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04/25/2005 - 00026801CITY COUNCIL MEETING CITY OF FRIDLEY AP RI L 25, 2005 The City Council meeting for the City of Fridley was called to order by Mayor Lund at 7:30 p.m. ROLL CALL: MEMBERS PRESENT: Mayor Lund Councilmember-at-Large Barnette Councilmember Billings Councilmember Bolkcom Councilmember Wolfe OTHERS PRESENT: William Burns, City Manager Fritz Knaak, City Attorney Richard Pribyl, Finance Director Deb Skogen, City Clerk Rebecca Brazys, Recording Secretary Kaela Brennan, AMF Legal Counsel Cynthia Blanc, AMF District Manager APPROVAL OF PROPOSED CONSENT AGENDA: APPROVAL OF MINUTES: • City Council Meeting of April 11, 2005. APPROVED. NEW BUSINESS: 1. Approve Extension to Plat Request, PS #04-05, by Yoava Klucsar for the Property Generally Located at 1420 Rice Creek Road NE (Ward 2). Dr. Burns, City Manager, said this extension will give Anoka County time to complete their review process. Staff expects the final plat to be before Council in May. Staff recommends Council's approval. APPROVED. 2. Receive bids and award contract for municipal garage re-roofing project No. 361. FRIDLEY CITY COUNCIL MEETING OF APRIL 25, 2005 PAGE 2 Dr. Burns, City Manager, stated the lowest of five bids received for this project was from Stock Roofing Company of Minneapolis in the amount of $53,225. Although the low bid is $13,225 over budget ($40,000), staff recommends Council's approval. The additional cost is associated with roofing code changes that were not anticipated at the time staff budgeted for this project. Fund balance will be used to cover the additional costs. APPROVED. 3. Resolution Providing for the Sale of $1,835,000 General Obligation Improvement Bonds, Series 2005A. Dr. Burns, City Manager, stated staff is recommends that in light of lost State aid and generally declining City financial reserves, we begin bonding for the portion of our annual street improvement project not covered by property owner assessments or Municipal State Aid. The intent is to certify the debt service required for repayment of these bonds for tax collection in 2006. This resolution will authorize staff to begin the competitive sale of general obligation bonds sufficient to cover the unfunded costs of the 2005 street improvement project. We expect to sell these general obligation bonds on an annual basis to cover the unfunded costs of future street improvement projects. Staff recommends Council's approval. ADOPTED RESOLUTION NO. 2005-19 4. Resolution Providing for the Sale of $4,625,000 General Obligation Tax Increment Refinancing Bonds, Series 2005B. Dr. Burns, City Manager, stated this resolution provides for the refinancing of bonds issued in 1997 to cover the remaining principal. At today's interest rates, staff estimates that we can save the Fridley Housing and Redevelopment Authority approximately $110,000. Staff recommends Council's approval. ADOPTED RESOLUTION NO. 2005-20 5. Approve Liquor License Renewals. Dr. Burns, City Manager, stated staff has determined that the restaurants and clubs listed have met the food to liquor sales ratios required for liquor licensing by the Fridley City Code. Additionally, the Fridley Police Department has reviewed these liquor license applications and has determined that there are no issues that would prevent them from being granted a liquor license renewal. Staff recommends Council's approval. THIS ITEM WAS REMOVED FROM THE CONSENT AGENDA AND ADDED TO THE REGULAR AGENDA. FRIDLEY CITY COUNCIL MEETING OF APRIL 25, 2005 PAGE 3 6. Claims (121224 — 121411) APPROVED. 7. Licenses. APPROVED THE LICENSES AS SUBMITTED AND AS ON FILE. MOTION by Councilmember Barnette, seconded by Councilmember Wolfe, to adopt the consent agenda with the removal of Item 5. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. ADOPTION OF AGENDA: MOTION by Councilmember Barnette, seconded by Councilmember Wolfe, to adopt the agenda with the addition of Item 5. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. OPEN FORUM (VISITORS): Consideration of items not on agenda — 15 Minutes No comments were made. PUBLIC HEARING: 8. Consideration of the Liquor License Renewal Application of AMF Bowling Centers, Inc., d/b/a Maple Lanes, Generally Located at 6310 Highway 65 NE (Ward 2). MOTION by Councilmember Wolfe, seconded by Councilmember Bolkcom, to open the public hearing. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. Mr. Pribyl, Finance Director, explained this public hearing is being held due to the license holder not meeting the food to liquor ratio for 2004. In reviewing the sales related to the restaurant, staff found that 29% of the sales were from food and the corresponding 71 % were from liquor. A point of disagreement exists between staff and AMF Maple Lanes regarding the inclusion or exclusion of food and beverages from vending sales in these numbers. Staff contacted the Minnesota Liquor Control regarding this issue and was told that because Fridley owns and operates "off sale" liquor, it must issue its "on-sale" private licenses under Minnesota Statute 340A.601, FRIDLEY CITY COUNCIL MEETING OF APRIL 25, 2005 PAGE 4 Subdivision 5. It can only issue "on-sale" liquor licenses to hotels, clubs and restaurants by this definition. In this case, the liquor license was issued to AMF as a restaurant within the bowling center. In 2003, the City modified the City Code to define a bowling center in such a way as to allow the restaurant to have a lower food minimum. Since the license is controlled under Chapter 340A.601, Subdivision 5, and is issued to a restaurant, the definition of food becomes an important issue. Minnesota Liquor Control directed us to the definition section of the State Statute regarding food and restaurants. The definition of restaurant includes a section that states "where meals are regularly prepared on the premises and served at tables to the general public." We have been told this does not include the vending of sandwiches, pop and candy. Mr. Pribyl stated the application for renewal did come in with a CPA statement indicating that the food sales ratio was 32%. Staff did verify that this did include "snack, candy, and cold drinks" as defined on their financials. Without the "snack, candy, and cold drinks" the food ratio falls to 29%. When the issue of food was discussed with AMF representatives, they indicated that the sales for 2004 were impacted by kitchen remodeling. They described those kitchen changes as being so significant that it disabled the kitchen for three of their highest revenue months. Staff asked for the 2005 monthly financials to determine how the ratio was running year to date, and the following was found: Without With Vendinq Vendinq January 31.02% 33.29% February 27.02% 29.98% March 28.60% 31.54% Mr. Pribyl explained that the AMF representatives found our language unclear as to whether food was defined as "prepared restaurant food." The language did not specify that vending food sales were not to be included. Based on past practice, staff recommends that the license be issued to AMF Maple Lanes and the public hearing be continued to October 24, 2005 for a review of the food sales. Staff would also be prepared at that time to clarify the language regarding food sales. Councilmember Barnette stated it appears vending sales are not qualified as food sales according to the State, so AMF Maple Lanes would have to meet the required ratio by October from qualified food sales only. Mr. Pribyl stated that is correct. Mayor Lund asked if vending sales have been included in the past. Mr. Pribyl stated vending sales have been included, but any time staff finds financial statements that include vending sales they bring it to the owner's attention to have those sales excluded. FRIDLEY CITY COUNCIL MEETING OF APRIL 25, 2005 PAGE 5 Councilmember Billings asked if there is anything that precludes the City from having different food ratio definitions for bowling alleys and restaurants. One of the arguments when the City changed the food ratio for bowling alleys was that the State Statute specifically spells out bowling alleys as a type of recreational facility that was eligible for having a liquor license when, in fact, in the City of Fridley the statute makes no distinctive difference between a bowling alley and a restaurant. Mr. Pribyl stated that was what staff discovered with the Liquor Control Board. Councilmember Billings stated the requirement for bowling alleys in our current statute is 30% and that was reduced from 40% last year as an attempt to aid AMF so they could stay in business. He then asked how the 2005 sales for AMF are comparing to the 2003 sales. Mr. Pribyl stated January, February and March sales are trailing their 2003 sales with food sales falling and liquor sales increasing. Councilmember Billings stated he thought that AMF inade a commitment last year to become more aggressive in their food sales. Mr. Pribyl stated that was one of staff's concerns when they met with AMF. AMF indicated they have had some change in leadership and they are now under the control of an individual who is much more geared towards restaurants. In the early months of 2004, their kitchen was down for remodeling to accommodate a change in their restaurant. Councilmember Bolkcom asked for clarification on the history of vending sales being included in the food ratio. She also asked about changing the City's ordinance when it is already spelled out in State statutes. Mr. Pribyl explained that vending sales were not included for the past two years. They discussed this issue with AMF last year. As far as the ordinance change, the City would clarify the issue that food is actually defined as a prepared meal at a restaurant and does not include vending sales. Ms. Kaela Brennan, local counsel for AMF Bowling, stated there was additional information revealed this evening that she was not aware of. When they met with City staff they reviewed the State statutory provisions which separate out the definition of restaurant and a bowling center. There remains a question of whether or not vending food sales should be included. She explained for AMF, the number one item of food sales are cans of pop. She pointed out that fountain pop is considered a food item, yet cans of pop are not. They welcome the opportunity for clarification and support staff's recommendation of postponing the public hearing until October. In attempting to meet their pledge to Council to increase their food sales, they experienced some difficulties with their kitchen equipment. The County Health Department required AMF to do significant remodeling including installation of a new food and ventilation system which FRIDLEY CITY COUNCIL MEETING OF APRIL 25, 2005 PAGE 6 took a lot longer than anticipated. The net result was that AMF was unable to operate at full kitchen capacity from January 30 to May 6, 2004. The bowling season is limited to a 9-month season in Minnesota and the kitchen remodeling occurred during the peak season. They continued to serve some food, but could not offer their full menu during the remodeling. If you exclude the period of time from January 30 to May 6, 2004, the food to liquor ratio is about 32%. In addition to the newly remodeled kitchen, AMF is offering a new and improved product line with a definite push toward upgraded, quality food. The figures through April 17, 2005, show dramatically increased food sales, with the food sales ratio at 27%. Food sales totals through April 17 are at about $8,000 which compares favorably to the $9,000 total for the full month of April 2003. If Council chooses not to follow staff's recommendation to postpone the public hearing until October, AMF would request that Council consider a period of probation because the suspension of their liquor license would have a dramatic economic impact on AMF. They may not be able to continue operating without the liquor license which would result in a loss of jobs for 24 employees. AMF is a tax-producing member and recreation center for the community. Ms. Cynthia Blanc, District Manager for AMF, stated discussions on this issue began in 2003 when a plan was submitted by AMF to Council detailing their efforts to increase food sales. She stated all of those things have been done. Since January of this year, they upgraded their product line. In addition, they changed their plate presentation and introduced new menus. They are also focusing on family products, such as birthday parties for kids and are offering a family fun-pack. In April of this year they have generated $8,100 in food sales compared to $2,500 in 2004 when the kitchen remodeling project was underway. In April, 2003, they had $9,290 in food sales, so they feel they are on track. Mayor Lund asked why their food sales for 2005 were not doing better considering all the improvements they have made. Ms. Blanc explained that many of the improvements she referred to were started in 2003. Their food sales are up 2% to 3% since 2003. Mayor Lund inquired as to the hours of operation for the restaurant. Ms. Blanc stated during the bowling season they serve food depending upon their business, but typically they may open around noon; if not, 4:00 p.m. until 10:30 p.m. Mayor Lund said he does not want to see the bowling alley close, but he would like to see the food sales expanded so they are not bordering on the 30% ratio all the time. He questioned extending this matter until October since that will be right at the end of the slowest business period for AMF. He asked if Ms. Blanc felt comfortable that AMF will be able have food sales of 30% by October. Ms. Blanc responded she is comfortable with that. FRIDLEY CITY COUNCIL MEETING OF APRIL 25, 2005 PAGE 7 There was some discussion regarding continuing the public hearing until December, but it was determined that the Council's practice has been to grant a six-month extension only. Councilmember Billings asked Ms. Blanc to provide a monthly report of food and liquor sales to the City staff so they can monitor the situation up to October. Ms. Blanc agreed to do so. MOTION by Commissioner Wolfe, seconded by Commissioner Bolkcom, to continue the public hearing until October 24, 2005. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. NEW BUSINESS: 5. Approve Liquor License Renewals. Councilmember Bolkcom asked what is involved in the Public Safety Department's review for liquor license renewals. Mr. Pribyl stated a background check is performed as well as a review of any incidents that may concern public safety. If the Director of Public Safety had any concerns about a particular establishment, he would bring them to the attention of the City Manager and Council. Councilmember Bolkcom stated one of the license applications is "right on the edge" with regards to the food to liquor sales ratio. Mr. Pribyl stated he double-checked that particular applicant's sales figures and confirmed that according to their CPA, they do meet the 40% minimum food to liquor sales ratio. Councilmember Billings stated certain establishments now have a 2:00 a.m. closing liquor license and asked how often they are required to submit a statement from their accountant. Ms. Deb Skogen, City Clerk, responded they must submit that statement every six months. MOTION by Councilmember Bolkcom, seconded by Councilmember Wolfe, to approve the license renewals as submitted. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. FRIDLEY CITY COUNCIL MEETING OF APRIL 25, 2005 PAGE 8 9. Informal Status Report. Mayor Lund announced that April 30, is the Fridley Historical Society's annual lasagna dinner. Mayor Lund also announced that the Stargazers annual event will be held at the high school on April 30. Councilmember Bolkcom stated there was a very good turnout at the Block Captain's meeting last week. Councilmember Wolfe announced that he and Mayor Lund attended the Alexander House annual gala event. MOTION by Councilmember Barnette, seconded by Councilmember Wolfe, to adjourn. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. Respectfully submitted by, Rebecca Brazys Recording Secretary ������ Scott J. Lund Mayor