Excerpt from February 3, 2004 City Commission Meeting Minutes

 

 

REGULAR AGENDA

Conduct a public hearing on a request for waiver from Section 4-206 of the City Code from Pepperjax Grill, 947 New Hampshire, Suite 120, for a cereal malt beverage license.

 

Frank Reeb, Administrative Service Director/City Clerk, said the process for this public hearing was similar to those held in recent months with respect to downtown drinking establishments and restriction waivers, but this application was different in that this establishment wanted to sell Cereal Malt Beverage. He presented to the Commission a map depicting the proposed location.

He said by City code staff was required to notify all affected churches and schools within 400 feet of the primary public entrance of the establishment.  Staff timely notified two establishments which were Salvation Army Church and the Lawrence Arts Center pre-school.  After that notification, the pre-school had decided to take a neutral position on that matter. He informed the Commission that there were two other establishments that were just outside the 400 feet.  Those two establishments were First United Methodist Church was approximately 440 feet from the primary public entrance and Lawrence Christian Center was further up the street along New Hampshire Street and they were approximately 450 feet.

He said this waiver request was for a Cereal Malt Beverage application and the rules were somewhat different.  One rule was the fact that by City code, they were required to close at midnight and they could not sell Cereal Malt Beverages after midnight.  Also, to the extent that the business plan information was important, he had a floor plan available of that establishment. 

He said the primary public entrance, despite the address of the establishment, was along 10th Street.

Another issue to keep in mind was according to William Fain, District Manager for PepperJax Grill, there was a similar store in the Omaha, Nebraska area that sold just over 1% beer and Fain said that they would conservatively sell 10% or less of what they considered their gross receipts to be. 

Lastly, Reeb said the applicant had provided a menu along with the Cereal Malt Beverage License application because they would need to meet the 55% food sales requirement in the event a CMB License was granted.  He said the hours of operation were from 11:00 a.m. until 10:00 p.m.

Rich Forney, pastor of the Salvation Army Church, said they had taken a poll of some of the people they housed in their facility.  He said they were a church first and foremost, however, they were most known for their social services within the Salvation Army.  He said they had been in this community for over 117 years and they had never had to come up against this type of a proposition.

He said their facility did not take in those people who were inebriated and everyone that came in had to take a breathalyzer test.  He said nationwide over 50% of individuals that were experiencing homelessness suffered drug and alcohol abuse or a dual diagnosis of addiction and mental illness.  The Salvation Army provided a safe haven from the social and behavioral influence of addictions.   Many residents know that they could not be intoxicated and enter the shelter at night and they were aware of their physical reaction to their blood alcohol level and they timed their daily drinking patterns, according to shelter hours, which were a first step toward recovery.  He said he had changed their blood alcohol level permissibility from 0% tolerance to .04%, half of the legal limit.   

He said they had been told by some of their residents on probation from alcohol related crimes that their probation officers had ordered them to stay at the Salvation Army Shelter because they did not let anyone in who was inebriated.  On any given night it was possible to find at least one person staying at the Salvation Army Shelter in an effort to avoid the social temptations of using alcohol. 

Above and beyond all of those issues, they were a church and he knew of very few Salvation Army facilities that had a drinking establishment or a place where there was alcohol available within 100 feet of their front door. 

Forney said Fain mentioned that 10 out of 400 patrons drank beer which was a small amount of people.  He said if that was the case, he was sure that PepperJax could exist without serving beer and still make a financial gain on their establishment.

He said he wanted his opinion to go on official records, as a representative of the Salvation Army, that he was protesting this waiver. 

William Fain, representing PepperJax Grill, said it was important that they were happy that they were opening up their first restaurant in the Kansas City Area, in Lawrence.  Since they were a new restaurant and a new concept, it was important that people understand what they were trying to offer to the customers.  He said they based themselves as being a family oriented restaurant that primarily sold food and they hoped to apply for the right to sell 3.2 beer.  He said they were planning on opening up several stores in the area over the next few years. 

He reiterated that they were a family oriented restaurant and they had no intention of making alcohol their focus.  He said it was actually a 1.1% beer sale rate for the entire 2003 year at that other location which equaled to 10 to 12 beers a day being sold over that 10 hour span.  He said their hours were 11:00 a.m. until 10:00 p.m. and they had no intentions of staying open late at night and trying to attract a bar type crowd.  He said not only did they have a responsibility to the community, but they also would have responsibility to their employees by not attracting that type of crowd.   He said they hoped to provide jobs for 40 to 45 people which would help this community in providing extra income to those individuals.  In addition, they hoped to be one of the first businesses associated with the Downtown 2000 project and they wanted to be a good example for others to follow.  He said they were not going to advertise beer sales nor would there be beer signs in the windows or throughout the restaurant.  

In closing, he said they were excited to be in Lawrence and their goal was to provide Lawrence with another eating establishment.  He said he thought they would make a good neighbor to the downtown area, the Downtown 2000 project, and the Salvation Army.  He said he understood Forney’s concern and objections, but he believed that they did not pose a threat to what the Salvation Army was trying to accomplish with their good deeds.  He respectfully asked the Commission to consider their application.

Bill Mitchell, Lawrence, said when he learned that the church at 9th and Illinois was not going to oppose a tavern next door, he decided it would be a waste of time to voice opposition as with the case with the two downtown churches and the establishments around 10th and Massachusetts.

He said the City Commission had recently acknowledged that perhaps some new ordinances might be needed to prevent Lawrence from turning into an Aggieville.  He said the Commission had three times in the last month waived the provisions of an existing ordinance that would have kept two bars out of downtown.  He suggested that a backbone was needed from the City Commission as well as the churches and it was the Commission’s business not only to enact ordinances, but also to see that existing ordinances were fairly enforced.  He asked the Commission how difficult it would be to ever again enforce the 400 feet distance requirement for churches and schools.  He said the Commission had the tense wrong when they expressed concern about the possibility that downtown “might” be becoming an Aggieville because downtown “was already” an Aggieville.

Patricia Sinclair, Lawrence, asked the City Commission to deny the request for a waiver.  She said they were looking at an issue of not just the wavier request, but the recent decisions in the same category and the code at large.  She suggested that the very existence of this item in the City code implied that it was in the public interest, welfare, and safety to have that distance requirement between bars, churches, and schools.  She was interested in whose burden it was to prove that “the proximity of the establishment is not adverse to the public welfare or safety.”  She thought that the applicant should have to demonstrate that it was not adverse to the public welfare or safety or perhaps the City was responsible for that and the City should provide research and staff reports at a time of a waiver request giving some data upon which the City Commission could base their decision on. 

The City code required that those churches and schools be notified, but it did not say that it was up to the church or school to make the determination of whether the waiver would be denied or allowed.  Although when she had attended the last hearing for those two establishments and when looking back at the notes from Rick’s Place waiver hearing she heard a lot said about the churches not opposing and it was as though since the churches had not raised an opposition that was the Commission’s deciding factor in granting the wavier.  She said now they had a church that said “no” so she asked the City Commission if they would say “no.” 

She said from the newspaper, the pastor reportedly was not happy with the idea that they would have a bar as a neighbor in the same complex, but the church decided not to protest and perhaps that had something to do with Rick’s Place having the same landlord.   She said that put the Church in a situation of duress. 

She said when the Masonic Temple was being discussed by the Commission along with City staff that there was an idea that waiver would exist only for those three people and at the time they stopped their business, then people would need to apply for the waiver again, but that proved not to be true.  It was fine for people to talk about what their intentions were, but the City code was not even enforced on those establishments therefore, why would we enforce the code now and what was there that made what PepperJax was stating as their hours of operations and there intentions a matter of law or record. 

She said the last time the Commission talked about the issue of PepperJax there was discussion about a primary entrance and Commissioner Highberger was concerned about that entrance.  She said the reason why the primary entrance was of interest was because that was where the City code specified that the 400 feet was measured starting from that point.  She asked that “primary entrance” be defined, but she did not get a definition.  She said she did not understand the point of having a condition that stated where the “primary entrance” was if the “primary entrance” was not defined.  If PepperJax was designating their “primary entrance” on 10th Street and most of their traffic was from New Hampshire, perhaps the two other establishments to the north of New Hampshire would have legally been required to be notified. 

When looking back at the Commission’s discussion of Rick’s Place, there were discussions about the neighborhood not wanting the bar, schools that were outside of the 400 foot range, property values, public nuisance and safety issues.  She said there was a lot of testimony as to who the person was that was brining in the bar and his track record, but yet there was no testimony about the track record of the proposed owners of the Masonic Temple.  She said she was pointing out the inconsistency in the way in which those establishments were being dealt with. 

She did not have any knowledge of the Commissioners view points as the financial gain to the City if that waiver was granted.  She said there was a decision for the City to be involved in a Downtown 2000 project which involved a parking garage and a variety of retail space.  It seemed from reports that developers missed a deadline last year and they were having trouble renting that space which made that a troubled venture, but she did not think that was a good enough reason to waive that distance requirement so the City could financially benefit.  If PepperJax was the only tenant they could come up with after all this time that was too bad.  She suggested in an email to the Commissioners that their should be a breakfast place at that location because downtown Lawrence needed more breakfast places that could serve all day long as far as she was concerned because she would be first in line. 

Melinda Henderson, Lawrence, said she was not speaking for or against the waiver request rather just to throw out some thoughts about the tax increment financing project for Downtown 2000 and the Parking Garage and how that played into the particular issue they were discussing.  Unfortunately, with this particular project, PepperJax Grill, it seemed that the City was in a catch twenty-two situation because there was grand opening coming up and she wondered if they did not have enough foresight back when the TIF project was approved that would have helped the City avoid this situation. 

Tax Increment Financing was a legitimate and often worthwhile economic development tool, but this one did not fall under the purview of the City’s current economic development program, therefore there was no professional assistance available to the developer as far as potential road blocks that might come up with tenants such as PepperJax.  She said now the City was in a position where not approving the waiver might be construed as “business unfriendly” because of the performance of the TIF district so far.  Even by ordinance the Salvation Army had the legitimate right to protest such an exception and they had done so. 

When plans first came forward for the idea of PepperJax Grill locating in the Downtown 2000 development, she wondered did anyone on staff advise the developer that there could be an issue with obtaining a Cereal Malt Beverage License.  She would like to see staff get out in front of the curve in the future and not have those battles coming to the Commission so late in the game.  She said the City could not approve TIF financing and then hope for the best.  She said the City might need more staff participation and guidance provided and available to the developer with regards for filling that project.   She said the City did need to nurture downtown and TIF financing was one way to do that with financial benefits accruing back to the City.  Perhaps the City needed to rethink their strategy regarding the use of tax increment financing and figure out how they could make sure that something like that was a win/win situation for the developer, tenants, surrounding neighbors, and the City.                                                     

Moved by Schauner, seconded by Hack, to close the public hearing.  Motion carried unanimously.  

Commissioner Schauner asked what conversations staff had with the PepperJax developers concerning any impediment that might arise as a result of their proximity to the Salvation Army.

Corliss said that had been discussed since the project was in its discussion stages that if they wanted to sell alcoholic beverages or cereal malt beverages that it would be an issue in regards to the fact that it would be on City property and the proximity concerns as well.  He said they identified that not only with this establishment, but there was attempt to locate a business that sold retail liquor, which was relocating on South Iowa now, to the north of the Arts Center.

He said the tax increment financing issues were important. Some people saw that as a goal of the Downtown 2000 Project, some people saw that as a tool and a few people saw it as a very limited tool.  He asked the Commission to keep in mind that the real estate property taxes that were paid on that building happen regardless of its occupancy.  Personal property taxes would depend upon the occupancy.  As far as sales tax, if there was a 7.3% sales tax, 5.3% went to the State, the 1 cent sales tax for the City came back to the City anyway, whether there was a TIF District or not.  The additional City share of the County sales tax also came back to the City.  He said it was just that increment of the County sales tax that would have gone to the County in the other three incorporated cities within Douglas County from that county one cent sales tax that came to the City because of the TIF District in order to retire that debt.   He said he did not know what that amount would be for a restaurant and also for cereal malt beverage sales in a restaurant, but he did not think that much money was being talked about, as far as sales tax was concerned.

Vice Mayor Rundle asked Forney if there were any problems with their other neighbor in the vicinity, India Palace.         

Forney said they had been at that location long before he arrived at the Salvation Army. He said it was very difficult for those people standing outside of the Salvation Army knowing that right across the street beer would be available at PepperJax.  He said it was true that beer was available at India Palace, but even though PepperJax was saying their primary entrance was on 10th Street, right straight across the street from the entrance to their shelter was the entrance on New Hampshire for this restaurant. 

Mike Wildgen, City Manager, noted that establishment was an on-premise license.  He said beer could not be taken out of that establishment; that beer would need to be consumed on-premise.

Vice Mayor Rundle asked Reeb to provide some history of India Palace.

Reeb read the email he had sent to Vice Mayor Rundle which stated: “The India Palace has a drinking establishment license (subject to the 55% food sales requirement) and not a cereal malt beverage license for which PepperJax has applied.  Nevertheless, the distance restriction waiver requirements are the same.  The India Palace's initial DE license was in October 1999 and, given staff's interpretation of City Code section 4-113, there was no distance restriction waiver necessary at that time because the sale of alcohol was allowed on the "premises" prior to that and there was no license gap exceeding 60 days.  That is, in 1995, the Nouvelle Tasty Shoppe (later known as AB's Grille & Deli) obtained a DE license to sell alcohol at 129 E. 10th.  That licensing process included a restriction waiver public hearing on November 14, 1995.  The DE file for Nouvelle Tasty Shoppe/AB's Grille & Deli contains a notice of public hearing letter to the Salvation Army (c/o Captain George Windham) but there is no document in the file indicating the Salvation Army's position on the matter.   The minutes from the November 14, 1995 City Commission meeting contain public comment from Aaron Bowers (the applicant) including a statement that he "has met with representatives of the Salvation Army and the other tenants of the building." There is no other public comment in the minutes.  The Commission then unanimously approved the distance restriction waiver for the Nouvelle Tasty Shoppe. The premise was licensed as Nouvelle Tasty Shoppe or AB's Grille & Deli until October 1999.”  He said that was the date India Palace came in to apply for a license.

    Commissioner Highberger addressed the TIF question.  He said his understanding concurred with Corliss’ opinion that the tax benefit to the City from PepperJax would be minimal and did not have anything to do with his decision on that issue.

He said there was a presumption that there was a ban on drinking establishments within 400 feet of a church or school and to waive that the City Commission would need to make a positive finding that the proximity of the establishment to the church or school did not harm the public health or welfare.  He said in the previous three recent waivers that were discussed, the Commission was presented with no information that would indicate that the proximity to the church would cause any harm to the public.  He said tonight they had testimony, that in fact, there was such a potential for harm.  He said Forney indicted that the presence of a drinking establishment, across the street from the Salvation Army, would provide a very strong temptation to their residents.

He said this was not a decision to be made by the church or school it was a decision that was to be made by the City Commission.  He said the Commission needed to give weight to the information they received from church or school representatives, but it was still the Commission’s decision.  He said in this case, he did not see a strong potential danger, but it would be hard for the Commission to make a finding in this case that the proximity would not cause any harm to the public health and welfare.  He said he would vote against granting the waiver for PepperJax.

Vice Mayor Rundle said he would give the burden of weight to the wishes of the church that was why the City had this ordinance.  He thought it was overstated that the idea was to protect the public from adversity.  If they were that concerned, they would be restricting alcohol assumption across the community.   He said they recognized that this was not a matter of boundaries or borders.  He said in new areas they used zoning to try and separate uses and made them compatible when one transitions from one use to another.  He had heard informal conversation from the church that they recognized that downtown was a very distinct venue and they had accepted that and tried to live with that distinction which might be a reason why the churches did not protest.

He said right now there were establishments in proximity to the Salvation Army that co-existed that might be contributing to problems.  He said the fact that the City was in an existing situation with a restaurant serving alcohol right across the street from a church mitigated the concern.  He said he would defer to the representative of the Salvation Army and vote to   deny the waiver.        

Commissioner Hack said as she looked at the City’s entertainment/hospitality businesses downtown, those types of businesses fell into three categories which were music venues, restaurants that serve alcohol, and areas where alcohol was more of a focus than food.  She said PepperJax fell into the restaurant that served alcohol category which their primary focus was not alcohol, but food.  She said this establishment was not a sports bar, but a family restaurant.  She compared PepperJax to a restaurant like Chipotle’s where drinking was not the primary focus.  She said she understood Forney’s concerns, but she was inclined to support that establishment because she did not believe that it was a bar/bar.  She said even the layout of that establishment did not suggest a place where people would gather simply to drink alcohol.

Commissioner Schauner said the City’s ordinance did not specify that just because a place was more restaurant oriented than bar oriented, that the Commission use a different standard in granting or not granting the waiver.  The question was whether the Commission could make a positive finding that the granting of the cereal malt beverage license for PepperJax Grill would not be harmful to the public health or welfare.

He said he voted against Masonic Lodge and Qdoba waivers and he could not in good conscience do otherwise in this case because he believed at some point the Commission needed to say that they would honor what that particular ordinance tried to do.  He said for the first time out of three waivers, the Commission had a church come forward to say that they did not think that selling beer at that establishment would be appropriate and had the potential to do damage to their clientele. 

He said the economic issue of the tax increment financing seemed like a non-issue in this case.  He said he would like to see PepperJax at that location and based on the numbers he heard concerning the sale of beer, it seemed that PepperJax business plan would not fail or succeed based on whether they had a cereal malt beverage license or not.  He could not support a waiver for that particular establishment.

 Vice Mayor Rundle added that those were questions of impact and the fact that the City had that process of a hearing and if the avenue to protest was expected was a recognition that the Commission might vary from that regulation. 

He said he remembered, in the past, acting on a waiver request at 15th and Kasold in which there was a small church on the northwest corner.  He said a liquor store was going into the shopping center across the street.  He said the church did protest, but that Commission voted to allow the liquor store because they were not opened at the same time the church was having their main services and that the alcohol was taken away from that location thus, was not perceived to be impacting to the functions of the church. 

Mayor Dunfield said each one of those waiver cases that the Commission dealt with had been different in one significant way or another.  Those were not black and white, clear cut issues and there were always shades of gray.  He said the Commission’s job was to exercise judgment to try and weigh the different values and issues and come to a conclusion.  

He said in this case, he took Commissioner Hack’s point about different types of establishments further.  He said downtown had bars that were bars and one of those was the Red Lyon a couple of doors down from this particular establishment.  He said there also bars that served food that fell into the 55% food sales requirement and some of those bar/restaurants tended to squeak by.  He said there were also restaurants that served a variety of alcoholic beverage and then there was, at the farthest end of the scale from a pure bar, PepperJax Grill which wanted to only sell 3.2 beer.  He said it was hard for him to see harm to public safety and welfare from that establishment when India Palace, at that next level, was with inside the front door of the Salvation Army and the Salvation Army clients, everyday, walked by the Replay, Red Lyon, Granada, and so many other establishments that were at the other end of that scale.  He said he was inclined to grant the waiver.

Vice Mayor Rundle said the City wanted that rich mixture of government, offices, restaurants, entertainment, and shopping.  He said the Commissions had tried to steer that mixture by having that requirement for new establishments to be more oriented towards food than serving alcohol.  He said it was not easy, if going to far certain parts of the mixture would be eliminated.  He said that was an on-going issue that Commissions would need to struggle with to keep that mixed balance. 

Commissioner Schauner said in response to Mitchell’s comments, Mitchell had it right with one exception.  He said he did not think downtown Lawrence was Aggieville.  He said his strong concern was that he wanted the Commission to do everything they could to maintain that right mixture and to have a policy that did not take the Commission on an irreversible path away from the type of mixture that they presently had and wanted.

Commissioner Highberger wanted Fain to know that his vote on this issue was not a judgment on Fain’s establishment.   He said he was trying to uphold the City’s ordinances.

Fain said he understood.

Moved by Rundle, seconded by Schauner, to deny the waiver for PepperJax Grill.  Aye: Highberger, Rundle, and Schauner.  Nay: Dunfield and Hack. Motion carried.