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08-10096rRESOLUTION NO. 10096 RESOLUTION DENYING ON-SALE WINE LICENSE AND 3.2 PERCENT MALT LIQUOR LICENSE FOR ARIBEL'S, 1120 EAST 66TH STREET WHEREAS, a request has been made for an on-sale wine license and fora 3.2 percent malt liquor license for Aribel's restaurant, located. at 1120 East 66th Street, Richfield, Minnesota; and, WHEREAS, City Code Chapter XII governs liquor licenses and applications, and City Code Section 1202.03 adopts the provisions of Minnesota Statutes Chapter 340A by reference; and, WHEREAS, on-sale wine licenses and 3.2 percent malt liquor licenses will not be issued unless various criteria are satisfied as set forth in the Richfield City Code Chapter XII and Minnesota Statutes Chapter 340A; and, WHEREAS, pursuant to City Code Chapter XII, City staff has performed certain background investigations and researched the property records for Aribel's, and analyzed this information in light of the requirements of the City Code and Minnesota Statutes; and, WHEREAS, in light of all of these investigations, the disclosures made on the liquor license applications, the applicant's history of dealings with .the City, the applicant's statutory violations and the history of complaints and police calls to the property, the City Council determines that it is in the best interest of the City that the on-sale wine license and 3.2 percent malt liquor license applications received for Aribel's restaurant be denied. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Richfield on this 13th day of May, 2008 as follows: 1. The City Council makes the following findings of fact: a. The property at 1120 East 66th Street (the "Property") is known as Aribel's restaurant. The applicant, Ms. Chetranee J. Seepersaud (the "Applicant") seeks an on-sale wine license and a 3.2 percent malt liquor license for the Property. Previous liquor license b. The City previously issued an on-sale wine license and a 3.2 percent malt liquor license to the Applicant in 2005, 2006 and 2007. Applicant submitted a renewal application on October 10, 2007, seeking licenses for the year 2008. The City Council considered that application at its December 11, 2007 meeting. The City Council authorized the licenses to be issued upon the condition that all taxes in arrears be paid to the Department of Revenue in full on or before December 31, 2007. The Applicant did not comply with that condition for renewal, and the licenses expired by their own terms on December 31, 2007. c. The applications now before the Council, submitted by Applicant and signed on January 11, 2008, are for new on-sale wine and 3.2 malt liquor licenses for Aribel's restaurant. Financial Status - Mortgage Foreclosure d. City Code § 1202.09, Subdivision 2(d) requires applicants disclose the names and addresses of all persons who have a financial interest in the business, buildings, premises, or fixtures, including mortgagors and lien holders. e. Applicant, in previous applications to the City, disclosed that the Property is owned by Jaiprakash Munna. The Property is encumbered by a mortgage in favor of Bayview Loan Servicing, LLC. When examining County property records, City staff learned that the mortgage was under foreclosure. The foreclosure sale occurred January 17, 2008. f. On the present application, Applicant did not disclose Mr. Munna's ownership interest in the property nor the mortgage foreclosure action. City staff learned of -the ownership interest by reviewing prior. applications and reviewing County property records. When questioned by City staff, Applicant supplied some information regarding Jaiprakash Munna. Investigation found that Jaiprakash Munna does not have a criminal history. g. The mortgage redemption period for the Property is set to expire July 17, 2008. It is not known if Jaiprakash Munna will redeem the Property. h. At the public hearing, Applicant told the Council that she and her husband "are in the process of buying the property and hope to close before [the redemption period ends]." The Applicant did not provide any further explanation as to how the Applicant would be able to purchase the property. Taking into consideration the level of income evidenced by the accountant's statement and the Applicant's past difficulties in paying required taxes, the Council has serious doubts about the Applicant's ability to purchase the property. i. Aribel's does not appear to be financially stable. Applicant was delinquent in paying food and beverage taxes in 2007. L The accounting submitted by Applicant shows $57,822 in food sales and $9,971 in liquor sales from October 2006 to September 2007, totaling $67,793. After rent, applicable taxes, and all other overhead are paid, Council has serious concerns that this is not a financially stable business. Restaurant Status k. Applicant has applied for the requested liquor licenses as a "restaurant." City Code § 1202.01, subd. 13 defines "restaurant" as an establishment, other than a hotel, under the control of a single proprietor or manager, where meals are regularly prepared on the premises and served at tables to the general public, and having appropriate facilities for serving no fewer than 40 guests at one time." I. City Code § 1202.21, subd. 18, establishes a requirement that at least 50 percent of a licensed restaurant's total revenues from sale of liquor and food must come from the sale of food. m. The requirements that licensed restaurants seat at least 40 guests, regularly serve meals to the general public, and have at least 50 percent of their sales from sale of food are all intended to ensure that dining and not consumption of alcohol is the primary activity on the premises. n. All available. evidence suggests that the Applicant's restaurant does not generate sufficient dine-in customers to sustain the business as a viable restaurant. At the public hearing, a neighboring property owner stated she sees little activity at Aribel's during daytime hours, and "the only time there seems to be activity is on the weekends and it is always late at night." Council members and City staff have also reported having observed few or no cars at the premises during daytime hours. At the public hearing, Applicant admitted that "most of our business is take-out during the day." o. Although the Applicant stated that the restaurant serves meals in the evenings and on weekends, the Applicant also has admitted that the restaurant has been rented for private parties. Those parties appear to be a source of the complaints regarding noise and late night activity. When meals are regularly served to the general public, the presence of the general public in the restaurant reinforces the public's expectations about appropriate use and consumption of alcohol. That element of control is lacking if the only diners are members of the same group or party. ~ Taken as a whole, the evidence suggests that the Applicant's business has consisted primarily of take-out food sales during the day and private parties in the evening. The Applicant has not shown that its business is primarily engaged in the regular preparation and service of meals on the premises to the general public. q_ The public interest is not served by issuing a license to a business that only nominally operates as a dine-in restaurant open to the general public. Statutory Violations r. On October 15, 2007, City staff received _ notification from State Alcohol and Gambling Enforcement that Aribel's bought liquor at retail for the purpose of resale in violation of Minn. Stat. § 340A.415. State Alcohol and Gambling Enforcement fined Aribel's $200 for this violation. s. On December 6, 2007, an agent of State Alcohol and Gambling Enforcement visited Aribel's and noted that Aribel's was once again selling alcohol purchased at retail. Aribel's was subsequently fined $400 for this second violation. t. The City was aware of the October 15, 2007 violation at the time that the City Council considered the Applicant's renewal application on December 11, 2007. However, the City Council was not aware of the December 6, 2007 violation.. Applicant did not disclose the December 6; 2007 violation to the City Council on December 11, even though the City Council questioned her about the October 15, 2007 violation and expressed concern about the Applicant's adherence to state liquor law requirements. u. Applicant never voluntarily disclosed the December 6, 2007 violation to the City. City staff learned of the second violation by letter from -State Alcohol and Gambling Enforcement dated December 28, 2007. v. Applicant did not disclose either the October 15, 2007 or December 6, 2007 violations in her license applications to the City dated January 10, 2008. w. At the public hearing, Applicant stated she was told by state investigators that she could allow customers to consume alcohol and she could display alcohol, but she could not sell alcohol at Aribel's during the period of tax delinquency. The Applicant indicated that she had allowed a customer to bring in alcohol for consumption but did not intend to sell it. x. Under Minn. Stat. § 340A.512, the liquor licensee may prohibit a person from bringing containers of alcoholic beverages into the premises or from consuming from such a container on the premises, without the licensee's permission. It appears that the Applicant is claiming that the second cited violation was in error and that the Applicant did not have alcohol for sale but had only granted permission for display of a container brought from the outside. That assertion raises two concerns. First, the Applicant's claim appears to be an after-the-fact justification, because the Applicant did not contest the second state citation, which was premised on the Applicant having alcohol for sale. in violation of state law. Second, even if the Applicant's assertion was true, in the experience of the City Council, viable liquor establishments that are licensed to sell alcohol do not allow on their premises the consumption and display of alcohol purchased outside of their establishment. The City has in the past suspended liquor licenses for restaurant licensees, and the City Council is not aware that any of those licensees ever engaged in such a practice during its period of suspension. The Applicant's resort to such a practice, if that is what the Applicant was doing, suggests that the business is not a viable restaurant with food sales alone. y. The two violations of Minn. Stat. § 340A.415 are especially troubling for the following reasons: (1) the violations were the result of intentional and purposeful actions and not mere neglect or oversight; and (2) the proximity in time between the two violations suggests not only poor judgment and lack of adequate management, but a blatant disregard for the law. Criminal Complaints z. Since the time Aribel's restaurant was issued an on-sale wine license and a 3.2 percent malt liquor license in September, 2005, noise complaints and calls for service have been steadily increasing. From September 2005 through December 2005, there were five calls for service. Three were noise-related and two were disturbances. In 2006, there were 12 calls for service. These calls included six noise complaints, one assault, one fight, two property damage claims, one domestic assault and one intrusion alarm. From January 2007 through December 2007, there were 19 calls for service. These included 10 noise complaints, two suspicious activity complaints, two assaults, one intrusion alarm, one driving complaint, one harassing communication complaint, one assist for another agency, and one fight. The majority of calls for service appear to be noise complaints, some of which resulted in citations being issued. So far in 2008, there have been 11 calls for service. aa. At the public hearing, two nearby property owners addressed the Council with concerns. of the high level of noise created by Aribel's. A property owner stated that, "she is awakened by noise from Aribel's, "incident reports are appalling," "does not seem like a good atmosphere," and "it is a nuisance." Another neighbor stated there is "noise, commotion, fighting in parking lot at 2:00-2:30 in the morning," "noise again after the police left," and this is "not a good thing for the community." bb. At the public hearing, Applicant stated she plans to end the noisy private parties at Aribel's. Applicant has made similar promises to the City regarding noise in the past. The Council has no reason to believe that Applicant will take action necessary to mitigate or end the noise created by her management of Aribel's. cc. Since Aribel's .2007 liquor licenses expired at the end of 2007, the only police calls to the property have been for owner/tenant- generated service calls. There have been no calls for noise violations. The lack of calls during that period shows a direct causal link between the sale of alcohol on the premises and the disturbances to the neighborhood. Administrative Burden /Public Interest dd. If a liquor license is granted to this Applicant, the City will need to expend additional resources monitoring any other Minn. Stat. § 340A.415 violations, the tax delinquency list and the foreclosure action. ee. Under Minnesota Statute § 340A.413, subd. 2(b), no license may be issued if the results of the license investigation show, to the satisfaction of the governing body, that issuance would not be in the public interest. Applicant's past violations of state law, and the increased City resources necessary to monitor the Property demonstrate that issuance of a liquor license to Aribel's is not in the public interest. 2. The facts and circumstances show Aribel's is not financially stable. 3. The facts and circumstances show Aribel's does not have a viable business as a dine-in restaurant open to the general public. 4. The Applicant has not demonstrated the business management skills, financial stability. and judgment necessary for someone holding a liquor license and selling alcohol to the public. 5. For all of these reasons, the City Council finds that it is in the best interest of the public to deny Applicant's on-sale wine and 3.2 malt liquor license .applications. Adopted by the City Council of the City of Richfield, Minnesota this 13th day of May, 2008. Debbie Goettel, Mayor ATTEST: Nancy C. Gib ,City Clerk