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HomeMy WebLinkAbout50. Discussion of Non-Renewal License Feescay` r7A of Oshkosh TO: Honorable Mayor & Members of the Common Council FROM: Pamela R. Ubrig, City Clerk DATE: August 20, 2021 RE: Liquor License Fees BACKGROUND At the August 3, 2021 Council meeting Council asked staff to review the city ordinances and statutes related to liquor license fees with regard to potentially refunding the fees of applicants who are denied a license. The discussion was specific to non -renewal applications not renewed under the City's Required Use of License Ordinance, Section 4- 6 of the City's Municipal Code. The regulation of liquor licenses is governed by a comprehensive set of State Statutes and local ordinance. Under the State Statutes, municipalities are authorized to enact regulations not in conflict with state law and may prescribe forfeitures or license suspension or revocation for violations of any such regulation. Pursuant to this authority, the City of Oshkosh has for many years had an ordinance requiring the use of liquor licenses by holders. Previous Councils had not strictly applied the policy in the past resulting in some license holders continuing to hold licenses without using them for several years, limiting the number of available licenses for new establishments seeking to open in the community. By ordinance adopted in February of 2019, the Council adopted an updated policy for Required Use of Licenses separating this requirement into its own section and updating and clarifying the language to require license holders to complete the requirements for issuance of licenses (complete inspections and other contingencies to allow the Clerk to issue a printed license for the establishment) and to actually conduct a license -related business for at least one 30-day period each license year. At that time, Council gave clear direction to staff that the intention behind adoption of the updated ordinance was to "reset" and strictly enforce the policy requiring use of licenses to support current active license holders and economic development within the community. Staff has, pursuant to the revised ordinance and enforcement policy, notified all license holders of the updated language and has brought forth several licenses for non -renewal in the current year. In some cases, license holders determined on their own to surrender licenses, although staff cannot state for certain that these decisions were made with reference to the Required Use ordinance. If a license holder who had not complied with the Required Use ordinance applied for a renewal of its license, staff upon direction of the Council notified the license holder of the Council's intention to not renew the license for violation of the Required Use ordinance and a Non -renewal hearing was scheduled before the Council. License holders were afforded the opportunity to present any evidence and information that they wished the Council to consider and Council made the determination whether to grant the renewed license. The license renewal fee was collected upon application for the license. If a license was not renewed by the Council, the license fee was not refunded. ANALYSIS The license fee is an administrative fee to allow the City to recover in whole or part, the costs of sending out notices to license holders, processing applications for new or renewal licenses, completing background checks, completing inspections of licensed premises, and a separate fee for publication of notices required by statute. There is no additional fee or cost associated with a hearing on an application or non -renewal, although as Council is aware, there is also significant staff time devoted to those processes and costs associated with service of hearing documents on the license holder. The administrative tasks noted above would be required to be completed for the application to be processed and brought before the Council whether the license is renewed or not renewed. Council is authorized to set the fees for liquor licenses within the requirements of the State Statutes. In some cases, the statutes set minimum and maximum amounts that may be charged for license fees. The Statutes do not address refunds for licenses issued under the municipal quota. They do however prohibit the refund or rebate of license fees for reserve and economic development licenses (the higher fee, $10,000 and $30,000, above - quota licenses). Presumably if the Legislature intended to prohibit refunds for municipal quota licenses, they would have done so, similar to what they have done with reserve and economic development licenses. If Council were to determine to issue a refund of license fees upon non -renewal, staff would recommend a partial refund not lower than City Hall, 215 Church Avenue P.O. Box 1 130 Oshkosh, WI 54903-1 130 920.236.5000 http://www.ci.oshkosh.wi.us the minimum license fee required by statute to avoid potential legal challenge alleging the City is not complying with the requirement to charge a minimum license fee. Council may wish to consider a policy providing more specific notice upon the Clerk's Office identifying a license for potential hearing for violation of the Required Use Ordinance. Currently, all license holders are sent the same information packet. A separate letter could be sent to those identified as being in violation of the ordinance indicating to them that if they do apply they will be brought before the Council for direction in relation to potential non -renewal as the records for the office indicate that they are currently in violation of the Required Use Ordinance. If the license holder has not applied and paid fees at that point, they may decide not to do so; or if they have applied and paid fees, but the administrative reviews and inspections have not been done, a refund could be given if the application for renewal were withdrawn at that time. The letter could more directly highlight the opportunity to make a determination whether to pay the fee and move forward knowing the fee may be forfeited or to withdraw. Another option discussed by staff was the potential to rebate the fee or a portion of the fee paid by persons whose license are not renewed, upon a new application for the same premises within the current license year. This option may be appealing in that it may encourage those persons who are not renewed to nonetheless pursue sale and redevelopment of their properties in the current license year. It would not guarantee issuance of a new license, however, it may encourage the owner or a potential buyer to move forward expediently with proposed actions/redevelopment. If Council would like to move forward with this option it would require additional research and refinement, as the policy would need to consider whether the applicant must be the same owner/applicant who paid the original fee, or have the current owner/applicant's sign off; and/or how to apportion the rebate between the current owner/applicant and a new applicant applying for the license. In addition, liquor licenses are prorated for the year. It is unlikely that a new applicant would come in for the same property the same month a license is non -renewed; therefore the policy would need to consider treatment as to the prorated fee. Consideration would also need to be given to the statutory minimums and whether a rebate may run afoul of that requirement or if new applications should be required to make at least the minimum payment of the application fee to avoid potential challenge to the city's policy for non-compliance with the State Statute. Any policy would also need to consider what categories of licenses it would apply to and whether it would apply only in the case of violation of the non-use ordinance or whether it would more broadly apply to non -renewal or revocations for any reason. City Hall, 215 Church Avenue P.O. Box 1 130 Oshkosh, WI 54903-1 130 920.236.5000 http://www.ci.oshkosh.wi.us RECOMMENDATION Staff recommends the first option discussed above — clear, separate notification to those license holders who may be subject to non -renewal under the Required Use Ordinance. While license holders receive information about the Required Use Ordinance with their renewal packets, staff recognizes that it may be beneficial to highlight this information for license holders when city records indicate that they may be subject to non -renewal under this ordinance. If Council determines to go with this option, staff would propose to include a separate letter on colored paper with the renewal packets for those license holders who appear to be in violation of the Required Use Ordinance. The letter would notify that license holder that the records in the office of the City Clerk indicate that they are in violation of the city ordinance and that if they file for non -renewal, the City Clerk will notify the Council that the records indicate that they are in violation and the Council may conduct a non -renewal hearing. If the license holder determines to proceed with their application they would be clearly informed that the fee would not be refunded. Staff understands that this would not provide a refund as had been discussed at the last meeting, but as noted, if the renewal paperwork is filed the fee covers some of the administrative costs of processing which are necessary whether or not the license is granted. This proposed resolution would be easier to apply, and would not make a particular specific exception for only one type of situation, maintaining consistency across all licenses and situations where we currently do not refund amounts if you relinquish your license, are suspended or revoked or transfer the license. This proposed option would however, give those particular license holders who do not meet the requirements of the ordinance a better, clear understanding prior to making the determination whether to apply for renewal. Staff is placing this item on the agenda for discussion/direction and will be prepared to answer questions at the August 24, 2021 Council meeting. Respectfully Submitted, Pamela R. Ubrig City Clerk A proved: ('1 John Fitzpatfck Assistant City Manager / Director of Administrative Services City Hall, 215 Church Avenue P.O. Box 1 130 Oshkosh, WI 54903-1 130 920.236.5000 http://www.ci.oshkosh.wi.us