any application before City Council approval, the license fee shall be refunded in full to the applicant, except where rejection is for a willful misstatement in the license application. (2) Late Fee. If a renewal application is received after the given due date, a late fee, as determined by the City Council, shall be charged to the applicant. Late renewal applications shall not be processed until the late fee is paid in full. The late fee must be paid separately from the renewal application fee due to accounting purposes. Each application for renewal submitted after the given due date for such application must be accompanied by payment in full of a late fee, as determined by the City Council. Late fees are not refundable. (3) Public Hearing Notice Fee. New license applicants must pay a public hearing notice fee, per for each notice posting. The fee is non-refundable and must be paid prior to the public hearing. The amount of the public hearing notice fee shall be determined by the City Council. Sec. 10-9. Investigation Required; Fee. Subject to the monetary limitations imposed under Minnesota Statutes, Section 340A.412, Subdivision 2, each initial application for an "on sale" or Oakdale MN Code of Ordinances: Chapter 10 - Page 6 "off sale" license shall be accompanied by a nonrefundable investigation fee in an amount as determined by the City Council, provided however, that said investigation fee may be waived upon an affirmative vote of the City Council. Background investigation fees are not refundable. After the completion of the initial investigation, the City Council may determine that further investigation is necessary to determine the applicant's qualifications. When such further investigation is so ordered, an additional fee, not to exceed applicable statutory limitations, may be assessed to cover the reasonable cost and expense of such investigation. At the discretion of the City Council, an investigation with corresponding nonrefundable fee as determined by the City Council may be required prior to the renewal of any existing "on sale" or "off sale" license whenever such investigation is deemed to be in the public interest. No license may be issued, renewed, or change in ownership or business control permitted if the results of the investigation show, to the satisfaction of the governing body, that issuance, renewal, or change in ownership or business control would not be in the public interest. If the City intends to deny issuance, renewal, or change in ownership based on a criminal conviction, the applicant shall be advised of the procedures under Minnesota Statute Chapter 364, which shall be followed by the City prior to a determination to deny. Prior to denial of issuance or change in ownership, the City will provide the applicant with written notice of the denial and the basis for the denial and inform the applicant of their right to a hearing on the denial. Notice shall be delivered in person or by regular mail to the applicant at the address provided in the application and shall inform the applicant of the applicant’s right to a hearing. If no request for a hearing is received within ten (10) days following the service of the notice, the matter shall be submitted to the City Council for denial. The procedure for denial of an application to renew is outlined in Section 10- 21. Sec. 10-10. Notice and Hearing. No initial application for "on sale" licensing by the licensee shall be acted upon by the City Council until a public hearing, preceded by at least ten (10) days published notice, shall have been held. Said notice shall be published once in the legal newspaper designated as such by the city, and shall include the time, place and purpose of the hearing, the name of the applicant, and the description and location of the premises. Sec. 10-11. Expiration of License; Prorating. All licenses issued pursuant to this Chapter shall expire on the last day of March of each year. Each license shall be issued for a period of one year except that if a portion of the license year (April to March following) has elapsed at such time as the application is filed, a license may be issued for the remainder of the license year for a pro rata fee. For the purpose of computing such "pro rata fee", any fraction of a month falling within the license period shall be counted as a full month. Sec. 10-12. License Limited to Applicant and Described Premises. Each license, as provided under this chapter, shall be issued only to the listed applicant and may not be transferred in any way, manner, or form to another holder. Changes in the articles of incorporation or partnership agreements, as the case may be, shall be submitted to the City within 10 days after such changes are made. The licensee shall notify the licensing authority when a person not listed in the application acquires an interest in the partnership or corporation and shall give all information about the person as is required in an initial application. Subsequent investigation determining the ineligibility of a corporate member(s) or partner(s) shall be sufficient grounds for the revocation of the involved license. Unless modified to the contrary, a license issued under this Chapter is valid only for the structural building portion of the premises described in the application, and shall not be transferable to new premises except upon the approval of the City Council. Oakdale MN Code of Ordinances: Chapter 10 - Page 7 Sec. 10-13. Places Ineligible for License. (1) No license required by this Chapter shall be issued for any place or for any business ineligible for such a license under State law. (2) No license shall be granted for operation on any premises on which taxes, assessments, or other financial claims of the city are delinquent or unpaid. (3) In those cases where licenses are desired for premises within one thousand (1,000) feet of any school or any church, the city shall cause a notice of a license application hearing to be mailed to all churches and schools located within one thousand (1,000) feet of such premises. In the case of a school, the distance is to be measured in a straight line from the parcel or lot upon which the business to be licensed is located to the nearest point of the parcel or lot upon which the school is located. In the case of a church, the distance shall be measured in the same manner as set forth above, except it is to be measured to the nearest point of the church building itself. The erection of a school or church within one thousand (1,000) feet of an existing licensed premise, after the granting of the original application, shall not in and of itself render such premises ineligible for renewal of the license. (4) No license shall be granted for operation on any premises upon which any city code or state code violations exist, nor which is in violation of any building permit or development agreement entered into between the proposed licensee, or licensees, and the city, except that the city may grant a temporary or restricted license for use on part of the premises or for part of the time, if the City Council determines that it is in the best interest of the city to grant said temporary or restricted license and the facts upon which said determination is made are stated in the resolutions granting the license. "Premises" as used in this section, refers not only to the building for which the license was issued, but also included all land adjoining the building and owned by the licensee. Sec. 10-14. Application for License Renewal. Applications for the renewal of an existing license shall be made at least sixty (60) days prior to the date of the expiration of the license and shall be made in such form as the City may approve. Proposed enlargement, alteration, or extension of premises previously licensed shall be reported to the City at or before the time application is made. If, in the judgment of the City Council, good and sufficient cause is shown by any applicant for that applicant's failure to file an application for license renewal within the time provided, the City Council may, upon a determination of compliance with all other provisions of this Chapter, accept the delinquent application. The City shall investigate the facts set out in the application, as in the case of an initial application for license. Sec. 10-15. Compliance Checks. From time to time, but at least once per year, the city shall conduct compliance checks by using underage persons over the age of 18 years but under the age of 21 years to enter the licensed premise to attempt to purchase alcohol. Designated law enforcement personnel shall supervise the underage persons used for compliance checks. Underage persons used for compliance checks shall not be guilty of the unlawful purchase or attempted purchase, nor the unlawful possession of alcohol when such alcohol is obtained or attempted to be obtained as part of the compliance check. No underage person used in the compliance check shall attempt to use a false identification misrepresenting the underage person’s age and all underage persons lawfully engaged in a compliance check shall answer all Oakdale MN Code of Ordinances: Chapter 10 - Page 8 questions about the underage person’s age asked by the licensee or his or her employee and shall produce any identification, if any exists, for which he or she is asked. Nothing in this section shall prohibit compliance checks authorized by State or Federal laws for educational, research or training purposes, or required for the enforcement of a particular State or Federal law. Sec. 10-16. Conditions of License. (1) Generally. Every liquor license issued pursuant to this Chapter shall be granted subject to the terms and conditions set forth in the following subdivisions of this section, in addition to all other provisions of this code and of any other applicable city code section or State Statute. (2) License Posting. A retail license to sell alcoholic beverages must be posted in a conspicuous place in the licensed premises. (3) Notice Posting. A premises licensed for the retail sale of alcoholic beverages must post and maintain in a conspicuous place within the licensed premises clearly visible to consumers; one sign 14 ½ inches wide by 8 inches high as designed by the commissioners of health and public safety, which incorporates the following information: (a) the penalties of driving while under the influence of alcohol; (b) penalties for serving alcoholic beverages to a person who is obviously intoxicated or under 21 years of age; and (c) a warning statement regarding drinking alcohol while pregnant. A sign that complies with this subdivision is available for reproduction from the state commissioners of health and public safety. A retail licensee may not modify the sign design but may modify the color. (4) Responsibility of Licensee/Manager. Every licensee, and in the case of a corporation, the Manager as named on the license, shall be responsible for the conduct of the place of business, the conditions of sobriety and order maintained therein and the observance of all applicable laws. The act of any employee authorized to sell or serve alcoholic beverages under State and/or local law, committed on the licensed premises shall be deemed to be the act of the licensee as well. As such, the licensee shall be liable for and subject to all penalties, as provided under this Chapter, equally with the involved employee(s). (5) Persons Denied Access. No intoxicating liquor or 3.2 malt liquor shall be sold, furnished, or delivered for any purpose to any obviously intoxicated person, to any habitual drunkard, or to any person under twenty-one (21) years of age. (6) Prostitution Prohibited on Licensed Premises. No licensee shall permit the licensed premises or any part thereof or any room in any adjoining building, either directly or indirectly under the licensee's control, to be used as a resort or other point of congregation for prostitution. (7) Prohibited Acts; Conduct. The following acts or conduct on licensed premises are deemed to be contrary to the public welfare and morals, and as such, no "on sale" or "off sale" license shall be held at any premises where such conduct or acts are permitted: (a) To employ or use any person in the sale or service of intoxicating liquor or 3.2 malt liquor in or upon the licensed premises while such person is unclothed or in such Oakdale MN Code of Ordinances: Chapter 10 - Page 9 attire, costume, or clothing so as to expose to view any portion of the female breast below the top of the areola or of any portion of the pubic hair, anus, cleft of the buttocks, vulva or genitals; (b) To employ or use the services of any hostess while such hostess is unclothed or in such attire, costume, or clothing as is described and expressly prohibited in Paragraph (a) above; (c) To encourage or permit any person on the licensed premises to touch, caress, or fondle the breasts, buttock, anus, or genitals of any person; (d) To permit any employee or person to wear or use any device or covering exposed to view, which simulates the breast, genitals, anus, pubic hair, or any portion thereof; (e) To permit any employee or other person to perform acts of, or acts which simulate, the following: (1) Sexual intercourse, masturbating, sodomy, bestiality, oral copulation, flagellation, or any other sexual acts which are prohibited by law; (2) The touching, caressing, or fondling of the breasts, buttocks, anus, or genitals; or (3) The displaying of the pubic hair, anus, vulva, genitals, or the nipple or areola of the female breast. (f) To permit any employee or other person to use artificial devices or inanimate objects to depict any of the prohibited activities described in paragraph (e) above; (g) To permit any person to remain in or upon the licensed premises who exposes to public view any portion of the female breast below the top of the areola or any portion of the pubic hair, anus, cleft of the buttocks, vulva or genitals, except where said breast, pubic hair, anus, buttocks, vulva or genitals are covered with, or by, opaque clothing; (h) To permit the showing of "still" photographs, electronic reproductions or other visual reproductions depicting the following: (1) Acts or simulated acts of sexual intercourse, masturbation, sodomy, bestiality, oral copulation, flagellation, or any sexual acts which are otherwise prohibited by law; (2) Any person being touched, caressed or fondled on the breast, buttocks, anus or genitals; (3) Scenes depicting the display of the vulva or the anus or genitals; or (4) Scenes wherein artificial devices or inanimate objects are employed to depict, or drawings are employed to portray any of the prohibited acts described above. (i) To permit any person, employee, or person otherwise under contract to perform on the premises, to dance on any table, bar, or other elevated platform, except on a duly designated stage designed exclusively for the entertainment of patrons of the licensed premises. Where any licensed establishment has such a stage, said "stage" is to be located not less than three (3) feet from any patron and there shall be provided, adequate dressing room(s) for the entertainers, one for males and another for females. Oakdale MN Code of Ordinances: Chapter 10 - Page 10 (8) Inspection of Premises. Any peace officer, health officer, or any other properly designated officer or employee of the city, shall have the unqualified right to enter, inspect and/or search the premises of the licensee during business hours or at other reasonable times without a warrant for same. Sec. 10-17. Consumption in Outside Licensed Premises Public Places, Automobiles. No person shall consume, or possess an open container which contains intoxicating liquor or 3.2 malt liquor on a public street or highway, or in an automobile, or in a public park where prohibited and duly posted, or in any other public place establishment that is not licensed under this Chapter, including, but not limited to, the parking lot of the licensed premises or adjoining parking areas not under the control of the licensee. If the open container is, or appears to be, an original package, as defined by State law, or a bottle marked as an original package, the contents will be presumed to be intoxicating liquor or 3.2 malt liquor. Sec. 10-18. Employment of, and Sales by, Minors. (1) It shall be unlawful for any licensee under this Chapter to allow any person under the age of eighteen (18) to sell, serve, or deliver any alcoholic beverage. (2) It shall be unlawful for any person under the age of eighteen (18) years to sell, serve or deliver any alcoholic beverage. Sec. 10-19. Evacuation of Premises; New Year's Eve Exception. No "on sale" licensee shall permit any intoxicating liquor or 3.2 malt liquor to be consumed on the licensee's premises during the hours when the sale thereof is by this section, prohibited; provided, however, that the licensee shall be allowed a thirty (30) minute period following the 2:00 a.m. closing hour to clear the premises of customers and any other persons, not including "on-duty" employees, who are on the premises at 2:00 a.m. An exception to this evacuation requirement shall be permitted on New Year's Eve as follows: Patrons who are on the licensed premises prior to closing time may remain on the licensed premises after closing time until 4:00 a.m. on New Year's Day for the purpose of consuming only food and nonalcoholic beverages. Sec. 10-20. Seized Liquor. Contingent on the final determination of any action pending in a court, the Chief of Police or the Police Chief's designee shall dispose of alcoholic beverages, materials, or apparatus seized by duly licensed peace officers employed by the City of Oakdale in connection with violations of this Chapter by: (1) Delivering alcoholic beverages to the bureau of criminal apprehension or state patrol for use in chemical testing programs; or (2) Destroying or otherwise disposing of alcoholic beverages or contraband articles that have no lawful use. Sec. 10-21. License Suspension; Revocation; Non-Renewal. (1) Generally. The City Council may suspend, or revoke, or not renew a license or permit to sell alcoholic beverages on a finding that the licensee or permit holder has failed to comply with an applicable statute, regulation, or ordinance relating to alcoholic beverages. Oakdale MN Code of Ordinances: Chapter 10 - Page 11 (2) Notice and Right to Hearing. Prior to revoking or suspending, revoking, or not renewing any license under this chapter, the City shall provide a licensee or permit holder with written notice of the alleged violations and inform the licensee of his or her right to a hearing on the alleged violation. (a) Notice shall be delivered in person or by regular mail to the applicant licensee at the address provided in the license application and shall inform the applicant licensee of the applicant’s licensee’s right to a hearing. The notice will indicate that a response must be submitted within ten (10) days of receipt of the notice, or the right to a hearing will be waived. (b) Such notice will include notice of the proposed penalty and of licensee’s right to a hearing as follows: i. If licensee wishes to admit the facts but contest the penalty, the hearing will be held before the Council. The licensee will be allowed to present testimony to the Council regarding the appropriateness of the penalty. Following the hearing, the Council will, by resolution, determine the appropriate penalty, if any. ii. If licensee wishes to contest the facts, a hearing will be conducted, under the procedures established in section 14.57 to 14.69 of the Minnesota Administrative Procedures Act, before an independent hearing officer appointed by the City, or under contract with the City. Following the issuance of the independent hearing officer’s report, the Council will hold a hearing and will consider the report. Licensee may provide testimony to the Council regarding the report. The Council may accept, reject, or modify the findings, conclusions, and recommendations of the independent hearing officer. Following the hearing, the Council will, by resolution, adopt findings and a determination of the appropriate penalty, if any. (c) If no request for a hearing is received within ten (10) days following the service of the notice, the matter shall be submitted to the City Council for suspension or, revocation, or non-renewal. For the purpose of a mailed notice, service shall be considered complete as of the date the notice is placed in the mail. If a hearing is requested within the stated time frame, a hearing shall be scheduled within twenty (20) days from the date of the request for the hearing. (3) Emergency. If, in the discretion of the City, imminent harm to the health or safety of the public may occur because of the actions of a liquor licensee, the City may immediately suspend the license or permit and provide notice of the right to hold a subsequent hearing as prescribed in part (2) of this section. Sec. 10-22. Enforcement and Penalties. Oakdale MN Code of Ordinances: Chapter 10 - Page 12 (1) Enforcement. Violations of the provisions established in this Chapter may be enforced through both criminal and civil sanctions. (2) Criminal Prosecution. Any person, firm, or corporation violating any of the provisions of this chapter shall be guilty of a misdemeanor. Nothing in this section shall prohibit the city from seeking prosecution as a misdemeanor in district court for any violation of this Chapter or criminal prosecution under Minnesota Statutes for violations of other statutes, rules or ordinances. (3) Administrative Penalties. The following are the administrative penalties for violations of this Chapter can be found in the City’s fee schedule. At the time of imposition of an administrative penalty, and in addition to the penalties in the City’s fee schedule, the Council may impose reasonable license conditions. The notice and hearing procedure for imposition of a license suspension, revocation, or non-renewal are provided in section 10- 21. For all other proposed penalties, the City will provide the licensee with written notice of the proposed penalty and the basis for the proposed penalty and inform the applicant of their right to a hearing on the proposed penalty. Notice shall be delivered in person or by regular mail to the licensee at the address provided in the application and shall inform the licensee of the licensee’s right to a hearing before the City Council. If no request for a hearing is received within ten (10) days following the service of the notice, the matter shall be submitted to the City Council for approval.: (a) First violation. Any licensee found to have violated this Chapter shall be charged an administrative penalty of five hundred dollars ($500.00). (b) Second violation. Any licensee found to have violated this Chapter two (2) times within a twenty-four (24) month period shall be subject to a one thousand dollar ($1,000.00) administrative penalty. (c) Third violation. Any licensee found to have violated this Chapter three (3) times within a twenty-four (24) month period shall be subject to a two thousand dollar ($2,000.00) administrative penalty. In addition, a one (1) day suspension of the liquor license shall be imposed. (d) Fourth violation. Any licensee found to have violated this Chapter four (4) times within a twenty-four (24) month period shall be subject to a two thousand dollar ($2,000.00) administrative penalty. In addition, a ten (10) day suspension of the liquor license shall be imposed, covering ten (10) consecutive business days. (e) Fifth violation. Any licensee found to have violated this Chapter five (5) times within a twenty-four (24) month period shall have their liquor license revoked. (4) Other Penalties. Nothing in this section shall restrict or limit the authority of the City Council to suspend up to sixty (60) days, revoke the license, impose a civil fine not to exceed two thousand dollars ($2,000), or to impose conditions or take any other adverse action in accordance with law, provided that the license holder has been afforded an opportunity for a hearing as provided under Sec. 10-2119. ARTICLE III. CHARITABLE GAMBLING Sec. 10-23. Purpose. The purpose of this chapter is to regulate lawful gambling within the city, to prevent its commercialization, to ensure the integrity of operations, and to provide for the use of net profits only for lawful purposes. Oakdale MN Code of Ordinances: Chapter 10 - Page 13 Sec. 10-24. Definitions. In addition to the definitions contained in Minn. Stat. §349.12, as it may be amended from time to time, the following terms are defined for purposes of this chapter: • Board. The State of Minnesota Gambling Control Board. • Licensed Organization. An organization licensed by the Board. • Local Permit. A permit issued by the city. • Trade Area. The City of Oakdale and each city contiguous to the city. Sec. 10-25. City May Be More Restrictive Than State Law. The City Council is authorized by the provisions of Minn. Stat. §349.213, as it may be amended from time to time, to impose, and has imposed in this Chapter, additional restrictions on gambling within its limits beyond those contained in Minn. Stat. Chapter 349, as it may be amended from time to time. Sec. 10-26. Fee Determined. The annual fee for a charitable gambling approval as required under this section shall be determined by the City Council. Sec. 10-27. Gambling; Gambling Device Prohibited. No licensee shall keep, posses or operate or permit the keeping, possession or operation of any slot machine, dice or any other such gambling device or apparatus on the licensed premises or in any room adjoining the licensed premises and shall not permit any gambling therein, except that pull-tabs and tipboards may be sold on licensed premises when such activity is licensed by the State pursuant to Minnesota Statutes, Chapter 349, and conducted pursuant to the regulations contained in the Municipal Code. This exception shall not apply to establishments licensed by the city for the sale of 3.2 malt beverages, 3.2 malt beverages and wine, and 3.2 malt beverages and wine as menu items only. Notwithstanding other provisions of the Municipal Code to the contrary, the City Council may permit an on-sale license to permit the holding of a single event, such as a banquet, that includes the sale of raffle tickets as a part of the event activity, provided that such events are separate from the public areas of the licensed establishment, not open to the general public and the raffle conducted by a charitable organization licensed by the State of Minnesota. Sec. 10-28. Pull Tabs, Tipboards and Paddlewheels in Bars. On-sale licensees may request permission of the City Council to permit qualified charitable organizations to conduct lawful gambling in the form of pull-tabs, tipboards and paddlewheels only on the licensed premises. Application for permission shall be made to the City Clerk and payment of the specified fee. If the application is granted, the license shall contain an endorsement specifying this approval and the gambling endorsement may be considered for renewal at the same time as the City Council may consider renewal of the on-sale license. Gambling endorsements on "on-sale" licenses shall be subject to the following regulations that shall be deemed as a part of the license, such that failure to comply with same may constitute grounds for adverse action as prescribed in the Municipal Code: 1. Use of the licensed premises shall be by means of a written lease agreement between the licenses and the charitable organization. The lease shall be a term of at least one year; a copy shall be filed with the City Clerk. 2. No more than two charitable organizations shall be permitted to sell pull-tabs or tipboards on the licensed premises, provided they are located in totally separate areas or sell at separate times. 3. Must be a charitable organization that can demonstrate reasonable benefit through service or financial contribution to organizations in the City of Oakdale Trade Area. The City Council Oakdale MN Code of Ordinances: Chapter 10 - Page 14 shall determine, on a case-by-case basis, if an organization has demonstrated that sufficient contribution has been provided to meet the definition of reasonable. Sec. 10-29. Charitable Gambling Regulations. The sale of pull-tabs, tipboards and paddlewheels shall be conducted only by qualified and state licensed charitable organizations. In addition to satisfying the qualifications set forth in Minnesota Statutes, Chapter 349, the following regulations and qualifications must be complied with by all such charitable organizations: 1. Must file financial reports monthly with the City Clerk; 2. Shall pay to the city 10% of the net profits, after prizes, taxes and lawful expenses, from selling of pull-tabs, tipboards and paddlewheels; and 3. Must be a charitable organization that can demonstrate reasonable benefit through service or financial contribution to organizations serving in the Trade Area of the City of Oakdale. The City Council shall determine, on a case-by-case basis, if an organization has demonstrated that sufficient contribution has been provided to meet the definition of reasonable. Sec. 10-30. Records and Reporting. Organizations conducting lawful gambling shall file with the City Clerk one copy of all records and reports required to be filed with the Board, pursuant to Minn. Stat. Chapter 349, as it may be amended from time to time, and rules adopted pursuant thereto, as they may be amended from time to time. The records and reports shall be filed on or before the day they are required to be filed with the Board. Sec. 10-31. Violations. Violation of any part of this ordinance, including the failure to make timely reports to the City of Oakdale, shall be considered grounds for the city to refuse to approve the granting or renewal of the gambling license of the organization which is in violation. In addition, any person or organization violating any term of this ordinance shall be guilty of a petty misdemeanor, and upon conviction, shall be subject to a fine up to $100. Further, a violation that is preceded with the previous twelve (12) months by two or more violations of this ordinance shall constitute a misdemeanor, and upon conviction, shall be subject to a fine of up to $700, imprisonment up to ninety (90) days, or both. Sec. 10-23. Adoption of state law by reference. The provisions of Minn. Stat. Ch. 349, as they may be amended from time to time, are hereby adopted by reference and are made a part of this ordinance as if set out in full. Sec. 10-24. City may be more restrictive than State law. The Council is authorized by the provisions of Minn. Stat. § 349.213, as it may be amended from time to time, to impose, and has imposed in this ordinance, additional restrictions on gambling within its limits beyond those contained in Minn. Stat. Ch. 349, as it may be amended from time to time. Sec. 10-25. Purpose. The purpose of this ordinance is to regulate lawful gambling within the City of Oakdale, to prevent its commercialization, to ensure the integrity of operations, and to provide for the use of net profits only for lawful purposes. Sec. 10-26. Definitions. Oakdale MN Code of Ordinances: Chapter 10 - Page 15 In addition to the definitions contained in Minn. Stat. § 349.12, as it may be amended from time to time, the following terms are defined for purposes of this ordinance: BOARD means the State of Minnesota Gambling Control Board. CITY PREMISES PERMIT a permit issued by the City approving a licensed organization to conduct lawful gambling at a specific location in the City. LICENSED ORGANIZATION means an organization licensed by the Board. LOCAL PERMIT means a permit issued by the City to allow lawful gambling that is excluded or exempted from State licensing requirements. STATE PREMISES PERMIT a permit issued by the Board that must be approved by the City for a licensed organization to conduct lawful gambling at a specific location. TRADE AREA means the City of Oakdale and each city contiguous to the City. Sec. 10-27. Applicability. This ordinance shall be construed to regulate all forms of lawful gambling within the city except bingo conducted within a nursing home or a senior citizen housing project or by a senior citizen organization if the prizes for a single bingo game do not exceed $10, total prizes awarded at a single bingo occasion do not exceed $200, only members of the organization, residents of the nursing home or housing project, and their guests, are allowed to play in a bingo game, no compensation is paid for any persons who conduct the bingo, and a manager is appointed to supervise the bingo. Sec. 10-28. Lawful gambling permitted. Lawful gambling is permitted within the city provided it is approved by the Council and conducted in accordance with Minn. Stat. §§ 609.75-.763, inclusive, as they may be amended from time to time; Minn. Stat. §§ 349.11-.23, inclusive, as they may be amended from time to time; and this ordinance. Sec. 10-29. Application for City premises permits. (1) Any licensed organization seeking to obtain a state premises permit from the Board, must apply for a City premises permit by filing with the City Clerk an executed, complete duplicate application, together with all exhibits and documents accompanying the state permit application that will be filed with the Board. (2) Upon receipt of an application for issuance of a City premises permit, the City Clerk will transmit the application to the chief of police for review and recommendation. The chief of police will investigate the matter and make the review and recommendation to the City Council. Organizations applying for a city premises permit must pay the City an investigation fee as outlined in the fee schedule. This fee will be refunded if the application is withdrawn before the investigation is commenced. If the City premises permit is approved, the licensed organization will be responsible for an annual investigative fee for conducting lawful gambling within the City. Oakdale MN Code of Ordinances: Chapter 10 - Page 16 (3) The applicant will be notified in writing of the date on which the Council will consider the recommendation. The Council will by resolution approve or disapprove the application. The Council may deny an application for issuance or renewal of a City premises permit for any of the following reasons: a. Violation by the gambling organization of any state statute, state rule, or City ordinance relating to gambling within the last three (3) years. b. Violation by the on-sale establishment or organization leasing its premises for gambling of any State statute, State rule, or City ordinance relating to the operation of the establishment, including, but not limited to, laws relating to alcoholic beverages, gambling, controlled substances, and protection of public safety within the last three (3) years. c. Lawful gambling would be conducted at premises other than those for which an on- sale liquor license has been issued. d. Lawful gambling would be conducted at a premises where there is not a written lease between the on-sale establishment and the licensed organization for a term of at least one year. e. Lawful gambling would be conducted at a premises for which more than two licensed organizations would be permitted to conduct lawful gambling. f. Lawful gambling would be conducted by more than one organization at the same time or in the same area. g. The applicant fails to demonstrate a reasonable benefit to the City of Oakdale. Reasonable benefit can be established by any of the following: i. More than 50% of the individuals benefited by the licensed organization are residents of the City; ii. More than 50% of the volunteers for the licensed organization are residents of the City; or iii. The physical site for the licensed organization’s headquarters or the registered business office of the licensed organization is within the City and has been located within the City for at least the two (2) years immediately preceding application. h. Operation of gambling at the site would be detrimental to health, safety, and welfare of the community. Sec. 10-30. Local Permits. (1) No organization is permitted to conduct lawful gambling excluded or exempted from State licensure requirements by Minn. Stat. § 349.166, as it may be amended from time to time, without a valid local permit. This section does not apply to lawful gambling exempted from Oakdale MN Code of Ordinances: Chapter 10 - Page 17 local regulation by Section 10-27 of this ordinance. Applications for issuance or renewal of a local permit must be on a form prescribed by the City. The application must contain the following information: (a) Name and address of the organization requesting the permit. (b) Name and address of the officers and person accounting for receipts, expenses, and profits for the event. (c) Dates of gambling occasion for which permit is requested (must be 5 or fewer per calendar year). (d) Address of premises where event will occur. (e) Copy of rental or leasing arrangement, if any, connected with the event, including rent to be charged to the organization. (f) Estimated value of prizes to be awarded (must be equal to or less than $50,000). (2) The fee for a local permit will be as reflected in the City’s fee schedule. The fee must be submitted with the application for a local permit. Upon receipt of an application for issuance or renewal of a local permit, the City Clerk will transmit the notification to the Chief of Police for review and recommendation. The Chief of Police will investigate the matter and make review and recommendation to the City Council as soon as possible, but in no event later than 45 days following receipt of the notification by the City. (3) The applicant will be notified in writing of the date on which the Council will consider the recommendation. The Council may deny an application for issuance or renewal of a premises permit for any of the following reasons: (a) Violation by the gambling organization of any State statute, State rule, or City ordinance relating to gambling within the last three (3) years. (b) Violation by the on-sale establishment, or organization leasing its premises for gambling, of any State statute, State rule, or City ordinance relating to the operation of the establishment, including, but not limited to, laws relating to the operation of the establishment, laws relating to alcoholic beverages, gambling, controlled substances, suppression of vice, and protection of public safety within the last three (3) years. (c) The organization has not been in existence for at least three (3) consecutive years prior to the date of application. (d) The organization does not have at least thirteen (13) active and voting members. (e) Exempted or excluded lawful gambling will not take place at a premises the organization owns or rents. (f) Exempted or excluded lawful gambling will not be limited to a premises for which an on-sale liquor license has been issued. Oakdale MN Code of Ordinances: Chapter 10 - Page 18 (g) Operation of gambling at the site would be detrimental to health, safety, and welfare of the community. (4) Local permits will be valid for one (1) year after the date of issuance unless suspended or revoked. Sec. 10-31. Revocation and suspension of local permit. A local permit may be revoked or temporarily suspended for a violation by the gambling organization of any State statute, State rule, or City ordinance relating to gambling. A local permit will not be revoked or suspended until written notice and an opportunity for a hearing have first been given to the permitted person. The notice must be personally served or sent by U.S. mail. Notice must state the violation and that the permitted person is entitled to a hearing on the matter. If the permitted person requests a hearing, the Council will hold a hearing. If, as a result of the hearing, the Council finds that an ordinance violation exists, then the Council may suspend or revoke the permit. Sec. 10-32. License and permit display. All permits issued under State law, or this ordinance, must be prominently displayed during the permit year at the premises where gambling is conducted. Sec. 10-33. Local gambling tax. A local gambling tax of up to 3 (three) percent per year is imposed on the gross receipts of a licensed organization from all lawful gambling less prizes actually paid out by the organization. The tax must be paid by the organization on a monthly basis and must be reported on a copy of the monthly gambling activity summary and tax return filed with the Minnesota Department of Revenue. The report must be an exact duplicate of the report filed with the Department, without deletions or additions, and must contain the signatures of organization officials as required on the report form. The tax return and payment of the tax due must be postmarked, or, if hand-delivered, received in the office of the City Clerk, on or before the last business day of the month following the month for which the report is made. An incomplete tax return will not be considered timely filed unless corrected and returned by the due date for filing. Interest will be charged at a rate of eight percent (8%) on all overdue taxes owed by the organization under this Section. Sec. 10-34. Contribution of net profits to fund administered by City. Each licensed organization must contribute ten percent (10%) of its net profits derived from lawful gambling in the City to a fund administered and regulated by the City without cost to the fund. The City will disburse the funds for charitable contributions as defined by Minn. Stat. § 349.12, subd. 7a, as it may be amended from time to time. Payment under this section will be made on the last business day of each month. The City’s use of such funds will be determined at the time of adoption of the City’s annual budget or when the budget is amended. Sec. 10-35. Designated trade area. Each organization licensed to conduct gambling within the City must expend one hundred percent (100%) of its lawful purpose expenditures on lawful purposes conducted within the City’s trade Oakdale MN Code of Ordinances: Chapter 10 - Page 19 area. This section applies only to lawful purpose expenditures of gross profits derived from gambling conducted at a premises within the City’s jurisdiction. Sec. 10-36. Records and reporting. Organizations conducting lawful gambling must file with the City Clerk one copy of all records and reports required to be filed with the Board, pursuant to Minn. Stat. Ch. 349, as it may be amended from time to time, and rules adopted pursuant thereto, as they may be amended from time to time. The records and reports must be filed on or before the day they are required to be filed with the Board. Organizations licensed by the Board must file a report with the City proving compliance with the trade area spending requirements imposed by Section 10-35. Such report must be made on a form prescribed by the City and must be submitted annually. Sec. 10-37. Penalty. In addition to any violation otherwise permitted by the City Code, violations of this chapter will be reported to the Board and a recommendation may be made for suspension, revocation, or cancellation of an organization’s license. Oakdale MN Code of Ordinances: Chapter 10 - Page 20

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