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3.8 Ordinance 2021-16 Lawful Gambling Request for City Council Action DEPARTMENT INFORMATION ORIGINATING DEPARTMENT REQUESTOR: MEETING DATE: Administration City Clerk Etzel September 27, 2021 PRESENTER(s) REVIEWED BY: ITEM #: Consent City Administrator/Finance Director Flaherty City Planner Licht City Attorney Kendall 3.8 - Lawful Gambling STRATEGIC VISION MEETS: THE CITY OF OTSEGO: Is a strong organization that is committed to leading the community through innovative communication. Has proactively expanded infrastructure to responsibly provide core services. Is committed to delivery of quality emergency service responsive to community needs and expectations in a cost-effective manner. X Is a social community with diverse housing, service options, and employment opportunities. Is a distinctive, connected community known for its beauty and natural surroundings. AGENDA ITEM DETAILS RECOMMENDATION: City staff recommends approval of an ordinance amending provisions of the City Code regulating lawful gambling and publication of the summary ordinance. ARE YOU SEEKING APPROVAL OF A CONTRACT? IS A PUBLIC HEARING REQUIRED? No No BACKGROUND/JUSTIFICATION: At the May 12, 2021 Administrative Subcommittee meeting, staff brought items needing review in Title 4, Chapter 7 of the City Code, which regulates Lawful Gambling within Otsego. The Administrative Subcommittee directed staff to look into how the 10% donated to cities was being spent by surrounding communities. During the June 9, 2021 Administrative Subcommittee meeting, staff presented information on how the other cities were spending their 10%, if required by ordinance. A city may, by ordinance require gambling organizations to 1) donate up to 10% of their profits to the City and, 2) expend their profits within a defined trade area. Staff noted trade area defined by Statute as being any City or Township abutting Otsego. The current ordinance conflicts with the Statutory definition of a trade area. The City may further limit approval of premises permits to organizations that have been in existence for 3 years, and meet other criteria determined by the City. At the September 9, 2021 Administrative Subcommittee meeting, staff noted t he Minnesota Gambling Control Board is the licensing authority and State Statute no longer requires cities annually approve a premises permit. The City may assess an investigation fee on organizations applying for or renewing a premises permit issued by the Gambling Control Board. The City will continue to verify that donations are made to the City in accordance with the City Code. City staff is proposing that the City Code be amended to 1) define the trade area in accordance with statute and 2) establish a separate limit on issuance of local permits only to organizations within cities and townships that have schools Otsego children attend. This amendment would not change the City’s current practice for issuance of local permits. The ordinance has been posted on the City’s website at least 10 days in advance as required by Minnesota State Statute. SUPPORTING DOCUMENTS ATTACHED: ▪ Draft Ordinance 2021-16 ▪ Draft Ordinance 2021-16 Summary POSSIBLE MOTION PLEASE WORD MOTION AS YOU WOULD LIKE IT TO APPEAR IN THE MINUTES: Motion to adopt Ordinance 2021-16 amending and the City Code regulating lawful gambling and authorizes staff to publish the summary ordinance. BUDGET INFORMATION FUNDING: BUDGETED: N/A N/A 1 ORDINANCE NO.: 2021-16 CITY OF OTSEGO COUNTY OF WRIGHT, MINNESOTA AN ORDINANCE AMENDING THE CITY CODE REGARDING LAWFUL GAMBING. THE CITY COUNCIL OF THE CITY OF OTSEGO DOES HEREBY ORDAIN: Section 1. Section 3-1-2.A of the City Code (Schedule of Fees – Licenses) is hereby amended to add the following provisions: Lawful gambling: Subsection 4-7-6 D Investigation fee: $100.00 Section 2. Section 3-1-2.B of the City Code (Schedule of Fees – Permits) is hereby amended to repeal the following provisions: Lawful gambling permits: Subsection 4-7-6 D State permit 100.00 Local permit 100.00 Section 3. Section 4-7-3.D of the City Code (Application of Provisions; Exemptions) is hereby amended to read as follows: D. The City Clerk is authorized to approve lawful gambling as exempt from the requirements for a City license under of this section for the following: 1. An organization that conducts lawful gambling on five (5) or fewer days in a calendar year. 2. An organization that does not award more than fifty thousand dollars ($50,000) in prizes for lawful gambling in a calendar year. 2 Section 4. Section 4-7-4 of the City Code (Lawful Gambling - Definitions) is hereby amended to revise the following definitions: LOCAL PERMIT: A permit issued by the City. TRADE AREA: The City of Otsego, City of Albertville, Big Lake Township, City of Dayton, City of Elk River, City of Rogers, City of Monticello and, Monticello Township, City of Rogers, and City of St. Michael. Section 5. Section 4-7-5.B of the City Code (Lawful Gambling Permitted; City Council Approval Required) is hereby amended to read as follows: B. Lawful gambling authorized by Minnesota Statutes sections 349.11 to 349.23, inclusive, as amended from time to time, shall not be conducted unless a State issued premises permit is approved by resolution of the City Council, subject to the provisions of this chapter and State law. Section 6. Section 4-7-6 of the City Code (Local Permit Requirements) is hereby amended to read as follows: 4-7-6: LOCAL PERMIT REQUIREMENTS: A. Permit Required: No organization shall conduct lawful gambling excluded or exempted from State licensure requirements by Minnesota Statutes section 349.166, as amended from time to time, without a valid local gambling permit, lawful gambling exempted from local regulation by section 4-7-3 of this chapter. BA. Application For Permit: Any organization seeking to obtain or renew a State issued premises permit or renewal of a premises permit from the board shall file with the City Clerk an executed, complete duplicate application, together with all exhibits and documents accompanying the application as will be filed with the boardState, as well as an application form as prescribed by the City and the following information: 1. Name and address of the organization requesting the permit. 2. Name and address of the officers and person accounting for receipts, expenses, and profits for the event. 3. Dates of the gambling occasion for which the permit is requested. 4. Address of premises where the event will occur. 5. Copy of rental or leasing arrangement, if any, connected with the event including rental to be charged to the organization. 6. Estimated value of prizes to be awarded. 3 CB. Review Of Application; Recommendation To City Council: 1. Upon receipt of an application for issuance or renewal of a premises permit, the City Clerk shall transmit the application to the County Sheriff for review and recommendation. 2. The County Sheriff shall investigate the matter and make the review and recommendation to the City Council as soon as possible, but in no event later than forty five (45) days following receipt of the notification by the City. Conditions for Issuance: a. Gambling shall be operated in accordance with the terms and conditions specified in this chapter, other applicable city ordinances and state and federal laws and regulations. b. The establishment for which the State issued premised permit or the organization leasing the premises for gambling shall not have been found to have violated any State Statute, State rule, or this code 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 gambling organization has been in existence in the City or within the City of Albertville, City of Monticello, Monticello Township, City of Rogers, or City of St. Michael for at least three (3) consecutive years prior to the date of application. d. The gambling organization shall have at least fifteen (15) active members. e. Lawful gambling subject to the requirements of this chapter shall be limited and will not take place at a premises the gambling organization owns or rents. f. Lawful gambling subject to the requirements of this chapter shall be limited to a premises for which an on-sale liquor license has been issued. g. Not more than one (1) gambling organization licensed to conduct lawful gambling activities subject to the requirements of this chapter shall conduct lawful gambling at any one (1) premises. D. Permit Fee: The applicant shall pay a fee at the time of application for a local premises as established by section 3-1-2 of this Code for the City Clerk to accept for costs incurred by the City to investigate the application. 4 E. Consideration Of Recommendation: 1. The applicant shall be notified in writing of the date on which the City Council will consider the recommendation. 2. The City Council shall receive the Sheriff's Office report and consider the application within forty five (45) days of the date the application was submitted to the City Clerk. 32. The City Council shall, by resolution, approve or disapprove the application within sixty (60) days of receipt of the application. 43. The City Council shall only approve an application for issuance or renewal of a state issued premises permit if there is compliance with all of the following requirements: of this chapter. a. The gambling organization shall not have been found to have violated any State Statute, State rule, or this Code relating to gambling within the last three (3) years. b. The establishment for which the premises permit is to be issued or the organization leasing the premises for gambling shall not have been found to have violated any State Statute, State rule, or this Code 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 gambling organization has been in existence in the trade area for at least three (3) consecutive years prior to the date of application. d. The gambling organization shall have at least fifteen (15) active members. e. Lawful gambling subject to the requirements of this chapter shall be limited and will not take place at a premises the gambling organization owns or rents. f. Lawful gambling subject to the requirements of this chapter shall be limited to premises for which an on-sale liquor license has been issued. g. Not more than one gambling organization licensed to conduct lawful gambling activities subject to the requirements of this chapter shall conduct lawful gambling at any one premises. 5 F. Term Of Permit: Local premises permitsA shall be valid for one year after the date of issuance unless suspended or revoked. 1. Licenses issued by the State are perpetual and valid unless the board revokes or suspends the license, the organization terminates the license, or the license lapses. 2. The City approval of the State issued premises permit shall expire each year on the date it was initially approved by the State with renewal to be considered in accordance with Section 4-7-6 of this chapter. G. Revocation Or Suspension Of Permit: 1. A local City approval of a State issued gambling 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. 2. A license shall not be revoked or suspended until notice and an opportunity for a hearing have first been given to the permitted person. The notice shall be sent by certified mail and shall state the provision reasonably believed to be violated. The notice shall also state that the permitted person may demand a hearing on the matter, in which case, the permit will not be suspended until after the hearing is held. If the permitted person requests a hearing, the City Council shall hold a hearing on the matter at least one week after the date on which the request is made. If, as a result of the hearing, the Council finds that an ordinance violation exists, then the Council may suspend or revoke the permit. 2. A permittee shall be given ten (10) days written notice sent via first class U.S. mail of a penalty, suspension, or revocation action stating the charges against the permittee. 3. Hearing: a. The notice shall state the right of the permittee to request a hearing regarding the revocation or suspension of the city gambling permit. b. The notice shall state that the permittee must affirmatively request the hearing within ten (10) days of receipt of the notice or that the hearing is otherwise waived. c. A hearing to consider suspension or revocation of a city gambling permit shall be conducted by the City Council in accordance with Minnesota Statutes sections 14.57 to 14.70. 4. Notice of lapse, revocation, or suspension of a state issued premises permit shall also constitute notice to the permittee of the suspension or revocation of the city gambling permit. 6 Section 7. Section 4-7-7 of the City Code (Changes in Application Information) is hereby amended to read as follows: 4-7-7: CHANGES IN APPLICATION INFORMATION: An organization holding a State issued premises permit or a local permit shall notify the City within ten (10) days in writing whenever any material change is made in the information submitted on the application. Section 8. This Ordinance shall become effective immediately upon its passage and publication according to law. MOTION BY: SECOND BY: ALL IN FAVOR: THOSE OPPOSED: ADOPTED by the City Council of the City of Otsego this 27th day of September, 2021. CITY OF OTSEGO BY:_____________________________ Jessica L. Stockamp, Mayor ATTEST:______________________________ Audra Etzel, City Clerk 1 SUMMARY OF ORDINANCE NO.: 2021-16 CITY OF OTSEGO COUNTY OF WRIGHT, MINNESOTA AN ORDINANCE AMENDING THE CITY CODE REGARDING LAWFUL GAMBING. NOTICE IS HEREBY GIVEN that on September 27, 2021, Ordinance 2021-16 was adopted by the City Council of the City of Otsego, Minnesota. NOTICE IS FURTHER GIVEN that the ordinance adopted by the City Council amends City Code pertaining to: 1. Investigation fees. 2. Application of provisions. 3. Definitions. 4. City Council approval. 5. Requirements. 6. Changes in application. ADOPTED by the City Council of the City of Otsego this 27th day of September, 2021. CITY OF OTSEGO BY: Jessica L. Stockamp, Mayor ATTEST: Audra Etzel, City Clerk Pursuant to Minnesota Statutes 412.191, Subd. 4 and 331A.01, Subd.10, this Ordinance is published in summary form. Complete copies of the ordinance are available for inspection by contacting the City Clerk, Otsego City Hall, 13400 90th Street NE, Otsego, Minnesota 55330 during regular office hours.