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CCA 02/25/2019 "f CITY COUNCIL MEETING OF FEBRUARY 25, 2019 Fridley The City of Fridley will not discriminate against or harass anyone in the admission or access to, or treatment, or employment in its services, programs, or activities because of race, color, creed, religion, national origin, sex, disability, age, marital status, sexual orientation or status with regard to public assistance. Upon request, accommodation will be provided to allow individuals with disabilities to participate in any of Fridley's services, programs, and activities. Hearing impaired persons who need an interpreter or other persons with disabilities who require auxiliary aids should contact Roberta Collins at 572-3500. (TTD/572-3534) CONFERENCE MEETING (6:00 P.M.) 1. Tour of Locke Park Water Treatment Plant (6911 University Avenue N.E.) PLEDGE OF ALLEGIANCE. APPROVAL OF PROPOSED CONSENT AGENDA: APPROVAL OF CITY COUNCIL MINUTES: 1. City Council Meeting of February 11, 2019 1 - 5 NEW BUSINESS: 2. Claims: (184069 — 184177) 6 - 23 OPEN FORUM, VISITORS: Consideration of items not on Agenda — 15 minutes. FRIDLEY CITY COUNCIL MEETING OF FEBRUARY 25, 2019 PAGE 2 ADOPTION OF AGENDA: PUBLIC HEARING/NEW BUSINESS: 3. Public Hearing Considering Denial of a Massage Therapy Business License Application for Tuina Massage, LLC, d/b/a Moore Massage; Denial of a Massage Therapist License for Julia Wang; and Denial of a Massage Therapist License to Yafang Zhang; and Resolution Denying a Massage Therapy Business License to Tuina Massage, LLC, d/b/a Moore Massage, Denying a Massage Therapist License to Julia Wang, and Denying a Massage Therapist License to Yafang Zhang (Ward 2) 24 - 100 NEW BUSINESS: 4. Resolution Approving the Community Investment Fund Policy for the City of Fridley; and Approving Transfers from the General Fund to the Community Investment Fund 101 - 106 5. Informal Status Report 107 ADJOURN. Fridley FRIDLEY CITY COUNCIL MEETING OF FEBRUARY 25, 2019 7:00 p.m. — City Council Chambers Attendance Sheet Please print name, address and item number you are interested in. Print Name (Clearly) Address Item No. -z 3 CITY COUNCIL MEETING CITY OF FRIDLEY FEBRUARY 11,2019 The City Council meeting for the City of Fridley was called to order by Mayor Lund at 7:04 p.m. MEMBERS PRESENT: Mayor Lund Councilmember Barnette Councilmember Tillberry Commissioner Eggert MEMBERS ABSENT: Councilmember Bolkcom OTHERS PRESENT: Wally Wysopal, City Manager Scott Hickok, Community Development Director James Kosluchar, Public Works Director Brandon Brodhag, Civil Engineer Cassandra Wolfgram, City Attorney APPROVAL OF PROPOSED CONSENT AGENDA: APPROVAL OF MINUTES: 1. City Council Meeting of January 28,2019. APPROVED. NEW BUSINESS: 2. Claims (183887— 184086; PCard 1901). APPROVED. ADOPTION OF PROPOSED CONSENT AGENDA: MOTION by Councilmember Barnette to adopt the proposed consent agenda as presented. Seconded by Councilmember Eggert. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. OPEN FORUM,VISITORS: John Connolly, North Metro Chamber, updated Council on Chamber activities and what is happening in the business community. The Chamber is offering a toolkit to help businesses adapt during the 35W MnPass construction that will take three years to complete. There will be 1 FRIDLEY CITY COUNCIL MEETING OF FEBRUARY 11,2019 PAGE 2 a lot of diversion and additional traffic on Central and University Avenues during this construction. Councilmember Eggert asked for more information on the 35W project. Mr. Connolly replied that construction is from Lino Lakes to County Road C and will involve lane closures and diverting traffic. It is a three-year project and the Chamber will communicate with businesses to offer a toolkit to send to guests via the website to keep them updated on how long it will take guests to get to their business. This should help break down barriers so businesses can stay open during construction. Construction will start sometime in April. In the end it will be wonderful and much better than what it is now. ADOPTION OF AGENDA: MOTION by Councilmember Tillberry to adopt the agenda as presented. Seconded by Councilmember Eggert. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. NEW BUSINESS: 3. Resolution Receiving Report and Calling for Hearing on Improvement for the 2019 Street Rehabilitation Project No. 2019-01. Brandon Brodhag, Civil Engineer, stated on October 8, 2018, the City Council adopted Resolution 2018-51 directing preparation of a feasibility report for the 2019 Street Rehabilitation Project No. ST2019-01. The project is proposed for 69th Avenue, University Avenue East Service Road and 71st Avenue near City of Fridley Civic Campus. On January 22, 2019, property owners and Council members were invited to attend an open house to discuss the project. Forty-seven properties received notice of the open house via U.S. Mail. There are ten properties in the project area that would be subject to assessment under the proposed project. Mr. Brodhag said staff gave a presentation to twelve attendees including Councilmember Barnette. Highlights of the presentation included project overview, construction impacts, anticipated schedule, assessments and payment schedule. Following the presentation, the meeting was opened to questions and comments from the group. Several property owners stayed after the meeting to ask individual questions regarding the project. Concerns were raised from the residents about construction traffic/access, specifically, with the Pulte development, and Woodcrest Baptist Church. Other traffic access concerns were brought to our attention by the Holiday Station Store and CTM-Truck. Staff responded that they would work with their contractor to minimize traffic disruptions as much as possible during construction. Mr. Brodhag added that a questionnaire was given to the property owners who attended the open house, requesting information and input on other project aspects, including access during construction and utility services. After the City Council adopted the resolution, staff resumed 2 FRIDLEY CITY COUNCIL MEETING OF FEBRUARY 11,2019 PAGE 3 final preparation of the feasibility report. The feasibility report includes consideration of public comment and concerns received through open house discussion, property surveys, and telephone conversations. Mr. Brodhag said the feasibility report, concludes that the project is necessary as included in the City of Fridley's proposed Long-Term Street Maintenance Program, and 2019-23 Capital Investment Program. The project is cost-effective, and will result in reduced maintenance requirements within the project area and a long-term savings to the City. The project is feasible and is funded in the proposed FY2019 budget. Staff recommends the City Council adopt the resolution receiving the Feasibility Report for 2019 Street Rehabilitation Project No. ST2019-01 and calling for a public hearing on the proposed improvements on March 11, 2019. If the City Council adopts the attached resolution at this meeting, public hearing notices will be sent to property owners abutting the project area and the public hearing will be advertised in the official newspaper. Mayor Lund noted that this may or may not go forward depending on Locke Point Boulevard and when construction can start. That construction needs to be done prior to this project starting. If it gets too late, it may get delayed. Jim Kosluchar, Public Works Director, replied that staff will go through the hearing process and get plans ready for bid. Mayor Lund noted that Pulte is moving right along even with the inclement weather. The majority of the lots have been sold. MOTION by Councilmember Barnette to adopt Resolution No. 2019-08 and changing the date of the public hearing mentioned in Paragraph 5 of the resolution from February 25 to March 11, 2019. Seconded by Councilmember Tillberry. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 4. Resolution Adopting ADA Transition Plan for Public Rights of Way. Brandon Brodhag, Civil Engineer, stated that the Americans with Disabilities Act (ADA), enacted on July 26, 1990, is a civil rights law prohibiting discrimination against individuals on the basis of disability. The Federal Highway Administration (FHWA) requires cities to adopt ADA Transition Plans in order to receive federal funding for transportation projects in the future. The City of Fridley has never developed a formal ADA Transition Plan before. The proposed plan, which can be found on the City's website, focuses only on transportation-related facilities within public rights-of-way, and details how those facilities will be made accessible to all individuals. This item includes one phase of an overall transition plan for the City of Fridley to comply with the Act's requirements. Other phases of this plan include transition plans for park elements and facilities, which will be the next part of transition compliance to be formally considered. 3 FRIDLEY CITY COUNCIL MEETING OF FEBRUARY 11,2019 PAGE 4 Mr. Brodhag noted that Fridley staff has conducted a self-evaluation of its facilities within public rights-of-way and has developed this Transition Plan detailing how the organization will ensure that all of those facilities are accessible to all individuals. Staff collected data on the existing condition of pedestrian ramps and coordinated with local partners that also contain facilities within the City limits (Anoka County and MnDOT). As required, a City-wide public open house was conducted on January 16, 2019. A comment was received from a resident and was considered in preparation of the final version of the plan. Mr. Brodhag said the plan also identifies priority area locations, and a schedule to become ADA compliant. Priority areas are near schools, medical facilities, City facilities, and locations identified based on public feedback. The schedule provides a goal of 90% compliance of features in the City's right-of-way within 20 years. The plan includes annual budget estimates that will bring the City into full compliance over time. This plan will guide future Capital Investment Plans and project planning. Facilities will be reconstructed when adjacent to a street improvement, and also as designated to conform to the plan's schedule. Funding for these projects is generated by the street reserve and grant funding when obtainable by staff. Maintenance of these improvements would be in accordance with our existing maintenance practices, including those for snow and ice removal. Mr. Brodhag stated that a grievance procedure is provided as a tool for staff to identify where the plan may be nonresponsive to a need in the community. The plan is intended to be a living document that will be receive routine updates. The first scheduled update will occur one year from the plan's formal adoption and on a four-year cycle thereafter. Appendices will be updated annually if new information is available. Staff recommends the City Council move to approve the resolution adopting the ADA Transition Plan for Public Rights-of-Way. If approved, the plan will go into effect and be shared with appropriate agencies and the public. Councilmember Eggert said the ramps are fully compliant which fits in with other cities. We have been working on this for quite a few years, and the specifications increased and changed to make some of the work that has been done non-compliant. Mr. Brodhag replied the standard has kept changing since 1990. MOTION by Councilmember Tillberry to adopt Resolution No. 2019-09. Seconded by Councilmember Barnette. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 5. Informational Status Reports. Mayor Lund asked residents to watch their mailbox for information on the corridor study and how to improve Highway 65 and University Avenue. A series of workshops have been scheduled. The first workshop will be held on Thursday, February 21, from 6 to 8 p.m. at the Civic Center. Activities will be available for children. This is an opportunity to make your voice heard. Workshops will be held every other Thursday for the next two months. 4 FRIDLEY CITY COUNCIL MEETING OF FEBRUARY 11,2019 PAGE 5 Councilmember Tillberry added the workshops will be well-run and concise. The two hours are well worth it and will help us in the decision we have to make later. Jim Kosluchar said the information will also be posted on the City's website. Councilmember Eggert said this week the Fridley Community Theater is presenting "Fools." The Fridley Fire Department badge ceremony is on Sunday night to honor our firefighters. Mayor Lund said the Lions wine tasting is at Banquets of Minnesota on Friday, February 22, from 5:30 to 8:00 p.m. Tickets are $25 and includes food tasting with 10 area restaurants and beer vendors. 300 tickets are available. On March 1,there will be a chili contest for Lee Carlson Center from 5:00 to 8:00 p.m. Tickets can be purchased on the Lee Carlson website. March 2 is the Spring Spree at Springbrook Nature Center. This provides funding for scholarships and programming at Springbrook Nature Center. ADJOURN: MOTION by Councilmember Barnette to adjourn. Seconded by Councilmember Eggert. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE MEETING ADJOURNED AT 7:51 P.M. Respectfully submitted, Krista Peterson Scott J. Lund Recording Secretary Mayor 5 AGENDA ITEM ff:;:diej COUNCIL MEETING OF FEBRUARY 25, 2019 CLAIMS CLAIMS 184068 - 184177 6 A\ Q1 C o 0 0�,o o I O Ol 01 01,N V 1'In 0 0 0 1 0 Co 1 00 a .-- a a .-1'�a .. V ,- > 0 0 0,0 0 j 0 Cs! 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Wysopal, City Manage ./ Mayor and City Council From: Deb Skogen, City Clerk ' s Jeff Guest, Police Lieutenants Date: February 19, 2019 Re: Public Hearing and Resolution Denying a Massage Therapy Business License to Tuina Massage, LLC d/b/a Moore Massage, Denying a Massage Therapist License to Julia Wang, and Denying a Massage Therapist License to Yafang Zhang In May of 2018 Fridley City Code Chapter 125 entitled "Saunas and Massage Parlors" exempted massage therapy businesses from licensing requirements but required massage therapists to register with the City. On May 10, 2018, a police investigation found proposed criminal activity at two locations, which were then closed and the massage therapist licenses suspended. As a result of that action, the Fridley City Council amended Chapter 125 by Ordinance No. 1356 on June 25, 2018. The new code requires the licensing of massage therapy businesses and massage therapists. Letters were mailed to all businesses on August 22, 2018, notifying them of the new requirements and an October 1, 2018, deadline to file their application. All businesses, with the exception of one filed in a timely manner and were approved and licensed. One remaining business applicant, Tuina Massage LLC dba Moore Massage, Julia Wang, Sole Proprietor, located at 1214 East Moore Lake Drive, filed for a massage therapy business license and massage therapist license, along with Ms. Yafang Zhang and paid the fees on October 23, 2018, after the deadline. After reviewing the application and receiving additional documentation from Julia Wang, the City Clerk found the applications to be complete and the appropriate license and investigation fees had been paid. The City Clerk forwarded the application on October 30, 2018, to the police department for the background investigation. A thorough police background investigation found Julia Wang has been involved in several other business which were not disclosed on her business license application, as required by City Code Section 125.10, Subd. 6, which states a license can be denied, suspended or revoked if, "there is any fraud, deception, or misstatement on the license application." In addition, Julia Wang did not disclose information about massage therapy business licenses in other cities which had been denied as required in Section 125.10, Section (9) which requires the applicant to provide any"interest in, as an individual or as part of a corporation, partnership, association, enterprise, business or firm, a 24 massage license that was revoked or suspended within the last five (5)years from the date the license application is submitted to the City." The investigation revealed: 1. Julia Wang has been engaged in, had a relationship with, or has interest in the following non-disclosed massage therapy businesses within the last five (5) years: Minneapolis-Orchid Massage and Spa from 2015-17 City of Blaine - Tuina Massage LLC dba Tao Massage from 2011-17 City of Columbia Heights -Tuina Massage LLC dba Sunny Massage from 2016-17 City of Spring Lake Park- Tuina Massage, LLC dba Dynasty Massage from 2016-18 Rochester- Tuina Massage from 2016-17 2. The following massage therapy business licenses were denied or non-renewed within the last five (5) years: Minneapolis -Orchid Massage and Spa Rochester—Tuina Massage 3. The following massage therapy business license was surrendered within the last five(5) years prior to a public hearing on revocation of business license: Blaine - Tuina Massage dba Tao Massage. 4. Julia Wang sold her interest in Tuina Massage in Rochester to Yi Lan Wang. The City finds Julia Wang changed ownership of her massage therapy businesses to hide her interest, ownership, management, and/or control of massage therapy businesses of Dynasty Massage, Spring Lake Park; Xin Massage, Blaine; Tuina Massage, Rochester; Lan's Spa, Rochester; and Sunny Massage, Columbia Heights. By not disclosing the additional massage therapy business licenses or license revocations in other jurisdictions on her application, Julia Wang falsified her applications which constitutes fraud, deception, and/or misstatement in violation of City Code Section 125.10.6. The investigation further revealed: 5. The following criminal activities occurred at a massage therapy business owned or operated by Julia Wang: A. February 10, 2017, Tao Massage, Blaine: criminal sexual conduct-5th degree against a massage client. B. March 24, 2017, Tuina Massage, Rochester: prostitution. C. Employment of Xiuxia Pan who had been charged with prostitution in Plymouth, Minnesota. D. Julia Wang is on record admitting her employees may engage in inappropriate sexual behavior with clients and has terminated employees due to illicit sexual conduct at her massage therapy businesses. 25 The licensing provisions of Chapter 125 are to "protect legitimate businesses, to prevent criminal activity, and to protect the health and welfare of the community." Criminal sexual conduct and prostitution are a menace to the safety, health, morals, and/or welfare of the public. If occurring within the City of Fridley, the criminal actions would be a basis for denial, suspension or revocation of the massage therapy business license and massage therapist license under City Code Sections 125.10.1 and 125.10.7. 6. The investigation revealed evidenced that businesses owned or operated by Julia Wang in other jurisdictions had multiple ordinance violations including: A. November 8, 2016, Orchid Massage Spa, Minneapolis: building code violations and inability to produce list of employees and copies of legal identification. B. February 14, 2017, Tao Massage, Blaine: unlicensed massage therapist working and failure to display licenses. C. May 17, 2017, Tuina Massage, Rochester: unlicensed massage therapist working. Fridley City Code Section 125.01.2.C, massage therapist licenses and massage therapy business licenses are necessary to "minimize the risk that such businesses and person will facilitate prostitution and other criminal activity in the community". Chapter 125 aims to prevent unlicensed therapists as they are a menace to the safety, health, morals, and/or welfare of the public, specifically, because it may facilitate prostitution or other such criminal activity. Julia Wang employed an unlicensed therapist who had been charged with prostitution. If occurring within the City of Fridley, the violation would be a basis for denial, suspension, or revocation of the massage therapy business license and massage therapist license under City Code Sections 125.10.4, 125.10.7, and/or 125.10.8. 7. The investigation revealed evidence of employees living in a massage therapy business owned by Julia Wang, including Orchid Massage Spa, Minneapolis and Tuina Massage, Rochester. The City finds that residential habitation in commercial property would be in violation of the zoning code and would be a menace to the safety, health, morals, and/or welfare of the public. 8. The investigation revealed concerns that the massage therapy businesses owned or operated by Julia Wang or her associates were being used for commercial sex or human trafficking, including Orchid Massage Spa, Minneapolis, Tuina Massage, Rochester; and/or Oriental Massage, Rochester. Commercial sex and human trafficking are a menace to the safety, health, morals, and/or welfare of the publication. If occurring within the City of Fridley, commercial sex and human trafficking would be a basis for denial, suspension or revocation of the massage therapy business license and massage therapist license under City Code Sections 125.10.1 and 125.10.7. 26 Based upon the City's verification and investigation of the facts in the massage therapy business license application, and the other information of public record, it is recommended that the requests for a massage therapy business license application to Tuina Massage LLC dba Moore Massage, Julia Wang, Sole Proprietor, located at 1214 East Moore Lake Drive, Fridley, Minnesota, and for massage therapist license applications to Julia Wang and Yafang Zhang for Moore Massage be denied based on the following: 1. That there was falsification of information, in violation of City Code Section 125.05.1.A.(7), specifically, Julia Wang's failure to disclose her ownership and/or operation of Tao Massage, Blaine; Orchid Massage Spa, Minneapolis; Sunny Massage, Columbia Heights; Tuina Massage, Rochester; and Dynasty Massage, Spring Lake Park. 2. That there was falsification of information, in violation of City Code Section 125.05.1.A.(7), specifically Julia Wang's failure to disclose the revocation of her massage therapy business license for Tuina Massage, Rochester and the denial of her massage therapy license for Orchid Massage Spa, Minneapolis. 3. That there was fraud, deception, or misstatement on the license application in violation of City Code Section 125.10.6, specifically Julia Wang's failure to disclose her ownership and/or operation of Tao Massage, Blaine; Orchid Massage Spa, Minneapolis; Sunny Massage, Columbia Heights; Tuina Massage, Rochester; and Dynasty Massage, Spring Lake Park. 4. That granting a massage therapy business license would be a menace to the safety, health, morals, or welfare of the public in violation of City Code Section 125.10.12. Specifically, based on a background investigation, multiple massage therapy businesses owned and/or operated by Julia Wang have been investigated for suspicious activity. Investigations by police revealed evidence of: A. Residential habitation within a commercial enterprise; B. At least two unlicensed massage therapists were working in a massage therapy business owned by Julia Wang; C. At least one massage therapist was cited for prostitution occurring in a massage therapy business owned by Julia Wang; D. At least one massage therapist was convicted of criminal sexual conduct arising out of his work at a massage therapy business owned by Julia Wang; E. Julia Wang employed at least one individual who was cited for prostitution in another jurisdiction; F. Julia Wang has acknowledged illicit sexual activity has occurred in her massage therapy businesses; G. Massage therapy businesses have presented an ongoing issue for local jurisdictions; and H. Police departments in at least two jurisdictions have indicated the living and working conditions in massage therapy businesses owned, operated or related to Julia Wang have raised concerns of human trafficking and/or illicit commercial sex. 5. That Tuina Massage, LLC, has sold its interest and does not have an interest in the enterprise, as required by City Code Section 125.10.14. 27 6. That City Code Section 125.05.02.J.(1)requires a massage therapist to be affiliated with, employed by, or own a licensed massage therapy business within the City. If no business licenses is approved, this would require the denial of a massage therapist license for Julia Wang and Yafang Zhang. 7. On the basis there was fraud, deception or misstatement on Julia Wang's massage therapist license application, in violation of City Code Section 125.10.6, specifically, A. Julia Wang's failure to disclose her ownership and/or operation of Tao Massage, Blaine; Orchid Massage Spa, Minneapolis; Sunny Massage, Columbia Heights; Tuina Massage, Rochester; and Dynasty Massage, Spring Lake Park; and B. Julia Wang's failure to disclose the revocation of her massage therapy business for Tuina Massage, Rochester and the denial of her massage therapy business for Orchid Massage Spa, Minneapolis. 8. That granting a massage therapist license to Julia Wang would be a menace to the safety, health, morals, or welfare of the public in violation of City Code Section 125.10.12. Specifically, based on a background investigation, multiple massage therapy businesses owned and/or operated by Julia Wang have been investigated for suspicious activity. Investigations by police revealed evidence of: A. Residential habitation within a commercial enterprise; B. At least two unlicensed massage therapists were working in a massage therapy business owned by Julia Wang; C. At least one massage therapist was cited for prostitution occurring in a massage therapy business owned by Julia Wang; D. At least one massage therapist was convicted of criminal sexual conduct arising out of his work at a massage therapy business owned by Julia Wang; E. Julia Wang employed at least one individual who was cited for prostitution in another jurisdiction; F. Julia Wang has acknowledged illicit sexual activity has occurred in her massage therapy businesses; G. Massage therapy businesses have presented an ongoing issue for local jurisdictions; and H. Police departments in at least two jurisdictions have indicated the living and working conditions in massage therapy businesses owned, operated or related to Julia Wang have raised concerns of human trafficking and/or illicit commercial sex On February 15, 2019, letters providing information about the notice of hearing and denial of the massage therapy business and massage therapist licenses were mailed to the applicants, as shown in Attachment 1. On February 21, 2019, an email with attachments were provided to the City from Julia Wang and YaFang Zhang legal representative requesting that their applications be withdrawn from the agenda, as shown in Attachment 2. 28 Recommendation Due to the nature of this license and the nature of the nondisclosure and fraud, staff feels a public hearing should be held to allow the City Council to determine the course of action for the following reasons: 1. Julia Wang's nondisclosure of other massage therapy business interests and/or ownership; 2. Julia Wang's nondisclosure of the revocation and denial of massage therapy business licenses in other jurisdictions; 3. the ordinance violations of in other jurisdictions; 4. the ongoing issue of potential criminal activity, and 5. the possibility of Julia Wang, or some other business she may have an interest, ownership or be associated with, may apply for a new business license. Staff recommends a motion holding a public hearing to determine whether the applications may be withdrawn or denied by one of the following actions: 1. If withdrawn, a motion would be in order recommending withdrawal of a Massage Therapy Business License to Tuina Massage, LLC, d/b/a Moore Massage, and the Massage Therapist Licenses to Julia Wang and YaFang Zhang. 2. If denied, a motion would be in order to adopt a Resolution Denying a Massage Therapy Business License to Tuina Massage, LLC d/b/a Moore Massage, Denying a Massage Therapist License to Julia Wang, and Denying a Massage Therapist License to Yafang Zhang, as shown in Attachment 3. 29 1 Attachment 1 1 I I I f 1 1 H f C27„�„ i 1' — o� m m a, ic-aO I I i i 3v1 _ i ti di alC 1 I 1 Nov; j 1 j1 c 1 F i 1 I I 8 0 I 1 31 a 5 < ? w s°o„� 1 < a 5o • > D d p I f 30 \ � � i ' • � • 4 ) )\ \d7 §A ' ® z E 1 2_ ; 1 \ i � � Z � / § 4`'.11 ! z . B,! \ yy § !;; d 5 2 § §\ ; 31 TIMOTHY J.KUNTZ LE YT ANDEi R, DANIEL J.BEESON KENNETH J.ROHLF GILLEN & STEPHEN H.FOCHLER JAY P.KARLOVICH MILLER, P.A. ANGELA M.LUTZAMANN KORINE L.LAND ATTORNEYS AT LAW DONALD L HOEFT BRIDGET McCAULEY NASON Established in 1929 TONA T.DOVE AARON S.PRICE DAVID L SIENKO CASSANDRA C.WOLFGRAM February 15, 2019 Julia Wang and Tuina Massage, LLC d/b/a Moore Massage 4 Black Oak Road St. Paul, MN 55417 RE: Notice and Hearing on Massage Therapy Business License for Moore Massage and Massage Therapy License for Julia Wang Our File No. 31000.05053 Dear Ms. Wang and Tuina Massage, LLC dib/a Moore Massage: This will serve as notice of our recommendation to the Fridley City Council for denial of the massage therapy business license for Tuina Massage, LLC d/b/a Moore Massage (hereinafter "Moore Massage") and the massage therapist license for Julia Wang. The recommendation to deny the massage therapy business license for Moore Massage is based on the following: 1. Falsification of information on the license application, in violation of Fridley City Code Section 125.05.1.A.(7), specifically, failure to disclose Julia Wang's ownership and/or operation of Tao Massage, Blaine, Minnesota; Orchid Massage Spa, Minneapolis, Minnesota; Sunny Massage, Columbia Heights, Minnesota; Tuina Massage, Rochester, Minnesota; and Dynasty Massage, Spring Lake Park, Minnesota. 2. Falsification of information on the license application, in violation of Fridley City Code Section 125.05.1.A.(7), specifically, failure to disclose the revocation of the massage therapy business license for Tuina Massage, Rochester, Minnesota and the denial of the massage therapy license for Orchid Massage Spa, Minneapolis, Minnesota. 3. Fraud, deception, and/or misstatement on the license application, in violation of Fridley City Code Section 125.10.6,specifically,failure to disclose Julia Wang's ownership and/or operation of Tao Massage, Blaine, Minnesota; Orchid Massage Spa, Minneapolis, 633 SOUTH CONCORD STREET• SUITE 400• SOUTH SAINT3QJL,MINNESOTA 55075 •651-451-1831 •FAX 651-450-7384 nICDTr•F AT CC%T nr`ATFT TTT\YTTCCl1T.TCTTT•\YT\Y/WT T FVA T,TTIFD f'ITA • Ms. Wang and Tuina Massage, LLC d/b/a Moore Massage Page 2 February 1.5, 2019 Minnesota; Sunny Massage, Columbia Heights, Minnesota; Tuina Massage, Rochester, Minnesota; and Dynasty Massage, Spring Lake Park, Minnesota. 4. Fraud, deception, and/or misstatement on the license application, in violation of Fridley City Code Section 125.10.6, specifically, failure to disclose the revocation of the massage therapy business license for Tuina Massage, Rochester, Minnesota and the denial of the massage therapy license for Orchid Massage Spa,Minneapolis, Minnesota. 5. Granting a license would be a menace to the safety,health,morals,or welfare of the public in violation of City Code Section 125.10.12, specifically, that that based on a background investigation,multiple massage therapy businesses owned or operated by Julia Wang have been investigated for suspicious activity; investigations by police revealed evidence of residential habitation within the commercial properties; at least two unlicensed massage therapists were working in massage therapy businesses owned by Julia Wang; at least one massage therapist was cited for prostitution occurring in a massage therapy business owned by Julia Wang; at least one massage therapist was convicted of criminal sexual conduct arising out of his work at a massage therapy business owned by Julia Wang; Julia Wang employed at least one individual who was cited for prostitution in another jurisdiction;Julia Wang has acknowledged illicit sexual activity has occurred in her massage therapy businesses; the massage therapy businesses have presented an ongoing issue for the local jurisdictions; and police departments in at least two jurisdictions have indicated that the living and working conditions in massage therapy businesses owned, operated, or related to Julia Wang have raised concerns of human trafficking and/or illicit commercial sex. 6.. Tuina Massage, LLC is no longer the real party in interest of the enterprise,in violation of Fridley City Code Section 125.10.14 on the basis that Tuina Massage,LLC sold its interest to Dynasty, LLC and/or Shan,LLC. The recommendation to deny the massage therapist license for Julia Wang is based on the following: 1. Denial of Moore Massage license, pursuant to Fridley City Code Section 125.05.02.J.(1) which requires a massage therapist to be affiliated with, employed by, or_own a licensed massage therapy business within the City. 2. Fraud, deception, and/or misstatement on the license application, in violation of Fridley City Code Section 125.10.6,specifically,failure to disclose Julia Wang's o'vnership and/or operation of Tao Massage, Blaine, Minnesota; Orchid Massage Spa, Minneapolis, Minnesota; Sunny Massage, Columbia Heights, Minnesota; Tuina Massage, Rochester, Minnesota; and Dynasty Massage, Spring Lake Park, Minnesota. 33 Ms. Wang and Tuina Massage, LLC d/b/a Moore Massage Page 3 February 15, 2019 3. Fraud, deception, and/or misstatement on the license application, in violation of Fridley City Code Section 125.10.6, specifically,failure to disclose the revocation of the massage therapy business license for Tuina Massage, Rochester, Minnesota and the denial of the massage therapy license for Orchid Massage Spa, Minneapolis,Minnesota. 4. Granting a license would be a menace to the safety,health,morals,or welfare of the public in.violation of City Code Section 125.10.12, specifically, that based on a background investigation,multiple massage therapy businesses owned or operated by Julia Wang have been investigated for suspicious activity; investigations by police revealed evidence of residential habitation within the commercial properties; at least two unlicensed massage therapists were working in massage therapy businesses owned by Julia Wang; at least one massage therapist was cited for prostitution occurring in a massage therapy business owned by Julia Wang; at least one massage therapist was convicted of criminal sexual conduct arising out of his work at a massage therapy business owned by Julia Wang; Julia Wang employed at least one individual who was cited for prostitution in another jurisdiction;Julia Wang has acknowledged illicit sexual activity has occurred in her massage therapy businesses; the massage therapy businesses have presented an ongoing issue for the local jurisdictions; and police departments in at least two jurisdictions have indicated that the livingand working conditions in massage therapy businesses owned, operated, or related to Julia Wang have raised concerns of human trafficking and/or illicit commercial sex. We have enclosed a copy of the draft resolution for your review. This matter will be heard at the Fridley City Council Meeting on February 25, 2019 at 7:00 p.m. at City Hall, 7071 University Avenue NE, Fridley,Minnesota 55432, during the regularly scheduled City Council meeting.The City Council may hear argument from the parties or their counsel and may take evidence.The City Council may approveor deny the license. Counsel may represent the parties at the hearing and may submit any written arguments to Deb Skogen, City Clerk, 7071 University Avenue NE, Fridley, Minnesota 55432 prior to the hearing, with a courtesy"copy to be provided by email to City Attorney Jay Karlovich at jkarlovich@levander.com. If you haveany questions,you may contact City Attorney Jay Karlovich at 651-451-1831." 34 Ms. Wang and Tuina Massage, LLC d/b/a Moore Massage Page 4 February 15, 2019 Very truly yours, Ca-MetahCIL--). 10 I Cassandra C. Wolfgram Fridley Assistant City Attorney CCW/crl Enclosure c: Jay Karlovich,Fridley City Attorney Ryan Kaess, Kaess Law, LLC (w/enclosure) • • 35 r Y* iGt3 l I � u� �Z� N ‘-•Z I 14 cz a _ ' I z 01 7_ Z s� 36 TIMOTHY J.KUNTZ LEVANDER, DANIEL).BEESON KENNETH J.ROHLF GILLEN & STEPHEN H.FOCHLER JAY P.KARLOVICH ILLER, P.A. ANGELAM.LUTZAMANN KORINE L LAND ATTORNEYS AT LAW DONALD L HOEFT BRIDGET McCAULEY NASON Established in 1929 TONA T.DOVE AARON S.PRICE DAVID L SIENKO CASSANDRA C.WOLFGRAM February 15, 2019 Yafang Zhang 9423 Tyler St.NE Blaine, MN 55434 RE: Notice and Hearing on Massage Therapist License for Yafang Zhang Our File No. 31000.05053 Dear Ms. Zhang: This will serve as notice of our recommendation to the Fridley City Council for denial of the massage therapist license for Yafang Zhang. The recommendation to deny the massage therapist license for Yafang Zhang is based on the following: 1. Denial of Tuina Massage, LLC d,'b/a Moore Massage license, pursuant to Fridley City Code Section 125.05.02.J.(1) which requires a massage therapist to be affiliated with, employed by, or own a licensed massage therapy business within the City. We have enclosed a copy of the draft resolution for your review. Hearing on the Tuina Massage, LLC d/b/a Moore Massage license and the massage therapist license for Yafang Zhang is scheduled to be heard at the Fridley City Council Meeting on February 25,2019 at 7:00 p.m. at City Hall, 7071 University Avenue NE, Fridley,Minnesota 55432,during the regularly scheduled City Council meeting. The City Council may hear argument from the parties or their counsel and may take evidence. The City Council may approve or deny the license. Counsel may represent the parties at the hearing and may submit any written arguments to Deb Skogen, City Clerk, 7071 University Avenue NE, Fridley, Minnesota 55432 prior to the hearing, with a courtesy copy to be provided by email to City Attorney Jay Karlovich at jkarlovich a?levander.com. If you have any questions,you may contact City Attorney Jay Karlovich at 651-451-1831. 633 SOUTH CONCORD STREET•SUITE 400 • SOUTH*SAINT 137L,MINNESOTA 55075 • 651-451-1831 •FAX 651-450-7384 OFFICE ALSO LOCATED IN WISCONSIN•WWW.LEVANDER.COM Ms. Zhang Page 2 February 15; 2019 Very truly yours, agnckk Cassandra C. Wolfgram Fridley Assistant City Attorney CCW/crl Enclosure c: Jay Karlovich, Fridley City Attorney 38 Attachment 2 From: Don Zhou To: Jay Karlovich Cc: Ryan Kaes5;Cassandra Wolfgrarp;Ski gen.Deb;Juliawang3616(aomail.conl Subject: RE:withdrawal of the application for Moore Massage Date: Thursday,February 21,2019 8:46:58 AM Attachments: withdraw request.odf Dear Mr. Karlovich, Ms Wolfgram and Ms Skogen; Here is the letter of request. Please let us know if we need to submit anything else. Thanks very much for your consideration Dongfa Zhou (ARN:0389180) Hongfa Law Firm 1395 Braun Ct. Eagan, MN 55123 (651)786-9581 hongfalawfirm@hongfalawfirm.com From:Jav Karlovich Sent:Wednesday, February 20, 2019 3:19 PM To: Don Zhou Cc: Ryan Kaess; Cassandra Wolfgram; 'Skogen, Deb (Deb.SkogenClfridleymn.gov)' Subject: FW:withdrawal of the application for Moore Massage Mr. Zhou, Thank you for your communications. At this point,there has been no decision made by the Fridley City Council regarding the pending license applications submitted on behalf of Tuina Massage, LLC dba Moore Massage; on behalf of Julia Wang; and/or on behalf of Yafang Zhang. City staff has provided notice of the February 25, 2019 public hearing regarding said pending license applications as well as the City staff's recommendations based upon the license application investigations performed by City staff. If the applicants want to withdraw their applications,the City(i.e. City Clerk Deb Skogen)would need some type of writings signed by the various license applicants as opposed to a telephone call or an email received from legal counsel. Jay P. Karlovich Fridley City Attorney 39 Jay P Karlovich I ! From: Don Zhou [mailto:hongfalawfirm@hongfalawfirm.com] Sent: Wednesday, February 20, 2019 2:39 PM To: Jay Karlovich Cc: Ryan Kaess; deb.skogen@fridleymn.gov Subject: withdrawal of the application for Moore Massage Dear Mr. Karlovich, This office has been retained by Julia Wang to resolve the issue of her application for massage license. We are in receipt of the letter dated February 15, 2019 (attached). We are disappointed at the decision. Instead of contesting the decision,we are asking if we can withdraw the application and ask that the item taken off the agenda for the 2/25/2019 city council meeting? Thanks very much and let us know. I have also called your office and left a voice message for you. Dongfa Zhou (ARN:0389180) Hongfa Law Firm 1395 Braun Ct. Eagan, MN 55123 (651)786-9581 hongfalawfirm@hongfalawfirm.com 40 Dongfa Zhou /471 AitO Attorney& Counselor at Law 1395 Braun Ct. Phone (651)786.9581 Eagan,MN 55123 fax'(651)925.0201 Email:hongfalawfimhongfalawfirm cum February 21, 2019 VIA EMAIL Dear City Attorney Mr. Karlovich and City Clerk Deb Skogen; My office represents Julia Wang and her business and Ms Yafang Zhang. Both Ms Wang and Zhang are requesting that their application for massage license as well as the business license by Ms Wang be withdrawn, as evidenced by their signed requests for withdrawal. They would ask that city to take the agenda item off this the agenda for the upcoming city council meeting. Thanks for your consideration and time. If you need anything further, please feel free to contact my office. Sincerely Dongfa Zhou (ARN 0389180) Hongfa Law Office 1395 Braun Ct. Eagan. MN 55123 651.786.9581 hongfalawfirm@hongfalawfirm.com CC: Jay Karlovich Deb Skogeg Julia Wang 41 a) tto ro V) co E ro C0 CL E . 4:5 1-13 •E OC 4--/ 0 CE O a) 7-6 E • L- = .{-1>' • >" 6 o CU >, c o — _le a) 0 C tCU ‘-• C a) no to 0 0 c ro 7Z, u — a E a5 u o -- o _c 4_1 NJ (1) _c CO CIJ C • • (1) CU (1) R3 CU 0 Ce .4-7J V-) 42 0 4? 0 •U 4J az tib 11 . cc! c o U � • S0 o v•••••4as 4. a.) v 743 Id) E N tp •V >, U g ti E a.0 0) I. Ci...1 "43 M3 N-:- A it o 0 3 0 te oNN„ Hi v rV c`d v ccs 6 43 Attachment 3 CITY OF FRIDLEY ANOKA COUNTY, MINNESOTA RESOLUTION NO. A RESOLUTION DENYING A MASSAGE THERAPY BUSINESS LICENSE TO TUINA MASSAGE, LLC d/b/a MOORE MASSAGE,DENYING A MASSAGE THERAPIST LICENSE TO JULIA WANG,AND DENYING A MASSAGE THERAPIST LICENSE TO YAFANG ZHANG WHEREAS,the City of Fridley has enacted an ordinance which requires licensing of businesses engaged in massage therapy and licensing of massage therapists; WHEREAS, on October 23, 2018, Julia Wang applied for a massage therapy business license for Tuina Massage, LLC d/b/a Moore Massage (hereinafter"Moore Massage") and a massage therapist license; WHEREAS, on the applications, Julia Wang denied that she had any massage license revoked or suspended within the last five (5) years and denied having any interest in a business which had a massage license revoked or suspended within the last five (5)years; WHEREAS, on the applications, Julia Wang alleged she had never been denied or revoked a massage therapy license in any other political subdivision, municipality, or state; WHEREAS,on the applications,Julia Wang alleged the only massage therapy business she had been engaged in within the last five (5)years was Tuina Massage in Otsego, Minnesota; WHEREAS,Yafang Zhang submitted a massage therapist license application with the employer listed as Moore Massage; WHEREAS, City staff completed an investigation and learned that Julia Wang was the owner and operator of Tao Massage in Blaine, Minnesota, from 2011 until 2017. WHEREAS, City staff learned the following about Julia Wang's operation of Tao Massage, Blaine: • On February 10, 2017, Junting He, massage therapist at Tao Massage, was charged with and later convicted of criminal sexual conduct-5th degree arising out of treatment of a client, in case number 02-CR-17-988. • On February 21, 2017, officers learned Julia Wang had an unlicensed massage therapist working for her. Julia Wang admitted the therapist had been working "for a couple weeks". Julia Wang was cited for operating with an unlicensed therapist and received a stay of adjudication. (Ex. A). • On February 22, 2017, the City of Blaine provided a notice of hearing on the suspension or revocation of Tao Massage's license for the unlicensed therapist. (Ex. B). Julia Wang voluntarily closed Tao Massage due to termination of her lease. (Ex. C). WHEREAS,Julia Wang did not disclose Tao Massage as a previous massage therapy business 44 Resolution No. 2018- on her license applications. WHEREAS, City staff completed an investigation and learned Julia Wang was the owner and operator of Orchid Massage Spa in Minneapolis, Minnesota, from 2015 until 2017. WHEREAS, City staff learned the following about Julia Wang's operation of Orchid Massage Spa, Minneapolis: • On November 8, 2016, District Supervisor Beth Roberts and Lead License Inspector Michele Harvet inspected Orchid Massage Spa. (Ex. E). • Ms. Roberts has extensive and particularized expertise and training involving sex trafficking and commercial sex businesses. Ms. Roberts observed extensive amount of food, cooking equipment, clothing, and personal effects in Orchid Massage Spa, and including in a room labeled as"lounge".Ms.Roberts concluded Orchid Massage Spa was being utilized for long-term and overnight residence by some of the workers, which is consistent with illegitimate massage parlors used for trafficking and commercial sex. (Ex. E). • On November 8, 2016, Ms. Roberts and Ms. Harvet observed building code violations and ordinance violations, including unable to provide identification to officers and unable to provide employee lists, in violation of City of Minneapolis code. (Ex. E). • December 2016 and February 2017, Orchid Massage Spa advertised on BackPage.com "beautiful Asian Masseuses (sic)", "the most beautiful masseuses in town" with photos of females in short dresses showing cleavage, "Hot Asian masseuses", "call our hot girl", and had heart icons on the ads. (Ex. D). BackPage.com was described in a 2016 U.S. Senate report as "the largest commercial sex services advertising platform in the United States."BackPage.com has since been seized by the FBI. • City of Minneapolis staff found reviews from customers posted on Rubmaps.com/erotic- massage from December 2016 and February 2017.In those reviews, individuals described sex services they received at Orchid Massage Spa. (Ex. D). • On May 30, 2017, a hearing was held on the denial of the Orchid Massage Spa license. During the hearing, Julia Wang was asked whether the workers in her massage parlor might engage in inappropriate sexual behavior with clients, and responded, "Yes, to be honest they might". Julia Wang admitted prior employees had engaged in illicit sexual conduct at her massage parlors. (Ex. E). • On August 22, 2017, the City Council denied the license-renewal application for Orchid Massage Spa. (Ex. F). • Julia Wang sought certiorari appeal to the Minnesota Court of Appeals, which was denied.Julia Wang, d/b/a Orchid Massage Spa v. City of Minneapolis,A17-1520(Minn. Ct. App. May 21, 2018). WHEREAS, Julia Wang did not disclose Orchid Massage Spa as a previous massage therapy business on her applications and did not disclose the denial of the massage therapy license for Orchid Massage Spa. WHEREAS, City staff completed an investigation and learned Julia Wang was the owner and operator of Sunny Massage in Columbia Heights, Minnesota, from 2016 until 2017. WHEREAS, City staff learned the following about Julia Wang's operation of Sunny Massage, Columbia Heights: 2 45 Resolution No. 2018- • On November 4, 2016, officers responded to Sunny Massage for suspicious activity complaint and found the business was closed at approximately 2:00 p.m. (Ex. G). • A female allowed the officers into the business.The female said she did not speak English and came from China two days ago. (Ex. G). • Officers found an advertisement for Sunny Massage on BackPage.com with pictures of Asian women and kiss icons. (Ex.H). • On November 17, 2017, Nicole Hunstad submitted a business license application as the new owner of Sunny Massage, now named Columbia Heights Massage. Julia Wang completed the application and signed as witness for Nicole Hunstad. (Ex. I.) Nicole Hunstad is listed as a reference on Julia Wang's massage therapist license. WHEREAS, Julia Wang did not disclose Sunny Massage as a previous massage therapy business on her applications or her relationship with Columbia Heights Massage. WHEREAS, City staff completed an investigation and learned Julia Wang was the owner and operator of Tuina Massage in Rochester, Minnesota, from 2016 until 2017. WHEREAS, City staff learned the following about Julia Wang's operation of Tuina Massage, Rochester: • Julia Wang was the owner and operator, along with Ling Donnay. The application provided that Tuina Massage was a partnership but only listed Ling Donnay. Julia Wang signed the lease for Tuina Massage and identified herself as a partner in the business to the City of Rochester in 2017. (Ex.J). • On March 27, 2017, Juan Zhang, massage therapist at Tuina Massage, was arrested for prostitution. (Ex. J). • On March 27, 2017, officers noted visual evidence that individuals were living inside Tuina Massage. (Ex. J). • On May 10, 2017, Xiuxia Pan applied for a massage therapist license to work at Tuina Massage. (Ex. J). • On May 17, 2017, officers learned Xiuxia Pan was working as a massage therapist at Tuina Massage without an approved license and was cited. (Ex. J). • During the background investigation for Xiuxia Pan's massage therapist license,the City of Rochester learned that on February 22, 2017, Xiuxia Pan was arrested in Plymouth, Minnesota for prostitution. (Ex. K). • On July 5, 2017, the City of Rochester had a hearing on the revocation or suspension of the Tuina Massage business license and the massage therapist license for Juan Zhang. (Ex. J). • At the hearing, Officer Arzola of the Rochester Police Department stated that "Tuina Massage present[ed] an ongoing concern for the Rochester Police Department."(Ex. J). • On July 5, 2017, the City of Rochester revoked the massage therapy business license of Tuina Massage for allowing individuals to live on the premises, in violation of zoning code; for acts of prostitution occurring on the premises; and for permitting an unlicensed person to perform massage therapy. The City also suspended the massage therapist license of Juan Zhang. (Ex.J). • Despite the revocation, on August 23, 2017, there was a BackPage.com ad for"Oriental Massage", the prior name of Tuina Massage. The ad matched a prior Tuina Massage BackPage.com ad from January 2017, including the phone number, but with a new 3 46 Resolution No. 2018- location matching that of Oriental Massage. (Ex. K). • Oriental Massage was owned by Ling Donnay,the partner of Julia Wang. (Ex.N). • On August 25, 2017, Yi Lan Wang submitted an application for Tuina Massage as the sole member/owner. Yi Lan Wang listed her home address as rental property then-owned by Gary Donnay, husband of Ling Donnay. Yi Lan Wang applied in the clerk's office with Ling and Gary Donnay. City staff noted that Yi Lan Wang was not proficient in English and required translation. After the application was submitted, an individual identifying herself as"Yi Lan Wang"began calling. This individual was speaking solely in English and was understandable. Follow up emails about the application were signed by"Julia Wang". (Ex. K). • As of October 16,2017,the website for Tuina Massage was still active and indicated the business was open. (Ex. K). • On October 30, 2017, Julia Wang spoke on behalf of Yi Lan Wang's massage therapist and business applications at a hearing. (Ex. L). • On October 30,2017,City staff,with the input of the Rochester Police Department,stated that the"working and living conditions indicate a possibility of human trafficking for the therapists working in the businesses owned and operated by Ms. Donnay." (Ex.N.) • Every therapist who applied for an individual license to work at either Tuina Massage or Oriental Massage had used either the business address for their home address or used the address of one of Gary Donnay's properties. (Ex. N.) • On October 30, 2017, the City of Rochester passed a resolution denying Yi Lan Wang's application for a massage business license and massage therapist license. (Ex. M). WHEREAS,Julia Wang did not disclose Tuina Massage as a prior massage therapy business on her applications and did not disclose the revocation of the massage therapy license for Tuina Massage. WHEREAS, Julia Wang did not disclose her association with Lan's Spa, Rochester or her association with Oriental Massage, Rochester on her applications. WHEREAS, City staff completed an investigation and learned Julia Wang was the owner and operator of Dynasty Massage in Spring Lake Park, Minnesota, from 2016 until 2018. WHEREAS, City staff learned the following about Dynasty Massage, Spring Lake Park: • A search of Dynasty Massage on the Minnesota Secretary of State website revealed a principal place of business as 7777 Highway 65, Spring Lake Park, Minnesota, the physical location of Dynasty Massage. • The nameholder of Dynasty Massage, Xiaoxin Qu, provided a listed address of 9423 Tyler St.NE,Blaine,Minnesota,which is recorded as residential property owned by Julia Wang. • Xiaoxin Qu previously held a massage therapist license in the City of Fridley at Moore Massage, owned by Tuina Massage, LLC, with Julia Wang as sole proprietor. • Xiaoxin Qu is also the nameholder of Xin Massage, with a principal place of business as 9423 Tyler St. NE, Blaine, Minnesota, residential property owned by Julia Wang, and a mailing address of 7777 Highway 65, Spring Lake Park, Minnesota • A search of Tuina Massage, LLC on the Minnesota Secretary of State website lists the manager as Julia Wang and also provides a principal address of 7777 Highway 65, Spring Lake Park, Minnesota. 4 47 Resolution No. 2018- WHEREAS, Julia Wang did not disclose Dynasty Massage as a previous massage therapy business on her applications or her relationship with Xin Massage. WHEREAS, City staff completed an investigation and learned of the following suspicious activity: • August 25, 2017: Julia Wang, sole member of Tuina Massage, LLC, entered into a membership conveyance agreement with Yi Lan Wang conveying all of Tuina Massage, LLC's interest in Tuina Massage, Rochester, Minnesota to Yi Lan Wang. (Ex.0). • In the agreement, Julia Wang stated Tuina Massage, LLC had previously sold all its interest in Orchid Massage Spa, Minneapolis; Dynasty Massage, Spring Lake Park; Moore Massage, Fridley; Tao Massage, Otsego; and Sunny Massage, Columbia Heights massage therapy locations to Shan, LLC and Dynasty, LLC, and the only remaining business owned by Julia Wang, sole proprietor of Tuina Massage, LLC, was Tuina Massage, Rochester. (Ex. 0). • Moore Massage, Fridley was posted on RubMaps.com and advertised as an erotic massage parlor. WHEREAS, following a background investigation, the Fridley Police Department recommended to deny the massage therapy business license for Moore Massage and the massage therapist license for Julia Wang for failure to disclosure ownership and/or operation of massage therapy businesses and massage therapist licenses. WHEREAS, Fridley City Code Section 125.05.1.A(7) provides that "Any falsification of information on the license application shall result in the denial, suspension or revocation of the license;" WHEREAS, Fridley City Code Sections 125.05.1.B(6), 125.05.2.K, and 125.05.2.L require all applicants for a massage therapist business license or massage therapist license to disclose whether the applicant has ever been engaged in the operation of a massage therapy business or worked as a massage therapist; WHEREAS, Fridley City Code Sections 125.05.1.A(9), 125.05.1.B(8), and 125.05.2.G require all applicants for a massage therapy business license or massage therapist license to disclose whether the applicant has had an interest in a massage license that was revoked or suspended within the last five (5) years; WHEREAS, Fridley City Code Sections 125.05.2.K and 125.05.2.L require all applicants for a massage therapist license to disclose the denial, suspension,revocation, or non-renewal of any massage- related license or massage business license; WHEREAS, Fridley City Code Section 125.10 provides for the following bases to deny a license, among others: • Subd. 1: "The applicant is a partnership, corporation, or other entity which has in its employ or is owned by any persons convicted of criminal prostitution, similar sex offenses, or other crimes directly related to the offering of massage therapy services or the running of a Massage Therapy Business;" • Subd. 4: "If the holder of a business license fails to maintain with the City a current list of all employees of such licensed premises. The list for the establishment shall include 5 48 Resolution No. 2018- all massage therapists licensed under this chapter;" • Subd. 6: "There is any fraud, deception, or misstatement on the license application;" • Subd. 7: "The owner, manager, lessee, or their employees or any massage therapist, are convicted of any ordinance violation or crime occurring on the licensed premises;" • Subd. 10: "The licensed activity is conducted in such a manner as to constitute a breach of the peace, a menace to the health, safety, or welfare of the public, or a disturbance of the peace or comfort of the residents of the City, upon recommendation of the police department or an appropriate City official;" • Subd. 12: "Based on the findings of a background investigation, granting a license would be a menace to the safety, health, morals, or welfare of the public;" • Subd. 14: "The applicant or licensee is not the real party having an interest in the enterprise." WHEREAS, Fridley City Code Section 125.11.3 requires a massage therapist to be employed by, affiliated with, or own a massage therapy business licensed by the City; WHEREAS, the Fridley City Council hereby makes the following Findings of Fact to support its motion to deny the massage therapist business license of Tuina Massage, LLC d/b/a Moore Massage, the massage therapist license of Julia Wang, and the massage therapist license of Yafang Zhang: FINDINGS OF FACT 1. Julia Wang stated on her applications the only massage therapy business she has engaged in within the last five(5) years was Tuina Massage in Otsego, Minnesota. 2. An investigation revealed Julia Wang was engaged in the following non-disclosed massage therapy businesses within the last five (5)years: • Tao Massage in Blaine, Minnesota, from 2011 until 2017; • Orchid Massage Spa in Minneapolis, Minnesota, from 2015 until 2017; • Sunny Massage in Columbia Heights, Minnesota, from 2016 until 2017; • Tuina Massage in Rochester, Minnesota, from 2016 until 2017; • Dynasty Massage in Spring Lake Park, Minnesota, from 2016 until 2018; 3. An investigation revealed Julia Wang continues to have a relationship with and/or interest in Dynasty Massage and Xin Massage. 4. An investigation revealed on August 25, 2017, Julia Wang sold her interest in Tuina Massage, Rochester, to Yi Lan Wang, and indicated at that time that Tuina Massage, LLC had sold all interest in its massage therapy businesses. (Ex. 0). 5. An investigation revealed Julia Wang was involved in Yi Lan Wang's massage therapy business license application for Lan's Spa and massage therapist license and acted as a witness for Yi Lan Wang as hearing on the licenses. (Ex. L). 6. An investigation revealed Julia Wang completed and witnessed the massage therapist business license application and massage therapist license application for Nicole Hunstad for Columbia Heights Massage, Columbia Heights, formerly Sunny Massage. (Ex. I). 6 49 Resolution No. 2018- 7. The City finds Julia Wang has changed ownership of her massage therapy businesses to hide her interest, ownership, management, and/or control of massage therapy businesses but Julia Wang continues to have an interest in, own, manage, and/or control Dynasty Massage, Spring Lake Park; Xin Massage, Blaine; Tuina Massage, Rochester; Lan's Spa, Rochester; Sunny Massage, Columbia Heights; and/or Columbia Heights Massage, Columbia Heights. 8. The City finds Julia Wang has an interest in, ownership in, management of, and/or control of Dynasty Massage, Spring Lake Park; Xin Massage, Blaine; Tuina Massage, Rochester; Lan's Spa, Rochester; Sunny Massage, Columbia Heights; and/or Columbia Heights Massage, Columbia Heights. 9. Julia Wang denied on her massage therapy business license application that she had any massage license revoked or suspended within the last five (5) years, denied having any interest in a business which had a massage license revoked or suspended within the last five (5) years, and denying ever having a massage therapy license in any other political subdivision, municipality, or state denied or revoked. 10. An investigation revealed the following denials, revocations, or non-renewals: • July 5, 2017: revocation of Tuina Massage license by the City of Rochester(Ex.J); • August 31, 2017: denial of Orchid Massage Spa license by the City of Minneapolis (Ex. F), aff, A17-1520 (Minn. Ct. App. May 21, 2018). 11. The investigation further revealed that Julia Wang voluntarily closed Tao Massage, Blaine after the City of Blaine provided notice of a hearing to revoke or suspend the massage therapy business license. (Exs. B, C). 12. Julia Wang falsified her applications by failing to disclose prior massage therapy businesses and massage therapy licenses, failing to disclose her interest in massage therapy businesses, and failing to disclose massage therapy license revocations, suspensions, denials, and/or non- renewals. 13. The City finds that the failure to disclose Tao Massage, Blaine; Orchid Massage Spa, Minneapolis; Sunny Massage, Columbia Heights; Tuina Massage, Rochester; and Dynasty Massage, Spring Lake Park constitutes fraud, deception, and/or misstatement on the application in violation of City Code Section 125.10.6. 14. The City finds that the failure to disclose the license revocation of Tuina Massage,Rochester and denial of the license for Orchid Massage Spa, Minneapolis constitutes fraud, deception, and/or misstatement on the application in violation of City Code Section 125.10.6. 15. An investigation revealed the following criminal activities occurred at massage therapy businesses owned or operated by Julia Wang: • February 10, 2017, Tao Massage, Blaine: criminal sexual conduct-5th degree against a massage client; • March 27, 2017, Tuina Massage, Rochester: prostitution. (Ex. J.) 7 50 Resolution No. 2018- 16. The investigation further revealed that Julia Wang employed Xiuxia Pan who had been charged with prostitution in Plymouth, Minnesota. (Ex. K.) 17. Julia Wang admitted that she has terminated employees due to illicit sexual conduct at her massage therapy businesses. (Ex. E.) 18. When asked whether her employees may engage in inappropriate sexual behavior with clients, Julia Wang responded"Yes,to be honest they might". (Ex. E.) 19. The licensing provisions of Chapter 125 are to"protect legitimate businesses,to prevent criminal activity, and to protect the health and welfare of the community." 20. Criminal sexual conduct and prostitution are criminal activity aimed to be prevented by Chapter 125. 21. Criminal sexual conduct and prostitution are a menace to the safety, health, morals, and/or welfare of the public. 22. If occurring within the City of Fridley, the criminal actions would be a basis for denial, suspension, or revocation of the massage therapy business license and massage therapist license under City Code Sections 125.10.1 and 125.10.7. 23.An investigation revealed massage therapy businesses owned or operated by Julia Wang had multiple ordinance violations, including: • November 8, 2016, Orchid Massage Spa, Minneapolis, Minnesota: building code violations and unable to produce the list of employees and copies of legal identification (Ex. E); • February 14, 2017, Tao Massage, Blaine, Minnesota: unlicensed massage therapist working and failure to display licenses (Ex. A); • May 17, 2017, Tuina Massage, Rochester, Minnesota: unlicensed massage therapist working. (Ex. J.) 24. According to Fridley City Code Section 125.01.2.C, massage therapist licenses and massage therapy business licenses are necessary to "minimize the risk that such businesses and person will facilitate prostitution and other criminal activity in the community". 25. Specifically, unlicensed therapists were aimed to be prevented by Chapter 125. 26. Unlicensed therapists are a menace to the safety, health, morals, and/or welfare of the public, specifically, because it may facilitate prostitution and other criminal activity. 27. In particular, Julia Wang employed an unlicensed therapist who had been charged with prostitution. (Exs. J, K.) 28. If occurring within the City of Fridley, the ordinance violations would be a basis for denial, suspension, or revocation of the massage therapy business license and massage therapist license under City Code Sections 125.10.4, 125.10.7, and/or 125.10.8. 8 51 Resolution No. 2018- 29. An investigation revealed evidence of employees living in massage therapy businesses owned by Julia Wang, including Orchid Massage Spa, Minneapolis and Tuina Massage, Rochester. (Exs. E, J.) 30. The City finds that residential habitation in commercial property would be in violation of the zoning code and would be a menace to the safety, health, morals, and/or welfare of the public. 31. An investigation revealed concerns massage therapy businesses owned or operated by Julia Wang or her associates were being used for commercial sex or human trafficking, including Orchid Massage Spa, Minneapolis; Tuina Massage, Rochester; and/or Oriental Massage, Rochester. (Exs. E, K,N.) 32. Commercial sex and human trafficking are criminal activity aimed to be prevented by Chapter 125. 33. Commercial sex and human trafficking are a menace to the safety,health,morals, and/or welfare of the public. 34. If occurring within the City of Fridley, commercial sex and human trafficking would be a basis for denial, suspension, or revocation of the massage therapy business license and massage therapist license under City Code Section 125.10.1 and 125.10.7. 35. The City finds that granting a license to Moore Massage would be a menace to the safety,health, morals, or welfare of the public in violation of City Code Section 125.10.12, specifically, that based on a background investigation,multiple massage therapy businesses owned or operated by Julia Wang have been investigated for suspicious activity; investigations by police revealed evidence of residential habitation within the commercial properties; at least two unlicensed massage therapists were working in massage therapy businesses owned by Julia Wang; at least one massage therapist was cited for prostitution occurring in a massage therapy business owned by Julia Wang; at least one massage therapist was convicted of criminal sexual conduct arising out of his work at a massage therapy business owned by Julia Wang; Julia Wang employed at least one individual who was cited for prostitution in another jurisdiction; Julia Wang has acknowledged illicit sexual activity has occurred in her massage therapy businesses;the massage therapy businesses have presented an ongoing issue for the local jurisdictions; and police departments in at least two jurisdictions have indicated that the living and working conditions in massage therapy businesses owned, operated, or related to Julia Wang have raised concerns of human trafficking and/or illicit commercial sex. NOW THEREFORE,IT IS HEREBY RESOLVED: 1. That the City Council hereby denies the massage therapy business license application of Moore Massage on the basis that there was falsification of information,in violation of City Code Section 125.05.1.A.(7), specifically, Julia Wang's failure to disclose her ownership and/or operation of Tao Massage, Blaine; Orchid Massage Spa, Minneapolis; Sunny Massage, Columbia Heights; Tuina Massage, Rochester; and Dynasty Massage, Spring Lake Park. 2. That the City Council hereby denies the massage therapy business license application of Moore 9 52 Resolution No. 2018- Massage on the basis that there was falsification of information, in violation of City Code Section 125.05.1.A.(7), specifically, Julia Wang's failure to disclose the revocation of her massage therapy business license for Tuina Massage, Rochester and the denial of her massage therapy license for Orchid Massage Spa, Minneapolis. 3. That the City Council hereby denies the massage therapy business license application of Moore Massage on the basis that there was fraud, deception, or misstatement on the license application, in violation of City Code Section 125.10.6, specifically, Julia Wang's failure to disclose her ownership and/or operation of Tao Massage, Blaine; Orchid Massage Spa, Minneapolis; Sunny Massage, Columbia Heights; Tuina Massage, Rochester; and Dynasty Massage, Spring Lake Park. 4. That the City Council hereby denies the massage therapy business license application of Moore Massage on the basis that there was fraud, deception, or misstatement on the license application, in violation of City Code Section 125.10.6, specifically, Julia Wang's failure to disclose the revocation of her massage therapy business license for Tuina Massage, Rochester and the denial of her massage therapy license for Orchid Massage Spa, Minneapolis. 5. That the City Council hereby denies the massage therapy business license application of Moore Massage on the basis that granting a license would be a menace to the safety, health, morals, or welfare of the public in violation of City Code Section 125.10.12, specifically, that based on a background investigation,multiple massage therapy businesses owned or operated by Julia Wang have been investigated for suspicious activity; investigations by police revealed evidence of residential habitation within the commercial properties; at least two unlicensed massage therapists were working in massage therapy businesses owned by Julia Wang; at least one massage therapist was cited for prostitution occurring in a massage therapy business owned by Julia Wang; at least one massage therapist was convicted of criminal sexual conduct arising out of his work at a massage therapy business owned by Julia Wang; Julia Wang employed at least one individual who was cited for prostitution in another jurisdiction; Julia Wang has acknowledged illicit sexual activity has occurred in her massage therapy businesses;the massage therapy businesses have presented an ongoing issue for the local jurisdictions; and police departments in at least two jurisdictions have indicated that the living and working conditions in massage therapy businesses owned, operated, or related to Julia Wang have raised concerns of human trafficking and/or illicit commercial sex. 6. That the City Council hereby denies the massage therapy business license application of Moore Massage on the basis that Tuina Massage,LLC,has sold its interest and does not have an interest in the enterprise, as required by City Code Section 125.10.14. 7. That the City Council hereby denies the massage therapist license application of Julia Wang on the basis that the City Council has denied the massage therapy business license of Moore Massage,and City Code Section 125.05.02.J.(1)requires a massage therapist to be affiliated with, employed by, or own a licensed massage therapy business within the City. 8. That the City Council hereby denies the massage therapist license application of Julia Wang on the basis that there was fraud, deception, or misstatement on the license application, in violation of City Code Section 125.10.6,specifically,Julia Wang's failure to disclose her ownership and/or operation of Tao Massage, Blaine; Orchid Massage Spa, Minneapolis; Sunny Massage, Columbia Heights; Tuina Massage, Rochester; and Dynasty Massage, Spring Lake Park. 10 53 Resolution No. 2018- 9. That the City Council hereby denies the massage therapist license application of Julia Wang on the basis that there was fraud, deception, or misstatement on the license application, in violation of City Code Section 125.10.6, specifically,Julia Wang's failure to disclose the revocation of her massage therapy business license for Tuina Massage, Rochester and the denial of her massage therapy license for Orchid Massage Spa, Minneapolis. 10. That the City Council hereby denies the massage therapist license application of Julia Wang on the basis that granting a license would be a menace to the safety,health,morals,or welfare of the public in violation of City Code Section 125.10.12, specifically, that based on a background investigation, multiple massage therapy businesses owned or operated by Julia Wang have been investigated for suspicious activity; investigations by police revealed evidence of residential habitation within the commercial properties; at least two unlicensed massage therapists were working in massage therapy businesses owned by Julia Wang; at least one massage therapist was cited for prostitution occurring in a massage therapy business owned by Julia Wang; at least one massage therapist was convicted of criminal sexual conduct arising out of his work at a massage therapy business owned by Julia Wang; Julia Wang employed at least one individual who was cited for prostitution in another jurisdiction; Julia Wang has acknowledged illicit sexual activity has occurred in her massage therapy businesses; the massage therapy businesses have presented an ongoing issue for the local jurisdictions; and police departments in at least two jurisdictions have indicated that the living and working conditions in massage therapy businesses owned, operated, or related to Julia Wang have raised concerns of human trafficking and/or illicit commercial sex. 11. That the City Council hereby denies the massage therapist license application of Yafang Zhang on the basis that the City Council has denied the massage therapy business license of Moore Massage,and City Code Section 125.05.02.J.(1)requires a massage therapist to be affiliated with, employed by, or own a licensed massage therapy business within the City. PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF FRIDLEY THIS 25TH DAY OF FEBRUARY 2019. Scott J. Lund, Mayor Attest: Debra A. Skogen, City Clerk 11 54 Resolution No. 2018- Exhibits: A Tao Massage, Blaine Police Report, Incident 17039073 B Tao Massage, Blaine Notice of Hearing, February 22, 2017 C Tao Massage, Blaine Emails, February 27, 2017 D Orchid Massage Spa, Notice of Denial Recommendation, February 6, 2017 Minneapolis E Orchid Massage Spa, Findings of Fact,June 29, 2017 Minneapolis F Orchid Massage Spa, Council Vote, August 31, 2017 Minneapolis G Sunny Massage, Police Report, Incident 16250953 Columbia Heights H Sunny Massage, BackPage.com Ad Columbia Heights I Sunny Massage, Memorandum, December 4, 2017 Columbia Heights J Tuina Massage, Findings of Fact,July 5, 2017 Rochester K Tuina Massage, Lan's Spa Memorandum, October 30, 2017 Rochester L Tuina Massage, Lan's Spa Hearing Minutes, October 30, 2017 Rochester M Tuina Massage, Resolution 482-17 Rochester N Tuina Massage, Healthy Way Memorandum, October 30, 2017 Rochester O Membership Conveyance Agreement, August 25, 2017 55 Blaine Police Department 10801 Town Square Dr NE Blaine,MN 55449 763-785-6168 Case#:17039073 Incident#:17039073 Event 169 NORTHTOWN DR NE BLAINE,MINNESOTA 55434 Description of Incident: ORDINANCE VIOLATION Reported Date: 02/14/2017 00:00:00 Time Assigned: 1430 Time Arrived: 1430 Time Cleared: 1500 Earliest Date: 02/21/2017 15:18:00 Related Case Number/Citation: 020217012511 List Additional Paperwork AND CITATION Copy to:: Case Summary: UNLICENSED MASSAGE THERAPIST WORKING AT BUSINESS. ENTERPRISE OWNER CITED:BY MAIL. Persons involved(2) ZHANXIAO,YU D08: 04/07/1958 Age: 58 Race: ASIAN Sex: FEMALE Address: 5125 SUNNYBROOK DR City: PADUCAH State: KENTUCKY Tip Code: 42001 Country: USA(UNITED STATES OF AMERICA) Eye Color. Height: WANG,JULIE DOB: 09/27/1977 Age: 39 Race: ASIAN Sex: FEMALE Address: 12133 7TH ST NE City: BLAINE State: MINNESOTA Zip Code: 55434 Home Phone: (763)-464-5806 Work Phone: (763)-313-1918 Eye Color: Height: Weight Misc Associated Names Data(1) Printed On11129/2018 Page 1 of 2 Printed By Wachtler,Terry Blaine Police..Department 10801 Town Square Dr NE Blaine,MN 55449 763-785-6168 Case#:17039073 Incident#:17039073 TAO MASSAGE Address: 169 NORTHTOWN DR NE City: BLAINE State: MINNESOTA Zip Code: 55434 Offenses(1) 22.431.E MASSAGE THERAPIST-EMPLOYMENT OF UNLIC THERAPIST PROHIBITED 9000 MISC CODE 9999 Offense Status: ASSISTED/ADVISED Felony/Misdemeanor: MISDEMEANOR Narrative(1) ORIGINAL OFFICER NARRATIVE Carlson,Matthew Badge 150 DPD00010 02/21/2017 RESPONDED TO TAO MASSAGE ALONG WITH CID DETECTIVE G. LEE IN ORDER TO EXECUTE A SEARCH WARRANT RELATED TO CASE 17031018. WHILE AT THE BUSINESS (IN PLAIN CLOTHES) I WAS APPROACHED BY ZHANXIAO AND ASKED IF I WANTED A MASSAGE. I RECOGNIZED THAT THERE WAS NO LICENSE FOR ZHANXIAO POSTED. I INQUIRED WITH THE OWNER, JULIE WANG, WHO WAS CONTACTED AND RESPONDED TO THE BUSINESS, ABOUT THE LICENSE. SHE ADMITTED TO ME AND DETECTIVE LEE THAT ZHANXIAO HAD BEEN WORKING AT THE BUSINESS FOR "A COUPLE OF WEEKS" WITHOUT THE REQUIRED LICENSE. ZHANXIAO WAS IDENTIFIED BY A KENTUCKY ID CARD THAT SHE PROVIDED. WANG IS BEING MAILED CITATION NUMBER 020217012511 FOR THE ORDINANCE VIOLATION. CITY CLERK'S OFFICE IS BEING NOTIFIED. Badge number: D150 Officer(2) APPROVING Officer: Carlson,Matthew Badge 150 02/21/2017 16:23:52 (DPD00010) REPORTING Officer: Carlson,Matthew Badge 150 02/21/2017 16:23:00 (DPD00010) Printed On 11/29/2018 Page 2 of 2 Printed By Wachtler,Terry 57 A_ 10501 Town Square Drive NE Blaine_ 554494101 'I City of lam e ! un��ci.blainenin.us February 22,2017 Tao Massage ATTN: Julia Wang 398 Northtown Drive NE #D19 Blaine,MN 55434 SUBJECT: Notice and Hearing of License Suspensions/Revocations • This will serve as follow-up to the Blaine Police Citation ICR# 17039073 of an unlicensed massage therapist working at a business,Tao Massage,398 Northtown Drive NE,Suite D#19. City Code states: Sec.22-424.-License required;number of licenses. (b)Massage therapist license. It shall be unlawful for any individual to practice, administer,or provide massage services to the public for consideration within the city without first having obtained a massage therapist Iicense from the city pursuant to this section. Sec.22-431. -License restrictions. (e)Employment of unlicensed massage therapists prohibited No therapeutic massage enterprise shall employ or use any person to perform massage who is not licensed as a therapeutic massage therapist under this section,unless the person is specifically exempted from obtaining a therapist license in section 22- 425 of this Code. Notice of a hearing before a City of Blaine Hearing Officer for consideration of suspension and/or revocation of these licenses is provided for in City Code: Sec.22-434.-Sanctions for license violations. (a)Suspension or revocation. The city council may impose an administrative penalty,suspend or revoke a license issued pursuant to this section, at its discretion,for: -(3)Any violation of this section or state law. ;(4)A violation by any licensee or individual that is directly related to the occupation or business licensed as defined by Minn. Stat. §364.03,subd.2. (5) Conducting the licensed business or occupation in an unlawful manner or in such a manner as to •constitute a breach of the peace or to constitute a menace to the health,safety, or general welfare of A L.!-the community. if 51 4 k1 t 9 sp a S{ .1�' :' a�" 6:5' lid-c " �' - y F:1'• f '"4 r ,, r r" .rte 'r 4 s„»��`[ ��..'�-� .;:..4444 - ='_ _ r^ 58 r��f, �,F4,/* r i tj yrrr, fi 'r :04, � • Based on the alleged Blaine City Code violations outlined above by the Blaine Police Department in ICR - #17039073 a suspension and/or revocation hearing by a hearing officer will be held on Wednesday, March 8,2017,at 2:30 p.m. at Blaine City Hall, 10801 Town Square Drive INIE,second floor in the:City Manager's Conference Room. Please confi i attendance by contacting me directly at 763-785-6124. /' ' � / atherine . Sorensen, CMC City Clerk Enclosure cc: Chris Olson,Police chief Matt Carlson,Police Sergeant Patrick Sweeney,City Attorney • • 59 Sorensen,Cathy: From: Julia Wang ,jufiawang3616@gmail corn> Sent: Monday,February 27,2017 2:23 PM To: Sorensen,Cathy Subject: Fwd:Tao Massage Termination letter Attachments: scan0001.pdf,ATT00001.htm Hello Catherine, Attached is the termination letter from Northtown mall. Please also let me know about Junting He's hearing.He called me this morning to tell me he also received a letter from you. Can he bring a Chinese interpreter with him or the city will get one for him. Thank you, Julia Subject: Tao Massage Termination letter Hello Catherine, I received the letter from you about the hearing date change.I get the termination letter from Northtown Management on Feb 15. We are going to close Tao massage soon. Thank you, Julia 1 *7 , r Licenses and ConsumerSenuces 350 S.5th St.-Room 1 °F Minneapolis,MN 55415 Minneapolis TEL 612.6731030 City of Lakes www.minneapolismn.gov February 6,2017 Orchid Massage Spa Inc. DBA:Orchid Massage Spa Attn:Julia Wang-owner 4933 34th Ave.So. Minneapolis,MN 55417 Re:Massage and Bodywork Establishment License Renewal for Orchid Massage Spa 4933 34th Ave.So, Minneapolis MN 55417 Dear Julia Wang: We have reviewed your renewal application for Orchid MassageSpa. This letter is being sent to provide you notice of our'recommendation to the Minneapolis City Council for denial of this license.This is based on the following violations: 1. Licensee in violation of MCO 286.80—"Inspection by city officers and identification_ of employees." (a) During any hours in which any person present on the licensed premises,all massage and bodywork establishments shall be open to inspection by city health,fire,zoning, building and license inspectors,police officers and any other appropriate city official. Upon demand by any city officer,any person engaged in.providing services in any licensed Premises shall identify himself/herself giving his/her true legal name and. his/her correct address. (b) Employment records,including copies of documents used to determine the employee, agent or contractor is eighteen(18)years of age or older,for each employee employed by a licensed massage and bodywork establishment shall be kept at the licensed premises and available for immediate review upon request of a city officer. Documents that are acceptable forms of identification can be found in Minnesota Rules Part 7410.0100. During an inspection on 11-8-16 Inspectors requested the employee who was working at Orchid Massage Spa—4933 34th Ave.So.for identification which she was unable to provide.This female employee was sitting behind the front reception desk of the establishment and speaking on the company phone.She greeted City inspectors by saying, "Hello,can I help you?"After the Inspectors identified themselves she stated, "I'm first one here"and"!have limited English."She did not have any identification with her and said she was from China. There was a male customer in a massage room during the inspection. ililv 6 117 f/ililil� . This was confirmed when the massage room door was opened by a female employee with a male visible in the room as City inspectors identified themselves.The door was then quickly closed shut..As part of the licensing conditions for a massage establishment to operate a current fist of employed personnel must be on the premise and available to Inspectors upon request This required.employee•list was not on the premise nor did the employee provide identification as requested. 2. Licensee in violation of MCO 259.250(2)--"Responsibility of the licensee to maintain and operate the business in compliance with all applicable laws and ordinances, including the Zoning,Fire,Environmental Health,Environmental Management, License,Food,liquor,Housing and Building Codes." On the 11-8-16 inspection the building exterior had a window boarded with plywood which violates city building code—MCO 85.100 Exterior Maintenance of Buildings. On approximately November 23,2016 Julia Wang came into the City of Minneapolis License& Consumer Services and brought her Minnesota drivers license and two other MN DLs with the names of Jianping Wan and Mei Mei Mak who Wang stated were employees of Orchid Massage Spa. Employment applications were not provided.She explained the woman who was at the desk of Orchid Massage was a friend and was only there a few minutes while she was out shopping. When asked about the boarded up window Wang stated the window had been repaired and she would send a picture of the repaired window to District Supervisor Beth Roberts'email. The email was provided to her with a business card by District Supervisor Roberts. Upon inspection of the outside of the business on December 15th and December 23rd the window was still boarded with plywood.Wang did not send an email to District Supervisor Roberts regarding the repair of this window. 3. 'Minneapolis Code of Ordinance 286.100 Unlawful Acts On December 27,2016 and February 5,2017 advertisements were found on BackPage.com for Orchid Massage Spa showing photos of Asian females allegedly working at Orchid Massage.The description in the Dec. 27,2016 ad reads, "Welcome to check out our brand new store with beautiful Asian Masseuses.At Orchid Massage Spa you will enjoy the best massage EVER!We have the most beautiful masseuses in town..."The photos included In the advertisement have Asian females in short dresses showing cleavage.The advertisement further states, "Don't wait, let us know what time to except you, Call 651410-0470:)"The February 5,2017 BackPage.com advertisement states, "Hot Asian masseuses.$10 off plus Private futon room.Free Shower.(Heart Icons inserted)651-410-0470."Further into the ad it reads, "Treat your body today,call our hot girl at 651-410-0470."Reviews from customers are posted on Rubmaps.com/erotic-massage on both dates.In these reviews individuals describe sex services they received in an online coded language. - This information found through the investigation coincides with residents in the neighborhood making complaints to.City.Councilman Andrew Johnson regarding various males parking their _ vehicles blocks from Orchid Massage and then walking into the establishment.This occurrs when parking is available directly in front of the business.This is reported by residents at all hours of the day.This was seen on the day of inspection of 11-8-16 by Inspector Harvet and Supervisor Roberts. • 62 Orchid Massage Spa advertises exclusively on BackPage.com which is an online advertising site, similar to Craig's List. But,it is also notorious for hosting an adult and massage section that has been found complicit through 2016 U.S.Senate hearings that it intentionally provided a platform for online sex and human trafficking.The 2016 U.S.Senate report described BackPage as"the largest commercial sex services advertising platform in The United States." Based on the information in your advertisement in backpage.corn and reviews of Orchid Massage Spa on rubmaps.com/erotic-massage,our office concludes that you have violated the City of Minneapolis Ordinance 286.100 Unlawful Acts. It is the recommendation of the City of Minneapolis License&Consumer Services Division to deny renewal of the massage establishment license for Orchid Massage Spa—4933 34th Ave.So.Mpls, MN 55406. For these reasons,it would not be in the public interest to recommend approval on this license application. You may find resolution for this matter in one of two ways: 1. Withdraw your license application. • 2. You may opt to have the entire case presented to an administrative hearing officer for an evidentiary hearing.The Minneapolis City Council would still determine if your license application should be approved or denied upon receiving the report and recommendation from the administrative hearing officer. Please contact us by February 28,2017 with your decision. For further questions,please contact District Supervisor Beth Roberts at 612-673-2627,or myself at 612-673-3902. Sincerely, ric1/416_, Gt.,4 Wilson, Manager Licenses and Consumer Services • 63 STATE OF MINNESOTA EVIDENTIARY HEARING CITY OF MINNEAPOLIS BUSINESS LICENSING DIVISION In the Matter of the Massage and Bodywork License Renewal Application of Orchid Massage FINDINGS OF FACT, Spa, Inc. &Julia Wang d/b/a Orchid Massage Spa. CONCLUSIONS OF LAW& LICENSING RECOMMENDATION Hearing Date: May 30, 2017 This matter came on for hearing before Minneapolis Administrative Hearing Officer Michael Sindt on May 30, 2017 at 9:00 a.m. in Room IA of Minneapolis City Hall pursuant to Minneapolis Code of Ordinances (M.C.O.) § 259.255, Adverse license action evidentiary hearings authorized. District Supervisor Beth Roberts and Lead License Inspector Michele Harvet appeared on behalf of the Business Licensing Division of the City of Minneapolis, which was represented by Assistant City Attorney Joel Fussy. License applicant Julia Wang of Orchid Massage Spa was present at the hearing and represented by attorney Ryan Kaess of Kaess Law, LLC. At the license applicant's request, language translation services were provided for her throughout the hearing. Based on the testimony adduced and evidence admitted at the hearing, the undersigned hearing officer makes the following: FINDINGS OF FACT 1. License applicant Julia Wang of Orchid Massage Spa, Inc. (hereinafter the "Applicant") has operated a massage establishment at 4933 34th Avenue South in the City of Minneapolis since 2015 doing business as Orchid Massage Spa. In December of 2013 the City of Minneapolis adopted Chapter 286 of the Minneapolis Code of Ordinances which requires any massage or bodywork establishment to be licensed and to comply with a host of regulations. The legislative history in the public record as well as the testimony at hearing establishes that the ordinance was initiated by the Minneapolis Coordinating Committee to Prevent Sex Trafficking. A primary purpose of this licensing ordinance was to prevent sex trafficking and commercial sex from continuing to occur in many less-than legitimate massage parlors operating in the city. 2. The Applicant's last annual massage and bodywork license was for the year 2016 and expired at the end of the calendar year. The record establishes that the Applicant did not immediately apply for renewal of the license for 2017 as she was in the process of selling the business to another individual. However, in March 2017 the Applicant notified city staff that she wished to renew her business license. After completing their duty to investigate all 1 l /0 r� 64 license renewal applications staff recommended thattherenewal application be denied. Pursuant,to her right, the Applicant appealed that determination and the evidentiary hearing that is the subject matter of this recommendation was held in order for the undersigned hearing officer to provide :a nonbinding licensing recommendation to the Minneapolis City Council, which has final authority to renew or deny the license renewal application. See M.C.O. §259.255: 3. The record establishes that in October 2016 the Business Licensing.Division received complaints from neighbors of the establishment regarding suspicious traffic-patterns involving the customers of the establishment. The complaints were forwarded by the ward council member's office and detailed observations of male customers parking a significant distance from the establishment despite closer and adjacent-parking`being-.available. 4. As part of the investigation of these complaints, Lead License Inspector • Michele Harvet and District Supervisor Beth Roberts conducted an inspection of the establishment on November 8, 2016'at approximately 1:30 p.m. 'Both are experienced business license inspectors and Ms. Roberts possesses extensive and particularized expertise and training from both a • law enforcement and regulatory background involving sex trafficking and commercial sex businesses, including specific_ knowledge..and experience involving inexpensively-run and less-than legitimate storefront massage parlors used, at least partly, as cover for trafficking and commercial sex purposes. Ms. Roberts previously worked as a sworn police officer for twenty-five years, including fifteen years as a detective,..and has:accepted a position with the Minnesota Human Trafficking Taskforce beginning in June 2017. In this capacity, Ms. Roberts has participated in and conducted extensive training, enforcement and investigative activity regarding sex trafficking and commercial sex 'activities, including writing her master's degree thesis on the topic. 5. - Upon arriving at the business for their inspection, the inspectors observed customer parking activity that confirmed the neighbor complaints in that two separate customers parked a block-and-a-half and two blocks away from the establishment when there appeared to be significantly closer parking available at that time of day. Ms.: Roberts testified that such customer activity is consistent with the operation of an illegitimate massage parlor, based on her training and experience. 6. Also during the November 8th inspection, it was observed that the very large plate-glass front window of the establishment was broken and completely covered with plywood. The record establishes that on November 23, 2016 the Applicant came into the offices of the Business Licensing Division, after being ordered to repair the non-compliant window; and spoke with Ms. Roberts, falsely telling her that the window had been repaired and that she would be sending her photographs documenting the repair via electronic mail. No such photographs were submitted to Ms. Roberts and the window was not repaired until sometime in March 2017. Re-inspections on December 15th and 2r confirmed that the window was still boarded with 2 65 plywood: At hearing, the Applicant claimed that a.partial repair had been accomplished after some weeks involving a higher-grade boarding material but the required.repair was notaccomplished for an unreasonable period of time.. The Applicant's claim that weather'hindered The basic repair of a business window.is not credible as window repair is commonly done year round in Minnesota, the BLD's testimony in evidence establishing her false statements regarding the status of the repair constitutes untruthfulness and evasiveness regarding the basic operations, conditions and code compliance of her licensed and closely-regulated business. 7. During the course of.the twenty-minute November 8th inspection of the interior•of-the business premises, theinspectors-discovered that neither the Applicant,nor anymanager was present An-Asian female Was present in the reception area, who claimed she was the-first and only one present that day. That statement was established to be false when the inspectors noted that massage room #3 was occupied by a;male customer and a masseuse who immediately closed the room's door upon noticing the city staff. The Applicant testified at hearing that she could not identify the woman who was left in charge of the business. She further testified that the woman was in for a job interview that very day for a masseuse position, lacked any identification, had not been background-checked, and that despite.all this she had personally left her at the business while.she.went out for shopping and lunch. This explanation was refuted during the Applicant's Testimony, she alternatively claimed that the woman -whom she cannot identify.—was working her first day" or was not employed by her at all at that point. Nonetheless, the unidentified`woman:who lacked.any identifcation'was left in charge of.the entire facility which is either extremely reckless or purposefully evasive. The unidentifiedWoman, Who was in charge of the establishment according to the Applicant's testimony,.was unable to produce the ordinance-required list of all employees and copies of legal identification. The Applicant conceded in her testimony that she did not keep such required information at the business, but.claimed she could access such information on her cell phone. The Applicant did; at a later date, provide copies of the identification of two purported employees but never provided any identification of the woman she claimed she knowingly left in charge of the facility on the date of the inspection. 8. The interior inspection completed on November 8, :416 revealed a generally cluttered, unkempt, uninviting 'and unprofessional appearance of the establishment, its rooms;fixtures, furniture, signage, and supplies. An especially large amount of food-and cooking-equipmentwas stored and kept on the premises and an unusual amount of clothing and other goods were present, which led Ms. Roberts to reasonably conclude that the establishment was utilized for long-term and overnight residence by some of the workers, consistent with massage parlors utilized for illicit trafficking and commercial.:sex. Beds were present- along with extensive clothing and personal effects in the licensed premises, including a room labeled as a "lounge"on the floorplan personally submitted by the Applicant as part of its original:license application. 3 66 9. As part of her investigation into the matter subsequent to the November 8th inspection, Ms. Roberts discovered that the establishment advertised exclusively on the Backpage website, often with sexually provocative photographs and copy. Additionally, the establishment had numerous customer reviews on the RubMaps website. According to the learned and credible testimony, experience and analysis of Ms. Roberts, the advertising methods of the establishment and the associated customer reviews are consistent with advertisements for illicit prostitution services associated with sex trafficking and commercial sex activities. Ms. Roberts, in her reports and recommendations in this matter, noted that a 2016 United States Senate report labeled BackPage as "the largest commercial sex services advertising platform in the United States." Although the advertisements do not, on their face, offer services that violate criminal laws or the ordinance regulations regarding massage services, their tone and scope are consistent • with commercial sex advertisements as established by the credible testimony of Ms. Roberts. Only subsequent to this staff investigation did the Applicant, upon becoming aware of the Staff concerns, hire services to build the establishmenta website of its own. • 10. The Applicant offered into evidence copies of contracts that she has made with several workers in her:establishment. Almost all of these,contracts are dated subsequent to the inspection and staff investigation.into this matter. The contracts specifically categorize the workers as independent contractors and contain general language forbidding illegal sexual contact while also purporting to put the contractors on notice that they are solely responsible for any illegal activity that might occur.and that the "company is not responding"and would not take any degree of responsibility for such illegal activity. Such a deflection of legal responsibility for massage workers'illegal acts by a licensed massage establishment runs contrary to the clear requirements of the ordinance which placedirect and vicarious liability upon licensed establishments. See M.C.O. § 286.100(7). 11. The Applicant, through her testimony, stated that she had purchased the massage parlor from a previous owner after it had:been shut down by the city based on illegal acts and operation. She testified that she sought this previous owner's advice on how to advertise the business. The Applicant further testified that although she had created the contracts and a corresponding conduct policy sometime after the inspection and investigation, she did not post the policy and instead kept it in a drawer of the establishment. Finally, when queried by her own counsel as to whether the workers in her establishment might engage in inappropriate sexual behavior with clients in an attempt to generate larger tips, the Applicant stated "Yes, to be honest ... they might" and conceded that she has previously been forced to terminate workers for engaging in' such illicit behavior either at this location or other massage parlors she operates. 12. All the above factors, taken in their totality and viewed through the expertise of the city staff, constitute substantial and credible evidence that the establishment, as presently operated, would likely fail to comply with 4 67 applicable lawsand requirements and has as a purpose—whether primary, secondary or ancillary — the facilitation of, or acquiescence -to, illicit commercial sex activities. The public interest would not be served by the renewed licensure of the establishment. • • CONCLUSIONS OF LAW 1. Section.259.255 of the Minneapolis Code of Ordinances, entitled Adverse license action evidentiary hearings authorized, governs this proceeding. It provides that "[ujpon a determination by the licensing ofcial to recommend adverse license action against a license .... applied for.... the licensing official may refer the matter to an administrative hearing-officer-pursuant to Title 1, Chapter 2.of this.Code ... for the purpose of developing a record and providing a recommendation to the,city council" The ordinance further provides that the "hearing officer shall render a decision in writing ... which Shall include findings of fact, conclusions of law and a recommendation regarding whether and what adverse license action is appropriate" which shall then be "considered by the appropriate committee of the city council" which shall have the duty of making the "final decision." Based on the applicable provisions, it is apparent that this matter has proceeded in accord with all applicable notice and jurisdictional provisions of the Code. 2. Based on the above Findings of Fact,._and as detailed in the below Conclusions of Law,.good cause to deny the renewal of the:subject license exists based on substantial evidence.:that.the business.has not and will not 'be operated lawfully and,that misrepresentations orfalse statements have been made by the Applicant. 3. Multiple ordinance provisions;establish standards and prerequisites for granting or renewing a business license that are applicable to this proceeding: §§ 259.250(2): "The following minimum standards and conditions shall be met in order to hold a license, provisional license or license permit under Titles 10, 11, 13 and 14,of this Code:.. Failure to comply with any of these standards and conditions shall be adequate'grounds for the denial, refusal to renew, revocation''or'suspension of`said license'or license permit... it shall be the responsibility of the licensee tomaintain and operate the business in compliance with all- applicable !awe and ordinances, including the zoning, fire, environmental health, environmental management, license, food, liquor housing and:building codes. 259.250(11): 'There shall be no fraud, misrepresentation, or bribery in securing or attempting to secure the license or license permit." 259.250(12): "There shall be no false statements made or omissions of any material matter in**application for a license or license permit." 5 68 259.250(1.3): "The provisions of this section are not exclusive. Adverse license action, inclusive of, but not limited to, revocation, may be based upon good cause at any time upon proper notice and hearing." 4. The massage and bodywork licensing ordinances provide in pertinent part: 286.80(b): "Employment records, including copies of documents used to determine the employee, agent or contractor is eighteen (18)years.of age or older, for each employee employed by a.licensed massage and bodywork establishment shall be kept at..fhe licensed premises and available for immediate review upon request of a city .officer. Documents that are acceptable forms of identification can be found in Minnesota Rules Part 7410.0100." 286.100(7): "... any person owning, operating or managing a massage and bodywork establishment shall comply with all business license management responsibilities pursuant to section 259.250 of this Code, including, but not limited to, subsection (3) of section 259.250.which,providesthat such a person or licenseeis directly and vicariously responsible for any violations on the premises by any employees, independent contractors, other persons hired by the licensee, or otherwise under the supervision or management of the licensee." 286.110(1): "it shall .be grounds for denial, -revocation,. nonrenewal, suspension or any other appropriate adverse license sanction .if. (1) The applicant or licensee is not complying with or has a history.of violations of the laws and ordinances that apply to public health, safetyand morals." 5. Refusing to issue a business license involves' the exercise of inherent municipal . discretion, which, under the law, enjoys 'a presumption of correctness so long as the municipality,engaged in reasoned decision- making supported.by substantial_evidence. See CUB Foods. Inc. v:.City of Minneapolis, 633 N.W.2d 557 at 562 (Minn.App. 2001). Such a denial may be based upon generalized "good;cause" as that term.is specifically utilized by the City of Minneapolis. Id. in the context of good cause, substantial evidence means "(1) such relevant evidence as a reasonable mind might accept as adequate to support a conclusion; (2) more than a scintilla of evidence; (3) more than some evidence; (4) more than any evidence; or(5) the evidence considered in its entirety." See Minn. Ctr. for Envtl. Advocacy v. Minn. Pollution Control Agency, 644 N.W.2d.'457, 466 (Minn. 2002). Based upon this.deferential.standard, adequate and substantial evidence necessary to support a municipal licensing denial need not be extensive and may, in fact, be characterized as "hardly overwhelming." Cub Foods at 563- 64. 6. Based on the case law defining and recognizing the "good'cause" standard for license denial, andalso based on the vicarious liability standard imposed upon massage and bodywork license holders and applicants, it is evident that substantial evidence exists to support a finding that good cause-exists to deny the subject license renewal application. 6 69 7. The-Applicant was plainly in violation of the building code(M.0:O. §85.100, Exterior maintenance of buildings) by failing to repair its 'boarded-up large front window for several months; even after falsely claiming to city staff that the repairs had been-made. The licensing standards citedabove impose a duty upon license holders and applicants to maintain their businesses in compliance with all laws and codes, speoifiicelly inclusive of`the building code. See M.C.O. § 259250(2). Additionally, the false statements and misrepresentations made`•by the Applicant to city staff regarding the completion of the work;violate other important licensing standards. See M C.O; §§.259 250(11)>&259.250(12). • 8. The Applicant violated M.C.O. § 286.80(b) by not having the required employment records immediately available to license inspectors on November 8, 2016. =furthermore; the Applicant's behavior and'decision- making in placing an unidentified woman 'in apparent control of the establishment while she shopped and dined leads to an inescapable conclusion that the business is not being run in a responsible manner likely to ensure compliance With applicable laws and ordinances. 9. The record establishes.that the Applicant has attempted to circumvent her legally-imposed direct and vicarious liability for the activities of her workers by entering into contracts with language that disavows any company responsibility for illicit behavior Of such workers. -See M.C.O. § 286.100(7). Further, the Applicant has conceded through her direct testimony that her workers in her massage businesses have previously committed illegal sexual acts_forgreater tips and that:"they`might'continue to attempt to do so. Such activity violates;the public interest as well as M.C.O. §286.110(1). 10. The totality of the 'operational observations derived''from the investigation into the application also constitutes good causefortlenial. As referenced in the findings of Fact, this basis includes, but is notlimited to, the extensive expertise and professional knowledge of commercial sex and trafficking- related enforcement by Ms. 'Roberts, as ,Well as the conditions in the establishment involving food, Clothing and bedding, The utilization of advertising websites directly correlated with illicit activity, the sexually provocative content 'of such advertisements, and 'the substandard and shoddy condition of the establishment in general 11. The Minnesota Court of;Appeals, in a; recent decision affirming_ the City's denial of another'massage and bodywork establishment license, recognized that the overall operational condition,of such an establishment (specifically including its chattered,and uninviting appearance) could be considered in making a licensure determination. See In the Matter of the Massage.and Bodywork License Application of Kim Yrs, LLC, and Yong Green d/b/a.Kim Yrs, WL 3223202 (Minn.App. June 13, 2016). This, combined with the existing case law•recognizing good cause license'denial and revocation, adequately buttress a conclusion that the subjectlicense 'renewal application should be denied for failure to be in the public interest and because a reasonable conclusion can be reached based on the totality of evidence that the operation would be detrimental to public morals and would, at least in 7 70 part, likely contribute to illegal activity involving prostitution and sex trafficking. The Applicant's Attorney alleged in his Post Hearing Filings that the City of Minneapolis is hostile to legitimate Minority-Owned Business" and that the BLD's case is little more than a rumor hypothesis and veiled racism." The Hearing Officer did not observe, nor did the Applicant's council provide any evidence of racism or hostility toward the Applicants in this case. The Testimony of BLD staff was credible and based on the facts, was supported in large part by the Applicant's own testimony. RECOMMENDATION Based upon the above Findings of Fact and Conclusions of Law, as well as the entire record in this matter, the undersigned hearing officer recommends that the application of Orchid Massage Spa, Inc. and Julia Wang for renewal of its massage and bodywork establishment license at 4933 34th Avenue South be DENIED by the city council of the City of Minneapolis. r Dated: a` 2017 a MICHAEL SINDT MINNEAPOLIS HEARING OFFICER 8 71 T.nk ,, o,•'.z7 Council Action No.. 0/7,4-06' 3 City of Minneapolis File No. J7'Po`12 Committee:c ms Public Hearing: 8/2,2t t7 Passage: V3/Irk'i7 Publication: GI ( 9t RECORD OF COUNCIL VOTE MAYOR ACTION COUNCIL MEMBER I AYE NAY I ABSENT I ABSTAIN REICH I V I 0 APPROVED 0 VETOED GORDON I FREY „' I rd B JOHNSON ✓ MAYOS S�PRO� 2017 YANG , WARSAME ✓ DATE GOODMAN ../ GLIDDEN ✓ 1 CANO ,i I Certified an official action of the City Council BENDER V I f QUINCY v I ATTEST: w - PALMIS ON ✓ I " / �AP' J/ PALMISANO " i �/ AUG 3 1 2017 r , ERK Presented to Mayor Date: 2017 Received from Mayor Date: SEP 0 7 The Minneapolis City Council hereby: 1. Denies the Massage and Bodywork Establishment License renewal application submitted by Julia Wang and Orchid Massage Spa,Inc.,for Orchid Massage Spa at 4933 34th Ave S. 2. Adopts the Administrative Hearing Officer's Findings of Fact, Conclusions of Law, and License recommendations. 'ef ' f7 f , i ` , /f /r ! xr Columbia Heights Police =,3 Department ;Al COLUMBIA Incident Report '.' -HEIGHTS- Case J, +a? Number: 16250953 Date Reported:11/04/2016 Event: Address:5019 UNIVERSITY AVE NE City:COLUMBIA HEIGHTS State:MN Zip Code:55421 Start Datellime: 11/04/2016 14:02:00 End Date/Time: Call Time Dispatched: 1402 Call Time Arrived: 1402 Call Time Cleared:1432 Synopsis:Suspicious Activity Person(s) Involved: j ' ��' v'���_s�er•,S�F M�2'c5},35 t La �.. `� �='`5 ..T i` 'C-'4_� z" �` A~ ST Y. Incident Involvement Type:MISC ASSOCIATED NAMES Date of Birth: Age:#Error Race:ASIAN Sex:FEMALE Address: City:#Error State: Zip Code:#Error Cell Phone:763-313-1918 Incident Involvement Type:COMPLAINANT Date of Birth: Age:#Error Sex:MALE Address: City:#Error State: Zip Code:#Error Work Phone:(651)338-5671 Organization(s) Involved: .a;a .a sA..;tea-z.�-,-^ glom e-rr'. �,e� rt-u ,�& . "sa.. _ fTlai2i� ClNi��IV�IA�SSAGE �+ '� '=��"F�i �� i.�� "��•� `���x '"f� "''-���`"-. ' �- "'`..,,� �-'.t-_ _r...�. ..- -:. ..a..-.�'�`.'t,_a" ......c:_...�-ar..axze,"' �' Involvement Type:MISC ASSOCIATED NAMES Address: 5019 UNIVERSITY AVE NE Business Phone:(763)313-1918 City:COLUMBIA HEIGHTS State: MINNESOTA Zip Code:55421 Narrative(s): c ee-�•gs� .ti1Wl= E Narrative:On November 4,2016, I received information that the new Sunny Massage business located at 5019 University 73 'f: Avenue had received suspicious activity complaints through city hall and that the business was on Backpage.com. I located an ad for Sunny Massage on Backpage.com. Investigator Pikala and['went to the business and found the front door locked. The front windows were covered with shades. I rang a door bell button and a female answered the door and let us in. The female said the owner was gone and she would not let us check the business. Upon questioning the female more she said she•didnat speak English and came from China two days ago. The female did have a cell phone with a lot of contacts in it. The female called the owner to respond back to the business. Officers waited a while until the owner Julie Wang showed up. - Wang gave us a tour of the business and showed us four rooms that were set up for massages. There was no one else in the business. Two rooms only had mattresses on the floor and Julie explained that those rooms were for Thai massage. The other two rooms had massage tables. Julie said that she locks the front door and put in a door bell,because black male youths were loitering for a long time in front of her business and she did not want them to just walk into the business. Julie also indicated there was a parking space dispute going on with the barbershop next door. After clearing the call,I was contacted by ACSO CID Detective Villegas who heard me checkout at the business over the radio. Detective Villegas said that the sheriffs office received a complaint about Sunny Massage via email from Toni Wenzell. I called and left a message for Wenzell regarding the complaint,but I did not receive a call back. I contacted Community Development Director Joe Hogeboom regarding the business check and forwarded him a copy of the report. Author:MMARKHAM Officer(s): Involvement Type:SUPPLEMENTING Officer Name:Pikala,Joe M HPD00035 Date:11/05/2016 Involvement Type:REPORTING Officer Name:Markham,Matt F HPD00023 Date:11/05/2016 Page 2 .3 2 74 Q f�) CD 11 Gt RS ■ a 3 'S.,-2:*':',.2','1''‘- .?::'..'''''-'7,''•:-..-'--.' '.- '' ,,,,:4:iii.,:, ,,:,..::,..,; kii. oi;,,,,fi'li,,,crAlf.„,,voze.,;1! ..!, V - y Q 0 +_ 4,:k cn E ca LI CU • %�^xA,;.:::::?=-17.1:-,_--- -7---''.-'-:'- Ss' fes,^wf'yt N' .rare ' — FF -,...8 ."�". w G ^al <a., X31 la mac' r-• r..+'i'z', R EL to _ • V/ cC�O S fLU Y m r W co .� I L CD mi � rx W 1 rl _ _ _ N i 3.:3 ' 03 _. .. w C W x r ch t ., o of i . E . U E :: m i Rt m L 0,c6 o m «`T. `� cQa E aE 0 .�- C o co co ca- :o ; U (N-CO0 U a 0 O CU N O ui D c L A a CO)CU y —Cil4. :c: c U caE I y co o I. Q A N U a c'n v C3- p W m g' a 4 0) N � o °o z V. a co :.J = CV as a� 4:13 2 gL _ .— ca a> > -6Q ' Y o D Q N m N N p T 4 p GV '''=.-,„ D v o ' N (p6 4 O o 64 o v. D S. 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N' US orn m 0 61 0. 0. c6 a a °' E E3 Z U•m m dcF a, J m N O N W U a E Tn c 9L m c i8' is N E - m N e m m 7 Q1 1 x- E VI m N m iad N 2 r a 0g3 1 cs _- m0 y 1 N .L� Em 8-$ U II a 77 COLUMBIA HEIGHTS POLICE DEPARTMENT MEMORANDUM To: Shelley Hanson, License/Permit Clerk From: Lenny Austin,Chief of Police Pr-- Subject: rSubject: Sunny Massage, Massage Therapy Business License Date: December 4, 2017 In conducting our background check for the massage therapy business license renewal for 2018 by Sunny Massage,the Police Department performed a review of the police calls to their address of 5019 University Ave NE as well as the applicant of a new owner, Nicole Ruth Hunstad. Pursuant to that review,we found the following: • The application was filled out by the previous owner,Julia Wang,but it was signed by this applicant • The previous owner,Julia Wang, signed the application as a witness and friend • The Certification of Compliance, MN Workers Compensation Law page is marked"I have no employees"but another application came in for another individual who listed Sunny Massage as their employer t_1- 111-.t - gc. ", c ,. Italoce.:S•4.4 • r : /4E,.,tr. Findings of Fact F3 BEFORE THE COMMON COUNCIL CITY OF ROCHESTER, MINNESOTA In Re: Massage Therapy Business License FINDINGS OF FACT, Issued To Tuina Massage and CONCLUSIONS OF LAW, Massage Therapist License issued To AND ORDER. Juan Zhang. On July 5, 2017, the City of Rochester Common Council conducted a public hearing, following notice to Tuina Massage and Juan Zhang. The hearing was for the purpose of determining whether possible license sanctions should be taken against the Massage Therapy Business License held by Tuina Massage at 308 Elton Hills Drive N.W., and the Massage Therapist License held by Juan Zhang. The hearing occurred pursuant to R.C.O. §115A.11. At the hearing, evidence was presented by Juan Zhang (by way of an interpreter), other persons assisting Ms. Zhang, and Ling Donnay and Julia Wang, business partners and owners of Tuina Massage. Officer Albert Arzola from the Rochester Police Department Investigations Division also presented evidence. The Rochester City Clerk presented various materials to the Council a copy of which is attached hereto and incorporated herein as Exhibit A. After considering all of the testimony and evidence submitted to the Council in this matter, the Council arrives at the following Findings of Fact, Conclusions of Law and Order: 1 7 9sf //y fir, FINDINGS OF FACT 1. Juan Zhang applied for a Massage Therapist License with the City of Rochester on October 25, 2016. The Council approved the license on December 5, 2016. The City Clerk issued a license to Ms. Zhang on December 14, 2016 The City Clerk's license file does not include any proof of Ms. Zhang's identity or proof that she is a U.S. citizen or legally permitted to be in the United States using any of the permissible identification forms provided by R.C.O. §115A.07, subd. 2(G). 2. Ling Donnay submitted a business license application on October 20, 2016. The business license application indicates the business is a partnership, but only information about Ms. Donnay was provided on the application. No applicant information about other partners was provided, nor was a copy of the partnership agreement included. At the time of original submission, the application was submitted under the business name Oriental Massage and the license was originally issued under that name on November 3, 2016. The business name was updated on December 13, 2016, and the license was reissued in the name of Tuina Massage. 3. The Rochester Police Department performed an undercover operation on March 27, 2017, at Tuina Massage. Juan Zhang was the therapist working at the time. As a result of the operation, Ms. Zhang was arrested and charged with prostitution. The Olmsted County Attorney's Office is in control of the pending case, Court File No. 55 CR 173320, and Ms. Zhang's first appearance in this case is scheduled for July 6, 2017. Charges were filed under Minn. Stat. §609.324, subd. 6, Engaging in Prostitution in a Public Place. A copy of the criminal complaint, summons, and statement of probable cause is attached and incorporated 2 80 herein as Exhibit B. 4. In addition to the prostitution charges pending under state law, the conduct outlined in the police report also violates the restrictions and regulations placed on massage therapy licenses in RCO §115A.10, including specifically subdivisions 4 and 6. 5. At the time of the undercover operation, the arresting officer also noted visual evidence that individuals were living in the business. This is a space within a strip mall location zoned in the B-1 Restricted Commercial Zoning District with a permitted use as a business center use. 6. The Rochester Police Department undertook a second undercover operation at Tuina Massage on May 17, 2017. Xiuxia Pan was the therapist working at the time. As a result of the operation, Ms. Pan was cited for performing services without a license. Ms. Pan had submitted an application to the City Clerk's Office on May 10, 2017 for a massage therapist license. However, as of May 17, no background check had yet been completed for Ms. Pan by the Rochester Police Department, and a completed application had not yet been submitted to the City Council for approval. At this time, Ms. Pan's background check has resulted in a recommendation from the Rochester Police Department to deny her license application. The City Clerk has sought additional information from the applicant in order to complete her application prior to presenting it to the City Council for action. 7. Officer Arzola stated that the Investigation Division has conducted four separate undercover operations at Tuina Massage. Two of the operations resulted in arrests for prostitution. In response to a question from a councilmember, Officer Arzola stated Tuina Massage presents an ongoing concern for the Rochester Police Department. 3 81 8. R.C.O. §115A.11, subd. 1(A) states that any license issued by the City under chapter 115A is subject to suspension, revocation, or denial if the licensee "failed to comply with any applicable state law, city ordinance or building, safety or health regulation relating to a Massage Therapist or Massage Therapy Business." 9. R.C.O. §115A.10, subd. 3 states that"[t]he Licensee shall be responsible for all acts and conduct attributable to and in connection with Massage Therapy Service provided by the Licensee or occurring on the Licensed Premises." 10. R.C.O. §115A.11, subd. 1(B) provides that any massage license issued by the City is subject to suspension, revocation, or denial if the Licensee "employed or contracted with a person to perform Massage Therapy who is required to be licensed by this chapter, but who was not so licensed at the time of employment or contract." 11. R.C.O. §115A.11, subd. 5 provides that "[t]he filing of a criminal complaint against the Licensee alleging a violation of Minnesota Statutes sections 609.321, 609.322, 609.324, 609.3242 or 609.3243 shall result in the immediate temporary suspension of the Licensee's license. The temporary suspension shall terminate at the time the complaint is dismissed, the Licensee is acquitted or the criminal charge is otherwise resolved, and for which all rights to appeal to a state court have been exhausted or waiver." CONCLUSIONS OF LAW 1. By the greater weight of the evidence and testimony presented at the hearing, it is hereby determined by the Council that the City issued a Massage Therapy Business License to Tuina Massage and a Massage Therapist License to Juan Zhang. 4 82 2. By the greater weight of the evidence and testimony presented at the hearing, it is hereby determined by the Council that the owners/operators of Tuina Massage allowed the massage business to be operated in violation of the underlying B-1 zoning district. Individuals were allowed to live upon the licensed business premise. This occurrence violates R.C.O. §115A.11, subd. 1(A). 3. By the greater weight of the evidence and testimony presented at the hearing, it is hereby determined by the Council that the owners/operators of Tuina Massage are responsible for the acts of prostitution occurring on March 27, 2017, and performed by its independent contractor Juan Zhang. R.C.O. §115A.10, subd. 3. 4. By the greater weight of the evidence and testimony presented at the hearing, it is hereby determined by the Council that, on May 17, 2017, the owners/operators of Tuina Massage permitted an unlicensed person to engage in massage therapy upon the licensed business premises in violation of R.C.O. §115A.11,subd. 1(B). 5. By the greater weight of the evidence and testimony presented at the hearing, it is hereby determined by the Council that there is sufficient evidence supporting the revocation of the Massage Therapy Business license issued to Tuina Massage. 6. By the greater weight of the evidence and testimony presented at the hearing, it is hereby determined by the Council that, on or about May 19, 2017, Juan Zhang was charged with Engaging in Prostitution in a Public Place occurring on March 27, 2017, and in violation of Minn. Stat. §609.324, subd. 6. 7. By the greater weight of the evidence and testimony presented at the hearing, it is hereby determined by the Council that R.C.O. §115A.11, subd 5 requires a person who has been 5 83 charged with a violation of Minn. Stat. §609.324 must have the person's Massage Therapy license temporarily suspended until the criminal charge has been resolved or the criminal complaint has been dismissed. ORDER The Common Council of the City of Rochester does hereby revoke the Massage Therapy Business license issued to Tuina Massage pursuant to R.C.O. §115A.11, subd. 4. The Common Council of the City of Rochester does hereby temporarily suspend the Massage Therapist License issued to Juan Zhang consistent with and subject to the conditions found in R.C.O. §115A.11, subd. 5. Dated at Rochester, Minnesota this 5th day of July, 2017. PRESIDENT SAID COMMON COUNCIL 11th Approved at Rochester, Minnesota this day of July, 2017. MAYOR OF SAID CITY FOF\LicenseZhangTui naMassage 6 84 ROCHESTER MilinesOta Office of the City Clerk To: Rochester City Council From: Anissa Hollingshead,City Clerk Date: October 30,2017 Subject: Recommendation to deny application for Massage Therapy Business license by Tuina Massage LLC DBA Lan's Spa Tuina Massage LLC DBA Lan's Spa Application On August 25,2017,an application was submitted for a massage therapy business license to be held by Tuina Massage LLC DBA Lan's Spa at 308 Elton Hills Dr NW.Yi Lan Wang submitted the application on her own behalf,and presented herself as the sole member/owner of Tuina Massage LLC. Summary of Denial Recommendation After working with Ms.Wang over a period of weeks to obtain a complete application as required under RCO 115A,and submitting the application for the review of the Rochester Police Department, it is my recommendation at this time that the request for a business license be denied. The reasons for the denial recommendation include: • The previous business at this location,Tuina Massage,had its license revoked by the City Council on July 5,2017,following a prostitution arrest. • A number of circumstances lead to concern there are strong ties between the former operators of Tuina Massage and Yi Lan Wang,and that therefore her application may be an attempt to continue/restart the same business interests the Council took action to revoke without addressing the concerns that led to the revocation. o While Yi Lan Wang indicates there is no association between herself and the prior owners of Tuina Massage,she lists her home address as a property owned by Gary Donnay,the husband of an owner of Tuina Massage.That home address is also used by multiple other therapists working in businesses owned by Ling Donnay. o When Ms. Wang first came into the City Clerk's Office to apply for an individual massage therapy license,she was with Ling and Gary Donnay. o Ms.Wang has indicated she alone will be working in the business, but applied for a massage license from the City of Plymouth in September of 2017. o Tuina Massage has an active website that has continued to be updated,and still accepts phone calls at the business number which is used interchangeably with Oriental Massage in advertising on Craigslist and Backpage.com. It appears this marketing is being maintained in the expectation business can be resumed at some point,despite the license revocation. 1 Pare 10i 'r��r%.rOiif.,,%�.'% 'ri'�"�'f.VA—,`�. o Follow up emails to inquire about the status of her application have been signed primarily as"Yi Lan Wang"however one from the same email address was signed "Thank you,Julia"as were emails previously received from Julia Wang,the prior partner/co-owner of Tuina Massage with Ling Donnay. Detail of Denial Recommendation History of Tuina Massage at 308 Elton Hills Drive NW Tuina Massage is located at 308 Elton Hills Drive NW,and previously operated in the City of Rochester until the Council revoked the prior business license on July 5,2017.That license had been applied for and issued in late 2016 after Ling Donnay submitted a business application.The application Ms. Donnay submitted indicated the business was a partnership, but the application did not contain any information about the other partner involved nor was any of the partnership paperwork required under RCO 115A submitted. Despite these application deficiencies,a license was issued on November 3,2016,to Oriental Massage at 308 Elton Hills Drive NW. Upon notification by Ling Donnay the business was instead operating as Tuina Massage,the license was reissued on December 13,2016,in that name with an expiration date of December 31,2017. On March 27,2017,there was an undercover operation and subsequent prostitution arrest at Tuina Massage at 308 Elton Hills Dr NW.Ling Donnay was not present at the time of the arrest, but was called to come in as the manager by the individual who was working and arrested.The Rochester Police Department notified the City Clerk's Office of the arrest on April 10.At its May 1 meeting,the City Council set a public hearing for June 5 to consider sanctions against the business license.At the request of Ms. Donnay's husband on her behalf as she was out of the country at the time,and the request of her business partner Julia Wang who contacted the office after the first hearing notice was sent,the hearing was continued until July 5,2017,when the Council voted unanimously to revoke the business license. There are a number of pieces of information which lead to the conclusion Ms.Wang may be intending to reopen the business at 308 Elton Hills Drive and operate it as a continuation of sorts of the prior business. Connections to Ling and Gary Donnay and Julia Wang There are several connections between Ms.Wang and the prior owners of Tuina Massage.Ms.Wang first came into the City Clerk's office on July 28,2017 to apply for an individual massage therapist license,and came into the office at the same time as Ling Donnay and her husband Gary Donnay were in the office submitting papers relating to one of Ms.Donnay's businesses.The address Ms.Wang provided as her home address(39 Park Drive NW in Eyota)on both the business license application and her own application for an individual massage therapist license is a single family property owned by Gary Donnay,the husband of Ling Donnay. Although he is not listed on any application or business record as playing any role in a massage therapy business,Gary Donnay began calling the City Clerk's Office in late May of 2017 after the hearing notice was sent regarding considering sanctions against Tuina Massage.He continued calling the office over a period of several weeks to inquire about the hearing,what the action taken by the Council on July 5 meant,the status of his wife's other business license,and whether other applications for individual massage therapist licenses for therapists who would be working in one of his wife's businesses had been granted. Wage 86 Two individuals applied in May and listed the business address for Tuina Massage as their home address, stating they were staying at the business. One of them,Xiuxia Pan,did not provide a subsequent address,as she was cited in May for working without a license at Tuina Massage,and the completion of a police background check revealed a pending prostitution arrest in Plymouth,Minnesota,leading to the withdrawal of her application.The other applicant was Lian Wang.When she was told the business location did not permit residential use,she changed her address to 39 Park Drive NW.The license that was issued to Lian Wang was mailed to that address,and Mr. Donnay called when he did not receive it. He stated to the City Clerk that although mail is not delivered to that property,the post office in Eyota knows that's his house and puts the mail with that address in his PO Box.Yi Lan Wang's individual massage therapy license was issued on October 3,and was also sent to the Park Drive address in Eyota. The home at 39 Park Drive NW is listed in Olmsted County property tax records as a single family residence,with Mr.Donnay as the sole owner since 2006. It is not homesteaded.Mr.Donnay is also listed as the owner of a single family home at 4334 56th St Ln NW in Rochester.That property is homesteaded.That is the address Ling Donnay has provided on her individual massage therapist application,as well as her business application for Tuina Massage.That address is also listed as the home address for two other individuals with active massage therapy licenses in the City of Rochester, Qingan Liu and Xue Dong. When Ms.Wang came into the City Clerk's Office on August 25,2017 to complete the massage therapy business license application,she came in with a friend who was helping interpret for her,as her English is not very strong.She stated had nothing to do with the prior owners,and was not associated with the 'trouble'at the business previously.However,as previously noted,her business license application listed 39 Park Drive NW as her home address.When submitting the application,Ms.Wang was told she needed to supply a copy of the lease for the location,as well as the business organization paperwork. She subsequently provided a membership conveyance agreement for the sale of Tuina Massage,LLC, from Julia Wang as the sole member to Yi Lan Wang,signed and dated Aug.25,2017.That membership conveyance indicated the buyer would be liable to landlord for the Tuina Massage LLC's rental obligation under the existing lease,of which she also provided a copy.The strip mall lease was dated Oct. 13,2016, and is between C&R Elton Hills,LLC,as the landlord and Tuina Massage,LLC,as the tenant,signed by Ling Donnay and Julia Wang as the tenants to run through November 30,2019. After submitting her business application,someone stating she was Yi Lan Wang began calling and emailing the City Clerk's Office regularly to inquire about the status of the business license.When Ms. Wang has been present at the Clerk's Office in person,she is unable to communicate in English without the direct and continuous assistance of someone else either with her or on the telephone.On the telephone and via email,however,communication has been solely in English,and although not perfect, understandable.The final email received by the Clerk's Office on Friday,Oct. 13 from the email address that had been indicated as being from Yi Lan Wang was signed not by Yi Lan Wang,but as"Julia."After previously communicating with Julia Wang in the weeks before and after the revocation of the Tuina Massage license,it seems possible the phone calls and emails about the license status were actually coming from Julia Wang,not Yi Lan Wang.This may indicate another strong connection between the prior business operations and the plans for a new business in the location. Continued marketing and connections between Tuina Massage and Oriental Massage 31Page 87 The Tuina Massage location has remained as it existed as of the date of license revocation July 5,2017. The exterior signage indicates both the business name and telephone number.A search of the telephone number online indicates there have been continuing advertisements on both Craigslist and Backpage.com for massage therapy services,using both the Tuina Massage name and address,and that of Oriental Massage at 14 6th St NW,also operated by Ling Donnay. The website of Tuina Massage has been recently refreshed,and advertises that the business is currently open,using the same telephone number that is listed on the exterior sign.Visual inspections of the business location by police have not turned up evidence of the physical business location being open at this time,however marketing has continued to use the name and contact number.This may being done to funnel business to the Oriental Massage location at this time,but there also seems to be an intentional desire to continue marketing the Tuina Massage name and location. It appears this marketing is being maintained in the expectation business can be resumed at some point,despite the license revocation. License application for Yi Lan Wang in Plymouth The City of Rochester was contacted by the Plymouth Police Department in September to advise Ms. Wang was also applying for a massage therapy license in Plymouth.Ms.Wang indicated when applying in Rochester,she would be operating the 308 Elton Hills Drive location on her own,yet went and applied for a license in another jurisdiction.On her application with the City of Plymouth,Ms.Wang listed 39 Park Dr NW as a prior address,and gave her current address as an apartment on Shelard Parkway.The Police investigator in Plymouth indicated that the apartment listed was notorious as a site used by multiple individuals involved in businesses suspected of trafficking,and in some instances charged in prostitution. Wage 88 Tuina Massage Website active today(screenshot from 10-16-2017): <yr xa¢. .:, w.;M.,.,��.>,:..., .. ,, Z Staaen:we;rfa•e;a:.,x. .)�a:hes:ortwna.rom a z air We provide the following types of Massage: •Deep Tissue Massage 'Acupressure Massage Hot Stone and Hot Gil Massage Medicated CM Therapy •Swcduh Massage 'Soft Touch Massage •Foot Massage .otti �t /7._ -a te,. ..-7-7. n_77 ;v ' C n:. ly-S'_os^.-9_0✓n :0:mutes V.:.• r5Ac.Eo)Ec E.sr.ci, 60 rrto,tes SSOiT ?e'S70 tFUra�i Wrur rtes --900(Table i Slt>7;Farr.} 126 nv+irr, Sie0;'..4i S170 0-Ver, d rands 60r:rr.ves --5;20 To ei 51d0.Fi;Yr, 5IPage 89 Backpage.com ad for Tuina Massage from January of 2017 • post Ad keywad rassage � �``�' , <,�l �, � . r c t" rr .<.� Da•:eunP CDM•Rkheatei se'v,ef>Cs 9e5'er maccwe 60440 Grand opening Tuina Massage at Rochester.$10 off.Please call 507-369-4577 now pe...-.,..v.adv...., -,.1am,,,,w 25,2717 10.50 N i Here,you are going to have all the best service.Please come to try. Service we offer Deep Tissue Massage Acupressure Massage Hot oil and hot store Massage Medicated oil Therapy Soft touch Massage Foot Massage Our rate: 30 mins table 540,Futon 550 60 mins table 560,Futon 570 90 mins table 590,Futon 5100 120 mins table 5120.Futon 5130 4 hands 60 mins table 5120.Futon 5140 Please show this Ad for 510 off. Call 507-369-4577 now. Appointment and walk-ins are welcome. 308 Elton Hills Drive NW.55901 gooale mao I Yahoo mao •Location:308 Elton Hits Drive NW.Rochester.Rochester •Post ID:18958458 rochestermn ,a! Lep! Fe, tom" ,r g ,^ "r.,Rrr.;. .,^, r . ,'',..,Nf, ?s,. ,.J 7 .1 Backpage.com ad for Oriental Massage in August,2017 using all the same information as Tuina, including phone number aelpaipegibu R eer`, Best deep tissue massage in town Please call 507.369.4577 now a ,au at gteg^,:v.e,,react!aar;ce Ve areas r.raresi .!!r ..d b;cased Yeas.tome=t) San.a.s Cir Des Tat a Mauna Rcwrr)as eMacrace Lao e,f C+7'r?HlfDy h sat town»+assay-• -g a-,.,, xwen 450 SD .taw.S c Foca s7e SD - :e54 S .z S!C'• -+ iA xs•.ac.e 5.2.1.,.ox,.5130 MIMSiE.MIK IRA sr a 4swIS:aT1 Psaase s.V,,R-a aA .10 G:G 9J rani nassa'Y Cu'50:•i5?-a5r7 Mrv. Rpea"-a n'Y-mics a, shame. KGY Str^s !S en S:..V ac•ca SUDO! `.4'i Iiac:'^.-:`•J •:a:td.!flaMMsiar •rssrro 1_5!a.57mrevepcs Wage 90 Dec.2016 photo of business from Google streets ? ? E L > Current photo of business(captured on Google Streets Feb.2017—verified still current on 10-15-2017) .ter....... �,x,;.�::�...,,_..... 3r 7 ' Page 91 Massage Therapy Business License Hearing on the application of Tuina Massage LLC D... Page 1 of 2 ops rE , RochestercityMN Adopted a_ s q n�� o � 30,20 ded � f �, � S..p0PM o t . _ Action Item '' o 8058 f y Massage Therapy Business License Hearing on the application of Tuina Massage LLC DBA Lan's Spa Information Department: City Clerk Sponsors: Category: Licenses & Misc. Activities Attachments Printout Memo on Massage Therapy Business License Applications - Lan's Spa20171030 482-17 Meeting History City Oct 30, 2017 5:00 PM Video/Audio Council Recessed Meeting Draft President Stayer introduced the item and asked the City Clerk to provide an overview of the item. City Clerk Anissa Hollingshead outlined the business license application before the City Council. 01:00:16 Lt Bruce Sherden came forward. 01:01:20 President Stayer opened the public hearing. Yi Lan Wang came forward to speak on behalf of her application. She was assisted try an interpreter provided by the City through IMAA. 01:04:42 Ryan Kase came forward as an attorney representing Ling Donnay and Julia Wang, the prior owners of Tuina Massage, to speak to the proposed new application. He answered questions from the council on behalf of the applicant. 01:12:44 Julia Wang came forward to speak in support of the application with Yi Lan Wang. They responded to questions from the council about the application. Councilmembers asked the City Clerk questions about address requirements. Ms. Hollingshead responded. The Council asked additional questions of Julia Wang and Yi Lan Wang. President Stayer asked the City Clerk if there were other germane issues before the Council regarding this application. Ms. Hollingshead responded. Councilmember Campion asked clarifying questions about the ownership status of the business. fr,A77147-1170.• F Lt Sherden answered questions about the Police Department's involvement in the application process. �t�F�V „ , 01:29:27 President Stayer closed the public hearing. ,;7, „�rf14 f 1.�✓ F = 01:30:45 Councilmember Wojcik moved, Campion seconded, to deny the application on the basis of incomplete and inaccurate information in the license application. 92 http://rochestercitymn.igm2.c om/Citizens/Detail_LegiFile.aspx?ID=805 8&highlightTerms... 2/22/2019 Massage Therapy Business License Hearing on the application of Tuina Massage LLC D... Page 2 of 2 Adopted Resolution No. 482-17 denying the application submitted by Tuina Massage LLC DBA Lan's Spa for a massage therapy business license. RESULT: ADOPTED AS AMENDED [UNANIMOUS] MOVER: Michael Wojcik, Councilmember SECONDER: Nick Campion, Councilmember AYES: Randy Stayer, Nick Campion, Ed Hruska, Mark Bilderback, Michael Wojcik, Mark Hickey ABSENT: Annalissa Johnson Find agendas, minutes and recordings of City meetings on this website. 93 http://rochestercitymn.igm2.com/Citizens/Detail LegiFile.aspx?ID=8058&highlightTerms... 2/22/2019 F2 482-17 RESOLUTION BE IT RESOLVED by the Common Council of the City of Rochester that the City deny the application submitted by Tuina Massage LLC d/b/a Lan's Spa for a Massage Therapy Business license on the basis that the application contains false or misleading information as to the applicant's address in Rochester, Minnesota, Plymouth, Minnesota, St. Louse Park, Minnesota, and Kent, Ohio. PASSED AND ADOPTED BY THE COMMON COUNCIL OF THE CITY OF ROCHESTER, MINNESOTA, THIS 30th DAY OF October 2017. 7 PRESIDENT SAID COMMON COUNCIL ATTEST= fig ; L CITY C ` RK APPROVED THIS 14th DAY OF November , 2017. finalES'F£R°14INA,£ 1 4:;...` 4toileaCrirogi g. ka `t : . .-�• MAYOR OF SAID CITY a°RAT �9aucvs'.'S°. Res 15\DenyLicensel 4,1#1,444a: 'f �ifi �� o^ ROCHE=STER My). nesota Office of the City Clerk To: Rochester City Council From: Anissa Hollingshead,City Clerk Date: October 30,2017 Subject: Recommendation to deny application for a new Massage Therapy Business license by Healthy Way LLC DBA Oriental Massage Rochester Healthy Way LLC DBA Oriental Massage Rochester license application/renewal Application Ling Donnay, previous owner of Tuina Massage at 308 Elton Hills Dr NW,also operates Oriental Massage at 14 6th St NW.As part of the process of reviewing the license history at Tuina Massage following an arrest for prostitution at that location and subsequent determination to revoke that license,it was discovered that Ms.Donnay had taken over the operation of Oriental Massage from the prior owner, and was operating it under a new business entity without applying for a new license as required by City Ordinances.Ms. Donnay was notified a new application would be necessary with complete information about the current business operations. For 2018,a new license is needed to the proper entity in order for business operations to continue. Summary of Denial Recommendation It is the recommendation of staff and the Rochester Police Department that the application of Ling Donnay for Healthy Way LLC DBA Oriental Massage for a new massage therapy business license be denied. The reasons for denial include: • The revocation on July 5,2017,of Ms. Donnay's prior business license for Tuina Massage. • Ling Donnay has been listed as the only owner and the on-site manager previously for Tuina Massage and for Oriental Massage,and has not fulfilled the full responsibilities of an on-site manager.Ms. Donnay was out of the country for several weeks over May and June,when the City was attempting to schedule a public hearing regarding Tuina Massage's license,and at a time when she had sole responsibility for the operation of both Tuina Massage and Oriental Massage. It is clear others are involved in the operation of these businesses, but that information is not being provided as part of any applications submitted to the City. • In her capacity as on-site manager and owner at Tuina Massage,violations of City ordinances and questionable business practices were allowed in that business. Under RCO§115A.10 subd. 12,as the on site manager Ling Donnay was responsible for the conduct at Tuina Massage. o The Findings of Fact adopted by the City Council in revoking the license at Tuina Massage found that: 95 00-1 ,y' f t ,F, • Charges were filed under Minn.Stat.§609.324,subd.6,Engaging in Prostitution in a Public Place. • The conduct at Tuina Massage violated the restrictions and regulations placed on massage therapy licenses in RCO§11SA.10,including specifically subdivisions 4 and 6. • Visual evidence was noted by the arresting officer that individuals were living in the business. • After the initial prostitution arrest on March 27,another therapist was cited for working in the business without a license on May 17,a violation of RCO §115A.10,subdivision 1. o At both Tuina Massage and Oriental Massage it appears all therapists are treated as independent contractors,but according to the testimony of a therapist at the July 5 hearing regarding Tuina Massage's license,they are required to be on site during all open hours,exceeding 9 am until 9 pm every day. Every therapist who has applied for an individual license to work at either Tuina or Oriental Massage has used either the business address for their home address,or an address for one of two properties owned by Gary Donnay, husband of Ling Donnay. Detail of Denial Recommendation License History The license for Oriental Massage was originally applied for on Jan. 20, 2015 by Xiao Li,and was issued on March 3,2015.The license was renewed by Xiao Li on February 3,2016,and December 14,2016. On March 20,2017,Ling Donnay came into the City Clerk's office and told staff she was the new owner of Oriental Massage.The only information she provided was a new insurance policy,which staff placed in the file. In the Progressive licensing system,the transaction history shows the license was last issued 12/14/2016.In the account notes,however,it can be seen that on March 20,staff changed the account name from'Oriental Massage'to'Oriental Massage—Ling Donnay'and reprinted the license with the new name. A search on the Secretary of State's website reveals Oriental Massage LLC—the entity to whom this license was issued-was originally formed on 11/26/2014,but was terminated on April 5,2017. RCO 115A.10 stipulates it is not possible to transfer a massage therapy license between entities. 115A.10. Restrictions and Regulations. Subd. 14. No license issued under this chapter may be transferred. A Massage Business Therapy license shall terminate upon any change in the Licensee's officers or ownership interests unless the change is approved by the Common Council in which case the license shall continue in force until the end of the license term. The issues involved with this license were first uncovered during the time action was being taken against the Tuina Massage license.A letter was sent to Ling Donnay on June 26,2017 advising the license that had been issued to Oriental Massage LLC was no longer valid since the company was no longer in existence,and both the business entity and the ownership involved in operating the business location 96 had changed,and that she therefore needed to complete a new application to have a new license issued. Ms. Donnay submitted a new application,however it was very incomplete and lacked much of the information and supplemental documents required on the application itself and in the ordinance.Staff worked with Ms. Donnay and her husband Gary over a period of several weeks to obtain a complete application. Recommendation Because staff in the City Clerk's Office provided an updated license to Ms.Donnay in March without completion of an application,contrary to the requirements of City ordinance,a belief that requirements were met may have been perpetuated.However,that license expires Dec.31,2017. In addition,all business owners and operators have an obligation to know and operate in compliance of City ordinances and state law. Because the reprinted license was improperly issued and Ms.Donnay did not follow the requirements of the City ordinance,the issuance of a new license to the new business entity is still required and should be enforced at the expiration of the current license period. It is the recommendation of staff that the new license application,for a business license to be effective January 1,2018,when the current license has expired,be denied.The Rochester Police Department has also issued a recommendation to deny the license,on the basis of the revocation of Ms. Donnay's prior business license for Tuina Massage. Under Rochester Code of Ordinances 115A.08,the revocation that occurred with Ms. Donnay's other business license must be considered in evaluating a new license application and may be grounds for denial of the new application.Further,many of the concerns that existed in the operation of Tuina Massage are also present with Oriental Massage. Ms. Donnay is listed as the on-site manager responsible for all business operations at Oriental Massage, as she was at Tuina Massage. However,despite being the on-site manager at both businesses,and the only person indicated on either license file with any responsibility for either business,she was out of the country and unavailable for multiple weeks in May and June of 2017 when notice of the hearing was sent out for Tuina Massage.The new application for Oriental Massage also lists only Ms. Donnay as the on-site manager and the only individual with any ownership interest.She and her husband also originally indicated she alone would be working in the business at the time the new application was first submitted.Since that time,other individuals have obtained individual massage therapy licenses to presumably work in the business as well,but according to the application submitted for consideration at this time,only Ms. Donnay is responsible for the management,ownership,and oversight of the business. During the hearing held regarding Tuina Massage,concerns were raised by the City Council about the nature of the working relationship for therapists in the business.The therapist who had been arrested at Tuina testified at the hearing that despite being classified as an independent contractor,she was requiredto be at the business from 9 a.m.until 9 p.m.every day. Every therapist who has worked at either Tuina Massage or Oriental Massage has listed either one of the business addresses as their home address,or the address of a property owned by Gary Donnay. 97 Although he is not listed on any application or business record as playing any role in a massage therapy business,Gary Donnay began calling the City Clerk's Office in late May of 2017 after the hearing notice was sent regarding considering sanctions against Tuina Massage. He continued calling the office over a period of several weeks to inquire about the hearing,what the action taken by the Council on July S meant,the status of the business license for Oriental Massage,and whether other applications for individual massage therapist licenses for therapists who would be working in one of his wife's businesses had been granted. Two individuals applied in May and listed the business address for Tuina Massage as their home address, stating they were staying at the business. One of them,Xiuxia Pan,did not provide a subsequent address,as she was cited in May for working without a license at Tuina Massage,and the completion of a police background check revealed a pending prostitution arrest in Plymouth,Minnesota, leading to the withdrawal of her application.The other applicant was Lian Wang.When she was told the business location did not permit residential use,she changed her address to 39 Park Drive NW.The license that was issued to Lian Wang was mailed to that address,and Mr.Donnay called when he did not receive it. He stated that although mail is not delivered to that property,the post office in Eyota knows that's his house and puts the mail with that address in his PO Box. Lian Wang came into the City Clerk's Office on October 20,2017,after notification of the October 30 hearing had been sent to Ling Donnay,and presented a letter requesting her address be updated.That letter is attached to meeting materials. Yi Lan Wang also listed 39 Park Drive NW as her home address for both an individual massage therapist license and a massage therapy business license.Yi Lan Wang's individual massage therapy license was issued on October 3,and was sent to the Park Drive address in Eyota.The Rochester Police Department was just notified by the Plymouth Police Department that Yi Lan Wang had withdrawn her application for an individual massage therapy license in Plymouth after the license investigator in Plymouth discovered discrepancies in her address information.She indicated the withdrawal in a hand written letter,attached to the meeting materials,to the Plymouth Police Department dated Oct. 12,2017, where she stated her new address was 14 6th St NW,Rochester,MN 55901,the address of Oriental Massage. The home at 39 Park Drive NW is listed in Olmsted County property tax records as a single family residence,with Mr.Donnay as the sole owner since 2006. It is not homesteaded.Mr.Donnay is also listed as the owner of a single family home at 4334 56th St Ln NW in Rochester.That property is homesteaded.That is the address Ling Donnay has provided on her individual massage therapist application,as well as her business application for Tuina Massage.That address is also listed as the home address for two other individuals with active massage therapy licenses in the City of Rochester, Ctingan Liu and Xue Dong. With the input of the Rochester Police Department,these working and living conditions indicate a possibility of human trafficking for the therapists working in the businesses owned and operated by Ms. Donnay. 98 MEMBERSHIP CONVEYANCE AGREEMENT WHEREAS,Julia Wang,hereinafter refeired to as"Seller,"is the sole member of Tuina Massage,LLC,a limited liability company organized under the laws of the State of Minnesota; WHEREAS,Yi Lan Wang,hereinafter referred to as`Buyer,"wishes to purchase said membership; WHEREAS,Buyer is aware that,prior to executing this agreement,Tuina Massage,LLC, has conveyed to Shan,LLC,and Dynasty,LLC,its interest in massage establishments in Minneapolis,Spring Lake Park,Fridley,and Otsego,MN; C a, z- tl10 . %022 WHEREAS,Buyer is aware that the only remaining massage business owned by Seller is the one located in Rochester,MN; NOW,THEREFORE,it is hereby stipulated and agreed as follows: 1. Seller will convey to buyer the membership in Tuina Massage,LLC,for the sum of $12,000,payable as follows: a. $6,000 upon execution of this agreement,receipt of which is acknowledged; b. The balance upon licensure of the business by.the City of Rochester. 2. Buyer will be Iiable to the landlord of the premises for Tuina Massage,LLC's rental . obligation under the existing lease. 3. Should.either the city refuse to license Buyer or should the landlord legally fail to honor the lease,the initial deposit shall be refunded to Buyer. • Julia Wang, Seller 7/ Dated: • ` rt' t " - I:. - • Yi Wang Dated: • • • •• 1 0 0 Introduced into the record at K A £ S S the City Council meeting of February 25, 2019. LAW LLC RYAN KAESS February 25, 2019 VIA EMAIL Fridley Mayor Scott Lund Fridley City Hall 7071 University Avenue NE Fridley, MN 55432 RE: February 25, 2019, Public Hearing on Massage Therapy Business License for Tuina Massage dba Moore Massage Located at 1214 East Moore Lake Drive and Massage Therapy Licenses for Julia Wang and Yafang Zhang Dear Mayor Scott Lund and Council Members: Please be advised that myself and Don Zhou represent Julia Wang for the above in the matter scheduled before the Council on February 25th, 2019. We are in receipt of your letter dated February 22, 2019 in which City Clerk Debra A Skogen stated that "due to nature of the issues found during the background investigation, the City has determined to move forward with the public hearing." We are disappointed with the new City decision and we disagree with this decision. Our client, Julia Wang has formally withdrawn her application for a Massage Therapy Business license and Massage Therapy license in your City, after communications and phone calls between the city attorneys and Don Zhou, my co-counsel on this matter. Between the time of formal withdrawal and the receipt of the city letter from Ms Skogen, for some inexplicable reasons and with no legal authority, City decided to keep this on the agenda for a final 101 5th Street E,Suite 1150,Saint Paul, MN 55101 Page 2 of 3 decision where there is no application any more. It is like announcing a death sentence when that person has already died. What legal basis that allows this vote to proceed when the application has been withdrawn? With no city ordinance to govern this procedure, any discussion or determination on a withdrawn application would be a clear violation of Minnesota law and cause harm to my client with malicious intent, a harm that my client would have no choice but to seek redress of the grievances in the Courts, suffered at the hands of the City. We want to emphasize that my client is withdrawing this application, not because she is agreeing with any of the unfounded, unproven and clearly exaggerated allegations made against her in the unjust report created by the city attorney. My client is withdrawing her application to avoid a fight with City who clearly does not want her to have a business in the city and may have other reasons such as to increase access to federal grants to combat fictitious sex trafficking rings. My client denies all the allegations in the unfair report created and submitted by the City attorney. However, we are not going to participate in what would clearly be nothing more than a Kangaroo Court that's only goal would be to further anti-Chinese bigotry and to hold up as an example to further seek increased funding to combat fictitious sex-trafficking. In short if the City of Fridley wants to discriminate against a hard-working Chinese woman and keep business out of Fridley, my client is willing to oblige as evidenced by her formally withdrawing her application. When the city does not welcome her, she does not want to choose to do business in that City. Lastly, the City also has no justification to publicly deny the application of Yafang Zhang's application. Both her application and our client's application have been formally withdrawn and the matter is closed. Any further actions are adding insult to the injury and is clearly not authorized by city ordinance or regulations and is motivated by nothing but malicious intent to punish our client. DEGREE 0C NGNOR BUILDING 325 CEDAR STREET SU[TE,020 SAINT PAUL MN 55101 KAESSLAWCOM Page 3 of 3 Sincerely, /s/ Ryan L. Kaess Ryan L. Kaess, Esq. Kaess Law LLC U.S. Bank Building 101 5th Street East, Suite 1150 St. Paul, MN 55101-1822 /s/ Dongfa Zhou Dongfa Zhou Hongfa Law Firm 1395 Braun Ct. Eagan, MN 55123 Cc: Scott Lund, Mayor Scott.Lund(a�FridleyMN.gov Robert Barnette, Councilmember at Large Robert.Barnette(a�FridleyMN.gov Tom Tillberry, Councilmember Ward 1 Torn.Tillberry(p�FridleyMN.gov Steve Eggert, Councilmember Ward 2 Stephen.Eggert FridleyMN.gov Ann Bolkcom, Councilmember Ward 3 Ann.Bolkcom(a�FridleyMN.gov Jay Karlavich, City Attorney JKarlovich@levander.corn DEGREE OF HONOR BUILDING_ 325 CEDAR STREET, SUITE 1020. SAINT PAUL MN 55101 KAESSLAWCOM Dr. Catherine Gray Discussion Points—Fridley City Council Meeting, February 25th RE: Ms. Julia Wang/Moore Massage (1210 Moore Lake Dr. E, Fridley, MN 55432) • We noticed employees being dropped off from back seats of SUV's or Mini-Vans, (but never the front) and rarely saw anyone being picked up • Vans and SUV loads of food were dropped off weekly -the kind of food purchases that you would be buying from Sam's Club or another food warehouse at the quantities of either retail amounts or a business with MANY employees. • Steady foot traffic on opening day, but only males coming for massage • I stopped over to speak with the owner, and was "thrown out"—this is the term that we use because they immediately say (if you are female,) "Get out.No English," or "No appt today for you." We have proof of 3 females working at the center, who tried to get massages as walk ins, only to be told the exact same statements, "Get out. No English. No appt for you today." • Their open sign is frequently flashing at 11:00 p.m. at night. • We observed two different middle-aged men leave with a very young Asian women, holding hands -they would return within the hour with gift bags from "Fantasy Gifts" across the street. • We observed a menu that they have of their services (also online) in which women are depicted as Geishas, along with a "menu" of services such as 4-handed massage (a very strong indicator that sexual acts are being performed,") and "Shower massage." • Photographic evidence of women drying their clothes on the picnic bench outside of our office • Photographic evidence of women walking in bathrobes with shower caddies,to and from the Lifetime Fitness (directly behind our building) • Page 2. (con't) _.. —•.— _ £f•. whew - • AA • 1110411f. j‘.157.4 Jf 1 AGENDA ITEM [171 CITY COUNCIL MEETING OF ridl February 25, 2019 To: Walter T. Wysopal, City Manager Mayor and City Council From: Daniel Tienter, Director of Finance/City Treasurer Date: February 25, 2019 Re: Community Investment Fund Policy and General Fund Transfer Approval Like many other municipalities, the City of Fridley (City) maintains a Closed Bond Fund (Fund), which absorbs the balance of any individual debt service funds upon their closure. Generally, the City opens a debt service fund per bond issue, and it remains open for the duration of the amortization schedule (e.g., 10 years). As such, the Fund tends to increase in balance over time. In the 1990s, the City began transferring monies from the Fund to support operating budget shortfalls. At the end of 2018, the Fund maintained a balance of approximately $3,163,000, or about $4,837,000 less than the $8,000,000 held by the Fund in 1990. Over the past several years, however, the City made various efforts to eliminate the use of the Fund, most notably the modification to the property tax levy limitation codified in the City Charter. The City ended this transfer practice in the Adopted 2019 Budget. Given the remaining balance of the Fund, the Council guided staff to consider alternate uses for the monies. Under this general direction, staff established three goals for any use of the Fund: 1) avoidance of ad—hoc expenditures; 2) long—term sustainability; and 3) support for other City activities. Based on these goals, and after reviewing the practices of other cities, staff recommend the creation of a Community Investment Fund (CI Fund), which would provide interfund loans to support capital projects related to parks and public utilities. Generally, the CI Fund would issue interfund loans to finance the cost of long—term improvements to the utilities owned and operated by the City. In turn, those utility funds would repay the CI Fund with interest, which the City would ordinarily pay to third—party bond holders. Upon repayment, the interest income will be used to support the cost of park improvements throughout the City. In order to support the planned interfund loan activities, staff also recommend the Council transfer up to $900,000 from the General Fund to the CI Fund upon creation. These monies are in excess of the upper threshold established in the Fund Balance Policy (i.e., over 50% of 101 budgeted expenditure for the subsequent year), and available for other purposes. This transfer will not impact any activities included in the Adopted 2019 Budget as the City does not anticipate the use of fund balance for operations. At the February 11, 2019 Conference Meeting, the Council reviewed the Proposed CI Fund Policy (Policy), General Fund transfer and guided staff to present it at a future Council Meeting for final review and adoption. Based on the process to date, the cost savings to the City and availability of funding sources, staff recommend the Council adopt the Policy and transfer up to $900,000 from the General Fund to the CI Fund at their Regular Meeting on February 25, 2019. These actions will be effective December 31, 2018 and included as part of the 2018 Comprehensive Annual Financial Report (i.e., audit). Recommended Action A motion to adopt the attached resolution adopting the Community Investment Fund Policy and authorizing a transfer of up to $900,000 from the General Fund to the Community Investment Fund. 102 RESOLUTION NO. 2019 - RESOLUTION APPROVING THE COMMUNITY INVESTMENT FUND POLICY FOR THE CITY OF FRIDLEY, AND APPROVING A TRANSFER FROM THE GENERAL FUND TO THE COMMUNITY INVESTMENT FUND WHEREAS, the City of Fridley(City) acknowledges the limited financial resources available to support the cost of capital improvements throughout the community; WHEREAS, similar to other municipalities,the City maintains a Closed Bond Fund(Fund); WHEREAS, the City recently ended the practice of utilizing the Fund to support operating budget shortfalls,which makes its available for other activities and uses; and WHEREAS, the City will convert the Fund into a Community Investment Fund to account for the current balance of the Fund, effective December 31, 2018, and various revenues identified by the attached Community Investment Fund Policy(Policy); and WHEREAS, the City will transfer $900,000 from the General Fund to the Community Investment Fund to support activities outlined in the Policy; and WHEREAS, the Community Investment Fund will issue interfund loans to support the cost of long—term improvements to utilities owned and operated by the City; and WHEREAS, the interest income generated upon repayment of those interfund loans will be used to support park and recreation improvement projects; and WHEREAS, the Community Investment Fund shall provide cost savings to the City and a reliable funding source for park and recreation projects for the foreseeable future. NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of Fridley hereby adopts the Community Investment Fund Policy attached as Exhibit A. BE IT FURTHER RESOLVED,that the City Council authorizes the following transfer: Fund Account Debit Credit General Fund Transfer Out $900,000 Community Investment Fund Transfer In $900,000 Total $900,000 $900,000 PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF FRIDLEY THIS 25th DAY OF FEBRUARY,2019. ATTEST: SCOTT J. LUND—MAYOR DEBRA A. SKOGEN—CITY CLERK 10 3 Exhibit A FridIf ley Investment Fund Policy City City of Fridley, Minnesota of Fridley Purpose The City of Fridley, Minnesota (City) acknowledges the limited financial resources available to support various capital projects throughout the community, such as improvements to park and recreation facilities, and public utilities. As such, the Community Investment Fund Policy (Policy) shall create and provide guidance regarding the use of a Community Investment Fund (Fund) to support capital project costs. Generally,the Fund shall be used to issue interfund loans to support the cost of long—term improvements to utilities owned and operated by the City, specifically the Water, Sanitary Sewer and Storm Water Utilities. Upon repayment,the interest income earned on those interfund loans will used to support the cost of park and recreation improvements throughout the City. Through this Policy,the Fund shall provide meaningful cost savings for the City, and a funding source for park and recreation projects for the foreseeable future. General Guidelines and Requirements For the purposes of this Policy,the following guidelines and requirements shall control the operation and use of the Fund. Fund Created The City shall create a Capital Project Fund called the"Community Investment Fund,"effective December 31,2018. Eligible Revenues and Funding Sources The following funding sources shall be deposited or transferred into the Fund: • All assets of the "Closed Bond" Fund as of December 31, 2018; • Any repayments as the result of interfund loans issued by the Fund; • All interest and investment earnings of the Fund; • Any unassigned fund balance of the General Fund in excess of upper threshold (i.e., 50%) established by the Fund/Cash Balance Policies for the City as determined by June 30 annually; • Any fees,excluding reimbursements for City staff time, obtained through the issuance of Private Activity Bonds (i.e., Conduit Bonds); • Any unanticipated proceeds or payments to the City,except for those controlled by Section 12.06 of the City Charter;and • Any other monies appropriated by the City Council and/or donated to the Fund. Eligible Costs and Expenditures The Fund shall be used exclusively to support the capital and debt service expenditures related to public utilities, pursuant to Section 11.01 of the City Charter. Additionally, the Fund may be used to support 104 1 capital costs, but not debt service or interfund loans,associated with park and recreation improvements, including, but not limited to: cultural or civic improvements; natural resources restoration; park and trail construction; and deferred maintenance related to any of these activities. Generally, the projects shall provide a community—wide benefit for the City. The Fund may not be used to support any operating costs of the City. The City may only expend Fund assets pursuant to the following procedure: • The Finance Director submits a "Request for Community Investment Fund Support" to the City Manager,which must include the estimated capital and projected operating costs of the project, for their approval; • Any such project must also be authorized as part of the Capital Investment Program (CIP) as adopted by the City Council annually,or from time to time; • The City Council adopts a resolution stipulating the structure and terms of any interfund loan, pursuant to Section 7.10 of the City Charter,originating from the Fund; and • The project meets or exceeds the requirements of other sections of this Policy. The Finance Director may authorize any transfers from the Fund to support park and recreation improvements provided the amount does not exceed the amount authorized in the CIP and the Fund's Cash Flow Projection or violate other sections of the Policy. The limitations imposed in the sections above do not apply to reasonable expenditures necessary for the administration of the Fund. Additionally, the Fund may be used for emergency and disaster purchases consistent with the Procurement Policy as adopted by the City Council, and Section 6.06 of the City Charter. Debt Service The Fund may be used to support the payment of debt service (i.e., bonds) for qualifying capital costs, subject to the following limitations: • The total annual debt service payments do not exceed more than 50% of the ensuing years' eligible and available revenues as defined below; and • Available revenue consists of total revenue derived from the aforementioned eligible revenues and funding sources, less any amount allocated for the accumulation of a Minimum Fund Balance. Minimum Fund Balance The Minimum Fund Balance must be estimated on a 10—year horizon. In order to accumulate a minimum fund balance and maintain the long—term solvency of the Fund, the Minimum Fund Balance will be as follows: • During Fiscal Year 2019 through 2022, the Fund shall maintain a Minimum Fund Balance of $300,000; • During Fiscal Year 2023 through 2025, the Fund shall maintain a Minimum Fund Balance of $500,000; and • Beginning in Fiscal Year 2026, and for all years thereafter, the Fund shall maintain a Minimum Fund Balance of$1,000,000. Administrative Considerations All agreements, applications, permits or other documents required under this Policy shall be provided in a form or forms as determined by the City Manager. 105 2 The City Manager, or their designee, may waive any sections of this Policy, if doing so would not violate any applicable sections of the City Charter or ordinances,State or Federal laws,or resolutions adopted by the City Council. Wavier of any particular section does not constitute a wavier for the entire policy and the City Manager, or their designee, may end such waivers in their sole discretion. Last Updated DT,02-22-2019 106 3 _ 111 liar SIT AGENDA ITEM ``it CITY COUNCIL MEETING OF FEBRUARY 25, 2019 Fridley INFORMAL STATUS REPORTS 107