Memorandum

City of Lawrence

City Attorney's Office

TO:	Thomas M. Markus, Interim City Manager Diane Stoddard, Assistant City Manager Toni Wheeler, City Attorney Scott McCullough, Director of Planning and Development Services
FROM:	Sherri Riedemann, City Clerk
DATE:	July 14, 2016
RE:	John Brown Underground – Drinking Establishment License

On July 1, 2014, upon application, the City granted to John Brown Underground, LLC, a Kansas limited liability company, a City drinking establishment license with an expiration date of June 30, 2016. Because John Brown Underground is located in the City’s CD zoning district, it must “derive from the sale of food for consumption on the premises not less than 55% of all [its] gross receipts from a calendar year from sales of food and beverages on such premises.” City of Lawrence, Kan., Code § 20-509(5) (Jan. 1, 2015).

On June 15, 2016, John Brown Underground filed a timely application with the City to renew its City drinking establishment license. At the same time, as required by City Code,  John Brown Underground submitted its tax receipts from the preceding two years. Those receipts disclosed that John Brown Underground was not meeting the 55% food requirement, but that it had taken some steps toward meeting that requirement, including making adjustments to its menu, adjusting its serving times, hiring a person to serve waffles, and filing in January, 2016, an application with the City for a building permit to expand its kitchen by more than 100%.

Because it had not met the zoning requirements to operate as a drinking establishment, i.e., it had not met the 55% food sales requirement of Section 20-509(5), on July 1, 2016, the City Clerk’s Office denied John Brown Underground’s renewal application for a drinking establishment license. See City of Lawrence, Kan., Code § 4-107 (Jan. 1, 2015).

Since that time, John Brown Underground has submitted to the City Clerk’s office a plan by which it will meet the 55% food sales requirement of Section 20-509(5), including an investment of $40,000.00, which plan among other things includes the expansion of the kitchen, expanded staff, expanded service hours, including weekday lunch and weekend brunch offerings, and expanded menus. It should be noted here that the City has approved John Brown Underground’s application for a building permit and that it will issue, subject to the City Commission’s decision herein. It should be further noted that the owner of John Brown Underground has stated that the expansions to the kitchen and its service hours will lead to compliance with the 55% food sales requirement. Staff has reviewed the plan and believes that, under that model, John Brown Underground should be able to meet the 55% food sales requirement.

Based on its review of John Brown Underground’s plan and consistent with what the City has done in such cases in the past, Staff recommends that the City Commission issue to John Brown Underground, LLC, a Kansas limited liability company, a temporary six-month drinking establishment license, subject to the following conditions: (1) that John Brown Underground comply with the 55% food sales requirement during that six-month probationary period; (2) that John Brown Underground submit monthly tax reports to the City for its review to track ongoing compliance; (3) that John Brown Underground enter into a compliance agreement with the City; (4) that, at the end of the six-month period, Staff review John Brown Underground’s tax reports and, based on that review, recommend (a) termination of the temporary drinking establishment license, (b) extension of the probationary period, or (c) issuance of a drinking establishment license to expire contemporaneously with the existing State drinking establishment license; and (5) that, in the event it fails to comply with the 55% food sales requirement and City Staff recommends that the temporary drinking establishment license be terminated, John Brown Underground agrees to voluntarily surrender its temporary drinking establishment license at the end of the six months.

Action Requested:

Staff requests the City Commission to issue to John Brown Underground, LLC, a Kansas limited liability corporation, a temporary six-month drinking establishment license subject to conditions, if appropriate