Liquor Control Board - May 20, 2020 Minutes

LIQUOR CONTROL BOARD
May 20, 2020 1:30 P.M.

Present: Commissioner Piepkorn, Commissioner Gehrig (by phone), Police Chief Todd, City Auditor Sprague, Chris Ohman, Environmental Health
Absent: Grant Larson
Others Present: Rick Carik, Rick’s; Duane Litton, Duffy’s; Dave Erickson, Bulldog Tap, Nikki Berglund Bernie’s; Jeff Thomas, Franks; Dustin Mitzel, Happy Harry’s, Dan Hurder, Boiler Room; Randy Thorson, Old Broadway; Dave Glesner Sidestreet; Dan Labernik, Labby’s; Mark Bjornstad & Jesse Fiegum, Drekker and Chad Klimek, SouthTown PourHouse, James Cailao, Vogel Law and other interested parties.

Meeting was called to order at 1:30 P.M.

1. Commissioner Piepkorn called the meeting to order and asked if there were any additions or corrections to the minutes of February 19, 2020. There were no additions or corrections to the minutes of February 19, 2020. Moved by Todd, seconded by Ohman to approve the minutes of the February 19, 2020 meeting of the Liquor Control Board all voted in favor, motion passed unanimously.

2. A. The first application to consider today is the issuance of a Class “FA-Golf” alcoholic beverage license to Spirit Properties, Inc. d/b/a Edgewood Tavern located at 19 Golf Course Avenue North.

Moved by Sprague, seconded by Todd to approve the issuance of a Class “FA-Golf” alcoholic beverage license to Spirit Properties, Inc. d/b/a Edgewood Tavern located at 19 Golf Course Avenue North. Motion approved unanimously.

B. The second application to be considered is for the transfer of a Class FA-M alcoholic beverage license from Granite City Restaurant Operations, Inc. d/b/a Granite City Food & Brewery to Granite City, Inc. d/b/a Granite City Food & Brewery to be located at 1636 42nd Street Southwest.

Moved by Sprague, seconded by Todd to approve the transfer of a Class FA-M alcoholic beverage license from Granite City Restaurant Operations, Inc. d/b/a Granite City Food & Brewery to Granite City, Inc. d/b/a Granite City Food & Brewery to be located at 1636 42nd Street Southwest. Motion approved unanimously.

3. Sprague raised some questions regarding the impact of Covid 19 on local bars and restaurants. Sprague asked if the liquor audits should be suspended. Chief Todd indicated he felt we should continue with the audits so the restaurants remain accountable, if we are seeing unreliable results we could make adjustments at the time.

Regarding the current moratorium, Commissioner Gehrig commented the City is trying to help existing businesses, some in the off-sale business will say it isn’t fair but perhaps we could create an additional class that would allow those that want to continue with alcohol delivery to continue that business model. Let’s keep what is good and working and make it fair.

Randy Thorson, Old Broadway, said he’d like to see the City add alcohol in addition to the beer and wine, Grand Forks is doing this and it is working well. He said some food doesn’t pack well in to go containers, but having a signature cocktail to go with the food would certainly help business sales. He feels a lot of restaurants will close as a result of the pandemic. He said the sealed containers for cocktails is working. Restaurants need time to adjust to how they are doing business. They need time to become creative in their product delivery. Restaurants are designed to be full, now they are having to operate on half capacity. Restaurants need the alcohol to meet the margins but they must sell food. Commissioner Piepkorn asked what kind of containers mixed drinks could go in. Mr. Thorson said it could be any container that can be sealed; glass, plastic, can bottle or bag as long as it is sealed. He said this will be vital to allow restaurants to survive. He doesn’t think this should be permanent but need some time to adjust, this little extra will help. Commissioner Piepkorn said this is affecting bars too, limited seating is now the norm plus many people are not feeling comfortable and won’t go back.

Hailey Gust from Mexican Village said 60% of their customers are requesting a margarita with their meal. Dan Hurder, Twist and Boiler Room, said one of their signature cocktails includes 24 oz. of mix along with 8 oz. of alcohol, to purchase the ingredients at home would cost in excess of $80 and it takes a certain skill set to prepare the drink in the correct proportions. This is the safe and responsible method of serving alcohol. Businesses need a longer period to adjust, but not permanent, just to help through this short term uncertainty.

Rick Carik, Rick’s, said consider the time frame, 60 days ago it was business as usual, 30 days ago everything was a mess. Let’s take changes slowly, just make the delivery with meals a temporary change. In some businesses people are starting to come back, even while they are maintaining social distancing. Commissioner Piepkorn said over time capacity will be increased, the CDC and Governor Burgum are changing recommendations.

Chief Todd commented he feels it is the city’s responsibility to be adaptable, to change to help the businesses be successful. We should allow drink in a sealed container. When this is over we should go back to the structure we have had in the past, there is a reason for every license class. Chris Ohman said as a Health Prevention Coordinator he looks at compliance issues, how are we monitoring compliance if we are allowing delivery. Sprague said he felt we should allow spirits in sealed containers, should extend the time so businesses can make adjustments but should refrain from delivering to customers homes.

Jeff Thomas, Franks Lounge, said with the ability to do spirits there will be a ramp up time, we should extend 60 to 90 days out to allow for adjustments. Dan Hurder added that ordinance allows you to take home an opened bottle of wine, as long as you follow a set of guidelines, allowing cocktails would help a bit too. Randy Thorson said restaurants need some time to make creative adjustments. A lot can happen in 90 days.

Commissioner Piepkorn asked if there were any objections. Dustin Mitzel, Happy Harry’s said they are in favor of helping bars & restaurants moving forward, a 60 to 90 extension would work. They find that bars & restaurants are the ones leading innovations, they introduce new products. He feels this should be temporary, nothing permanent.

Moved by Sprague, seconded by Ohman to recommend to the City Commission an extension of the moratorium to August 24, to allow spirits in addition to beer and wine but to no longer allow delivery of alcohol to individual homes, alcohol for curbside pick-up only. Commissioner Gehrig indicated he felt home delivery should continue. Motion passed on a 4 to 1 vote.

4. Sprague indicated that we are finally able to report the results of the liquor audits, 31 of 33 restaurants tested passed the food sales requirements. Twist had a second failure and SouthTown PourHouse had a first failure.

Dan Hurder from Twist said after the first failure they have tried a number of different ideas to boost sales, they started opening for lunch but didn’t gain enough sales, they experimented with Sunday brunch but found they were selling even more alcohol. This could very well be the nail in the coffin. He said this is a sales mix, customers are willing to spend $13 on a signature cocktail but don’t want to spend $10 for a burger. He is requesting a waiver so he can continue to improve his food rations, Attorney Morris indicated we have to follow the ordinance and can’t just waive the requirements. She indicated sanctions can be appealed to the City commission.

Moved by Todd, seconded by Ohman to find Twist in violation of a second offence of the food percentage audit and follow the ordinance with a 30 suspension of alcohol sales. Motion carried.

Sprague explained SouthTown PourHouse has a business concept with Duane’s pizza on their menu. The result of the liquor audit showed with Duane’s pizza included the food percentage is 53% food 47% alcohol. If pizza sales are excluded the food percentage is 42% food 58% alcohol. In discussions with the licensee it is staffs determination the business agreement between the two businesses is not a partnership agreement rather it is a product sales and facility use agreement. Chief Todd asked if this agreement is a partnership. Attorney Morris responded the relationship is complicated but does not rise to the level of a true partnership. Some business models can prove to be difficult to meet the 50% food ratio so businesses will choose to acquire a license that does not require food sales.

James Cailao, with Vogel Law, representing SouthTown PourHouse, said his client has an FA license which requires 50% of revenues coming from prepared meals, to meet that requirement Duane’s Pizza and SouthTown PourHouse share a kitchen, everything is located within the licensed premise. Duane’s pizza is listed as a menu item on SouthTown’s menu. The ratio of food to alcohol prepared in the shared kitchen is 53% food 47% alcohol. All sales taxes for the pizza sales are being paid by Duane’s. Duane’s on premise sales should count as the ordinance 25-1506 says main course meals prepared on the premise. He stated the City was aware of the relationship and they are meeting the intent of the ordinance. What are the options? Could the City grant a variance? How about an amendment to the ordinances? This is simply tow businesses trying to co-exist and share space. There could be more businesses in the future looking for a creative business arrangement. The pizza is ordered and consumed on site. The food industry is a vital component to a thriving community. Any penalties applied at this time will be extremely difficult due to the Covid pandemic.

Chief Todd clarified the kitchen arrangements; Attorney Morris replied there is a facility use agreement that specifies the rent and other compensation.

Jeff Thomas, Frank’s lounge, stated he has a Class Z license, he paid extra so he wouldn’t have to be constricted by food sales. If you allow food from a non-related company to apply toward the food sales percentage, you risk devaluing the other licenses. Could someone attach a Subway to a bar and claim those sales as bar sales? If this is allowed you are moving in a dangerous direction. Dan Hurder said your policies need to be strong or you are just encouraging creative accounting. Chris Ohman, Public Health, said in their inspections they are two separate businesses with separate plan, separate owners, separate coolers. They have always been two separate businesses.

Moved by Sprague, seconded by Ohman to find SouthTown PourHouse in violation of the food sales requirement and that this be considered a first violation. Motion passed unanimously.

Both businesses were informed of their right to appeal the decision of the Liquor Control Board to the City Commission.

5. Sprague mentioned that Preston Nesemeier wanted to make everyone aware that in an effort to slow the spread of coronavirus and to adhere to recommended guidance for social distancing, Fargo Cass Public Health has temporarily suspended in-person server training classes and opened access to the online class. Servers needing to take the course or renew their current card can visit www.myservertaining.org
Users must create an account and login to the My City of Fargo account system to register for the online training. After creating an account, please click on the ‘Online Server Training Request’ link to register and pay for the course. When it becomes possible, the online option will return to renewals only.
There being no further business to come before the Liquor Control Board, the meeting was adjourned at 2:47 p.m. The next regular meeting will be held Wednesday, June 17, 2020 at 1:30 p.m. in the City Commission Room.