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OAH 2-6010-20557-6 |
STATE OF
OFFICE OF ADMINISTRATIVE HEARINGS
FOR THE
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In the Matter of the
On-Sale Liquor License, Class A, with Sunday Sales held by Midwest Latino
Entertainment & Talent, Inc. |
FINDINGS
OF FACT, CONCLUSIONS
OF LAW AND
RECOMMENDATION |
The above-entitled matter came on for
hearing before Administrative Law Judge Raymond R. Krause on January 25-26, 2010,
and January 28-29, 2010, at the Office of Administrative Hearings in
Joel M. Fussy, Minneapolis Assistant City
Attorney,
STATEMENT
OF THE ISSUE
The issue presented in this case is whether
good cause exists for the City of
Based upon all the proceedings herein,
the Administrative Law Judge makes the following:
FINDINGS OF FACT
Background
1.
Midwest Latino
Entertainment & Talent, Inc. and Maya Lopez-Santamaria operate El Nuevo
Rodeo (ENR), at
2.
ENR is an
entertainment venue operated in conjunction with a restaurant located in the
City’s Third Police Precinct. ENR is
located in a commercially-zoned Community Activity Center District (designated
C3A). The business operates in the
3.
ENR is located
in the Longfellow neighborhood (Longfellow) in
ENR’s
Initial Licensure
4.
In 2003, Maya
Lopez-Santamaria discussed with Hamoudi Sabri, the owner of the
5.
On June 1, 2003,
ENR applied for a Zoning Addendum for Beverage Alcohol License in Minneapolis
to operate as a restaurant and nightclub with live entertainment in the City
with a Class A Liquor License with Sunday Sales. The Zoning Addendum specifically approves the
uses of the premises as consistent with the zoning classification of the
property. Gross square footage of the
premises is identified as 16,000 square feet.
Net square footage for seating areas on the second floor (main floor) is
listed as 5,220 square feet.[6]
6.
As part of its
application for licensure, ENR submitted its Business Plan, describing in overall
terms how the proposed business was intended to be run and setting out the
manner in which restaurant operations, liquor sales, entertainment, and
security would be handled. Included in
the Business Plan was a comparison of ENR’s proposed operation with other
businesses in the same general area of operations. One of those businesses was the recently
closed Vanandy’s Nightclub, regarding which the Business Plan stated:
Vanandy’s Night Club
Vanandy’s
Nightclub, previously located at the same address as El Nuevo Rodeo and La Quebradita
Restaurant, was closed in January 2003 due to code infringements and
questionable business practices. For the
purposes of market research, it is our primary business research tool because
El Nuevo Rodeo and La Quebradita Restaurant is virtually taking over this
pre-existing business and its market niche while consciously raising the bar
for its customers in virtually every aspect of the business. For the sake of research, let us consider this
past establishment’s business at the same location.
Positive market attributes:
Vanandy’s
nightclub opened in approximately 1999. They
were the first inner city Mexican nightclub/dance hall and provided a very
coveted service for this market. They
had a beer license, a stage, dance floor and a lights and sound system for live
and recorded music. Vanandy’s was such a
popular nocturnal destination that from the day that it opened until its
closing date, Vanandy’s was always full; it is no secret in the Mexican
business community that Vanandy’s was a highly lucrative business, creating
great wealth for the owners. Despite its
rustic and un-cared for decor, Vanandy’s was the envy of all local Mexican
music promoters because of the revenues it brought in. Vanandy’s was open three nights a week, Friday-Sunday
and closed during the week. MLET’s own
field research done in the year 2000 indicates that at 10:00 pm on various
occasions, the door was closed to patrons due to a full house, with only a
local band playing. Food was never functionally
served at Vanandy’s, which only had a beer and wine license.
Negative attributes:
Perhaps
the biggest stigma that remains regarding Vanandy’s is the lack of
professionalism of the Management of the business, which the owners conducted
remotely from
7.
Review of the
ENR license application was conducted by the Minneapolis Police Department
License Inspection Division (Division).
The Division report noted that ENR will be operated as a restaurant with
hours from 10:00 a.m. to 2:00 a.m. The
report also included the following:
PREMISES:
The
licensed premise consists of 18,000 net square feet of street level and second
floor areas in the Oddfellows building located at
* * *
CLASS A ENTERTAINMENT:
The
applicant has applied for a Class A license and, although the establishment
will not be located within the Adult Entertainment District, has completed has
completed [sic] the Class A License
Addendum wherein the applicant acknowledges that the license is subject to
suspension, revocation or denial of renewal if adult entertainment were to be
presented.
The
applicant intends to present disc jockeys, local, national and international
Mexican bands and stage shows. Additionally,
the establishment will be available for wedding celebrations, baptisms, Mexican
festivals such as Cinqo de Mayo.
MISCELLANEOUS ORDINANCE REQUIREMENTS:
Zoning: The Minneapolis Zoning Administrator has certified
that this establishment is located in a C-2 zoning district, which is a lawful
district for the intended use.
Customer
Parking: The off street parking
requirement for this restaurant is established by the Minneapolis Zoning Code. The Minneapolis Zoning Administrator has
certified that this establishment is exempt from off street zoning
requirements. The applicant will furnish
a valet service to the US Bank parking lot located at
* * *
Must Be
a Restaurant
Because
this establishment will be located within 500 feet of a residentially zoned
area, it is required to operate as a restaurant and gross annual sales of
alcoholic beverages may not exceed 40% of gross annual sales of all food and
beverages.[8]
8.
On June 20, 2003
the City’s Zoning Office Representative, Stephen Poor, approved the Zoning
Addendum for Beverage Alcohol License Applicants in Minneapolis to operate as a
restaurant and club in the City with a Class A Liquor License with Sunday Sales
on June 20, 2003.[9] The only restriction on the license was that
there be no adult-oriented entertainment. The application was approved by the
Minneapolis City Council. ENR first
began operations in June of 2003 when it obtained the Class A On-Sale Liquor
License with Sunday Sales.[10]
9.
During the
application process, ENR, through Ms. Lopez-Santamaria, extensively discussed
with the City Licensing Division how ENR was anticipating to operate. The presence of entertainment, including the
likelihood of large attendance during special events, the use of the premises
for a cultural center, and the proposed uses for educational purposes was
disclosed to Inspector Zeigler. At no
time did any City official indicate that the intended uses of the premises were
in any way inconsistent with the business licensing that was being applied for,
and was granted by the City. The name of
the business at the time it was initially licensed by the City was El Nuevo
Rodeo Nightclub and La Quebradita Restaurant.[11]
ENR’s
Business Operations
10.
There are two
entrances at ENR. When a cover charge is
required, lines of patrons form at the entrances. Upon entry, patrons are not seated at
tables. Patrons choose whether to sit or
stand. There are two floors with seating
on each. The upper floor (main floor)
has a bar area, a stage, and two areas designated as dance floors. The lower floor contains seating for a
maximum of 94, with a counter area and kitchen.
ENR’s main floor plan showed seating around two bars, and along the
walls and in the area between the two dance floors. In total, the floor plan showed 353 seats.[12]
11.
While ENR is a
for-profit business, it has engaged in extensive community-based educational
and cultural activities. Meetings,
fundraisers, and educational seminars have been conducted on the premises to
benefit nonprofit organizations in the community. These activities use the stage and dance
areas of the main floor for functions much closer to those of a community
center than a restaurant.[13]
12.
Alejandro Rojas
is ENR’s Executive Chef. He has worked
for ENR for three years. Mr. Rojas
described ENR’s food operations as preparing and serving food every day,
sometimes until early hours of the following morning. On some occasions Mr. Rojas has served food
at ENR as late as 4:00 a.m.[14]
13.
ENR’s
entertainment director and promoter, Antonio Gaytan, has been employed there
for six years. Mr. Gaytan noted that, in
contrast to ENR’s operations at other times, on weekend nights most of the
patrons are there to view the live entertainment. When live music is being performed, ENR uses
a digital decibel monitor to check noise levels within the building and from a
point 50 feet outside the building.[15]
14.
ENR has
approximately 50 employees. About one
thousand musicians and performers have been employed giving performances as
part of ENR’s events. Approximately 20
suppliers of food for ENR’s restaurant operations have significant sales to
ENR.[16]
15.
On normal
business days, the main floor is not set up or used for entertainment or
restaurant seating until the evening hours.[17] When open, patrons are seated at tables on
the main floor by waitstaff, provided menus, encouraged to order food, and
orders for food and drink are taken.
Patrons seated at tables have their food and drink orders delivered by
waitstaff. When no more seating is
available, patrons gravitate to the bar areas to await seating or dance in the
areas in front of the stage.[18]
16.
Any business
seeking to make a substantial change in how that business is operated must file
a new business plan. The City License
Division’s practice is for the new business plan to be filed and approval of
that substantial change be obtained.[19]
17.
On April 16,
2009, ENR had temporary bars available for use on the premises.[20] ENR’s business plan does not make any
reference to the use of temporary bars.[21]
Methods of
Enforcement
18.
The City License
Division uses four different levels of enforcement to compel adherence to
ordinances and statutes, or to sanction offending licensees. These enforcement methods are advisory notices,
violation notices, administrative citations, and settlement conferences. Generally speaking, these methods are
comprised of the following:
A. Advisory notices are sent
to a license holder when the City License Division believes that a city
ordinance may have been violated by the licensee. The purpose of this notice is to inform and warn
the licensee in order to prevent further possible violations of city
ordinances. No fines are associated with
advisory notices.
B. Violation Notices are sent
to a license holder when the City License Division believes that a city
ordinance may have been violated by the licensee. The purpose of this notice is to strongly
urge, inform and warn the licensee in order to prevent further possible
violations of city ordinances. Fines may
be present with violation notices.
C. Administrative Citations
are sent to a license holder when the City License Division believes that a
city ordinance may have been violated by the licensee. The purpose of this notice is to penalize the
licensee for alleged violations of city ordinances. Fines are present with administrative
citations. Administrative citations may
be paid, or be contested by a written request for Hearing. When fines are paid they are an admission of
the violation.
D. Settlement Conferences are
scheduled between the licensee and the City License Division. The purpose of these Settlement Conferences
is to bring the licensee into compliance with City and State Ordinances,
Statutes, and Codes. The licensee does
not have to agree to any of the recommendations from the City License Division,
but the licensee is compelled to do so to avoid further adverse action by the City
License Division. Furthermore, the
stipulations in the Settlement Conference must be accepted and approved by the
City’s Mayor and the City Council.[22]
Overview of
Police Reports and Criminal Activity
19.
Over the 29
months between April 13, 2007, and November 26, 2009, there were 35 incidents
that resulted in the generation of police reports that were linked to activity
occurring on or near to ENR premises.
The incidents reported were connected, to a greater or lesser degree, to
ENR or their patrons. Further analysis
of the reports reveals that:
A.
27 of the
reported incidents occurred at times coincident with ENR Saturday or Sunday
night venues.
B.
33 of the
reported incidents occurred after midnight, and 13 of those incidents occurred
after 2:00 a.m.
C.
At least 26 of
the thirty-five incidents were handled by off-duty police officers employed by
ENR to improve security.
D.
The incidents
included: three minor consumptions of alcohol, four violations of curfew, eight
disorderly conducts, three obstructing the legal processes, six possession of
narcotics, ten fifth-degree assaults, and three second-degree assaults with a
dangerous weapon.[23]
License Enforcement
Issues
20.
In 2006, several
problems were identified with the manner in which ENR was being operated. To address compliance issues, the City
License Division initiated settlement negotiations with ENR and conducted a
licensing settlement conference on December 11, 2006. The City License Division sought to impose
conditions on ENR’s Class A On-Sale Liquor License with Sunday Sales. The City License Division recommended and ENR
agreed to the following license conditions:
A. ENR would submit to the City
License Division within 30 days an independent accountant’s detailing of ENR’s liquor/food
ratios for a period of twelve months.
B. ENR would be penalized
$9,400.00 for violation of Minnesota Code 1001.2 and 1003.1 Fire Exceeding
Legal Occupancy, of which $5,400 was stayed and $4,000.00 must be paid.
C. ENR would continue “to
follow the business plan and premise drawing that was submitted with the
original liquor license application on June 16, 2003 with slight modifications
submitted within 30 days of signing this agreement in order to reflect the
number of seats/tables currently available.”
D. ENR would discontinue snipe advertising.
F. ENR would stop advertising
and operating as a nightclub.[24]
21.
ENR has shown
that its sales are in compliance with requirement in the Minneapolis Code of
Ordinances (MCO) for restaurant liquor licenses that 60 percent of its revenue
be derived from the sale of food and no more than 40 percent of its revenue
from sale of alcoholic beverages (the 60/40 rule).[25]
22.
From August to
October, 2007, City Inspector Olds visited ENR on six different evenings and
two afternoons. Inspector Olds concluded
that ENR was operating as a nightclub and not a restaurant. Her conclusion was based on the number of people
drinking compared to the number of people eating, patrons not ordering full
meals in the period after 10:00 p.m., and the number of seats available during ENR’s
late night hours of operation. Inspector
Olds observed that ENR was following the seating plan approved by the City
License Division when she inspected the business premises. Inspector OIds maintained that the City
License Division should revoke ENR’s liquor license since “zoning does not
allow it” [ENR operating as a nightclub].
These considerations were the basis of the City License Division’s
issuance of an administrative citation on August 22, 2007 for a violation of
23.
On October 12,
2007, Inspector Olds issued an administrative citation to ENR for a violation
of MCO § 259.250 for advertising as a nightclub. ENR’s owner explained that the advertising
text arose from a typographical error, which, upon receipt of the citation
error, was corrected.[27]
24.
On April 28,
2008, a shooting occurred on the corner of 27th and
25.
On August 31,
2008, Inspector Casey observed two individuals leave ENR, each with a can of
beer. These individuals remained in the
area drinking the beer and then threw the empty cans of beer onto the
ground. Inspector Casey also observed
that the live entertainment did not stop until 2:05 a.m. and that some who were
leaving the establishment were highly intoxicated. She observed one patron urinate on the
street. ENR security witnessed these
activities and did not intervene to stop these nuisance behaviors.[29]
26.
On September 2,
2008, the City License Division issued an administrative citation for a
violation of MCO § 362.20 (f) for allowing liquor to leave the ENR premises and
a violation of MCO § 360.70 for allowing live entertainment past 2:00 a.m. [30]
27.
On September 8,
2008, the City License Division issued a Violation Notice to ENR for an alleged
violation of
2008
Settlement Conference
28.
In early
September 2008, Ms. Lopez-Santamaria had a meeting with Inspector Olds and
Deputy Director Cervantes. The only
issues raised in this meeting were an instance of an employee drinking beer on
the premises after 2:30 a.m., and the April 28, 2008 shooting. Ms. Lopez-Santamaria was told that there was
no connection between that shooting and ENR.
No concerns were raised by the City License Division about ENR’s methods
of operation or any assertion that ENR was a nightclub.[32] The result of this meeting was the Settlement
Agreement entered into between ENR and the City License Division which added to
ENR’s license the following conditions:
A.
The City will
impose a $500.00 sanction due at the time of signing this agreement.
B.
The Licensee
shall adjust the security/alcohol service policy to reflect that no one shall
consume alcohol on the premises after 2:30 a.m. and before 8:00 a.m. all days
of the week, except Sundays when no consumption is allowed before 10:00 a.m.
C.
The Licensee
shall provide a current and approved security/alcohol service policy to
Licensing, due at the time of signing this agreement.
D.
The Licensee
shall follow the submitted security/alcohol service policy to Licensing, due at
the time of signing this agreement.
E.
The Licensee
shall employ security personnel at a ratio of one (1) security guard per fifty
(50) patrons and one (1) off-duty Minneapolis Police Officer. The Licensee shall employ two (2) off-duty
Minneapolis Police Officers on nights when the expected attendance is 700 or
more.
F.
The Licensee
will attend a police training that focuses on learning about gangs in the City,
through Police Licensing, provided by Minneapolis Police Department personnel
by October 1, 2008.
G.
The Licensee
will remove all patrons under eighteen (18) years of age by 10:00 p.m. every
night, unless they are accompanied by a responsible guardian. The Licensee will have the responsible
guardian sign a responsibility form.
H.
One of the
security personnel for the Licensee will be stationed in the U.S. Bank parking
lot from 9:00 p.m. to 3:00 a.m. looking for loitering, drinking in cars,
fights, etc. Security must call 911 when
crimes are witnessed.
I.
ENR currently
has sixteen (16) security cameras with digital recorders with forty-five (45) days
retention. Management will purchase and install
twelve (12) more cameras by September 30, 2008.
ENR will provide copies of digital recordings to the Division of
Licenses and Consumer Services or Minneapolis Police if required to assist in a
criminal or civil investigation and subject to receipt of a Subpoena or an
Order from a Court of Law requesting disclosure. The management will provide a map of where
all the cameras are located by September 15, 2008.
J.
The Licensee
will post a sign at the main entrances of ENR saying that they ban guns and
weapons on their premises.
K.
The Licensee
will purchase a metal detection wand for scanning patrons by August 31,
2008. All patrons entering the facility
will be wanded before entering. Patrons
with guns, knives and weapons will be denied entry.
L.
The Licensee
will make sure that patrons leaving the restaurant do not carry beverage
bottles outside of the establishment.
M.
The Licensee
will have door staff monitor the actual number of patrons less than twenty-one
(21) years of age in the establishment.
N.
The Licensee
will attend at least one Downtown Bar Meeting or LINC Meeting in the next two
months after signing this agreement.
Inspector will provide dates and time to Licensee. [33]
29.
Overall,
Inspector Olds perceived ENR as being responsive to addressing concerns raised
by the City License Division and making changes in business procedures to
ameliorate those concerns.[34] Ms. Lopez-Santamaria believed that the
conditions were excessive, but agreed that ENR would make the changes set out
in the conditions agreed to on September 10, 2008, to be proactive and
demonstrate ENR’s cooperation with the City License Division.[35]
30.
The Licensing
Division suggested that ENR might be better suited to the downtown
entertainment district. Ms. Lopez-Santamaria
felt she had too much invested in the current location to make relocation a
realistic option.[36]
31.
On September 25,
2008, the City License Division renewed ENR’s business licenses.[37]
Post
Settlement Conference Violations
32.
On September 27,
2008, a patron was arrested for possession of cocaine in a bathroom of ENR.[38] No evidence was submitted suggesting that the
individual obtained the illegal drug at ENR.
33.
On September 28,
2008, several patrons were ejected from ENR for unruly conduct. One of these individuals struck an MPD
officer as he was leaving the area and the individual was arrested.[39]
34.
On October 12,
2008, a patron inside ENR threw a beer bottle during an altercation.[40]
35.
On October 13,
2008, the driver for the band appearing at ENR was assaulted by an individual
with a crowbar. The assault occurred
outside of ENR and no one identified the attacker as having any connection with
ENR.[41]
36.
In a separate
incident on October 13, 2008, a patron was ejected from ENR for unruly
conduct. That patron refused to leave
the area and started a fight.[42]
37.
On October 18,
2008 Inspector Casey observed an individual remove a bottle of beer from
ENR. Consequently, ENR was administratively
cited on October 20, 2008 for a violation of
38.
On October 31,
2008, a patron was ejected from ENR for unruly conduct. That patron refused to leave the area and he
was detained by MPD officers. In running
a status check, the officers discovered that the patron was wanted on an
outstanding warrant and he was arrested.[44]
39.
On November 2,
2008, a patron was ejected from ENR for unruly conduct. That patron refused to leave the area and
started a fight. The patron was arrested
by MPD officers.[45]
40.
On November 14,
2008, a gang-related shooting occurred at the corner of 28th and
41.
On November 15,
2008, an assault occurred inside ENR as two security employees attempted to
eject a patron.[47]
42.
At approximately
12:58 p.m., on November 21, 2008, Deputy Director of Inspections Ricardo Cervantes
responded to a request for an update from Councilmember Schiff regarding
ENR. That update was copied to a number
of City officials including Rocco Forte, Director of the City License Division,
and stated:
Licensing
Staff Met with Police Licensing on Tuesday and 3rd Precinct on Wednesday, to
discuss the Police reports generated on Saturday, 11-15, review the history of
the business, and determine next steps. It
was determined that some the police reports did not clearly connect the
activity to El Nuevo Rodeo. This has
been communicated to Inspector Gerold and Officers involved in the incidents
have been directed to submit supplemental reports providing more detail
including the nexus with the Business. A
subpoena will be delivered to Licensee, Maya Santa Maria for video taken during
that morning, a cost estimate of police resources used that night is under way,
a detailed history of violations and a summary of police activity is being
compiled to be used as evidence for adverse action.
After
review of El Nuevo webpage, schedule of events, License Inspectors along with
Police will be conducting inspection on nights where large crowds are expected.
On duty and off duty Squads called to
this address have been asked to direct vehicle cameras at this location while
on the scene when available. License
Inspector Casey has compiled a list of licensing ordinances and license
conditions that will be distributed at 3rd Precinct roll call to assist in the
documentation of further violations.
When I
have received the summarized police reports and license violation history I
will meet with our city attorney to discuss a revocation action.[48]
43.
At approximately
1:44 p.m., on November 21, 2008, Director Forte provided an update by email on
issues that Councilmember Schiff raised, stating in pertinent part:
El Nuevo Rodeo
At this
point, Business Licensing does not see any other option than to pursue a
revocation of El Nuevo Rodeo’s license.
We have had the licensee in on numerous different occasions and have
added numerous conditions to the license, all to no avail. We intend to pull the Licensee in as soon as
possible and ask for the voluntary surrender of the license. Alternatively, we will ask an Administrative
Law Judge to revoke the license and close the business. [49]
44.
As of November
28, 2008, the City License Division had drawn no clear nexus between the
operations of ENR and any criminal behavior on November 11 through November 15,
2008. Video recordings from the ENR
security cameras were made available for review by the MPD for investigation of
the events over that timeframe.[50] No evidence from those security cameras was
cited by the City License Division in this proceeding as showing any wrongdoing
by ENR.
45.
During her
inspection on November 28, 2008, Inspector Casey observed that ENR allowed live
entertainment past 2:00 a.m. to 2:05 a.m. Consequently, ENR received a Violation Notice
on December 3, 2008 for a complaint of conditions at ENR, alleging a violation
of MCO § 360.70 (f) for allowing live entertainment past 2:00 a.m.[51] She also observed and photographed a man
consuming a bottle of beer after 2:30 a.m. at ENR. Inspector Casey issued an administrative
citation to ENR on December 4, 2008, for a violation of MCO § 364.85, by
allowing the consumption of alcohol on the premises of ENR between the hours of
2:30 a.m. and 8:00 a.m. [52]
46.
On December 1,
2008 Inspector Casey conducted an inspection of ENR in the afternoon. She observed and took photographs of
construction work that was being conducted on the main floor. No building permit had been obtained for that
work. Inspector Casey counted the chairs
present at that time and arrived at the number 285.[53] Inspector Casey did not include the folding
chairs that were moved to the basement to make room for the construction
work. The main floor was not in use at
the time the count was made. [54]
47.
As a result of
the November 28, 2008 and December 1, 2008, inspections the City License
Division issued a Violation Notice for a Complaint of Conditions to ENR. The Violation Notice alleged that: [55]
A.
ENR violated MCO
§§ 362.395 and 362.30 in November, 2008 by operating as a nightclub within 500
feet of a residentially zoned area without a Conditional Use Permit.
B.
ENR operated as
a nightclub is in violation of “On Sale” license provisions since ENR “was
operating beyond a restaurant.”
C.
ENR failed to
maintain 573 seats as required per the 2003 ENR business plan; since there were
only 285 seats present on the first and second floors during the December 1,
2008 inspection.
D.
ENR had
temporary bars, temporary dance floors, and standing areas (over 2000 square
feet) for the purpose of watching live entertainment, that were not permitted.
E.
ENR was required
to operate as a restaurant and not a nightclub.
F.
ENR needed to
submit a new floor plan to the City License Division that showed the location
of 573 seats between the two floors.
48.
On December 4,
2008, a Notice of Ordinance/Code Violations from the Regulatory Services &
Emergency Preparedness Construction Code Services Division was sent to the
building owner for violation of MCO §§ 85.20 and 93.20, and the Minnesota State
Building Code (Minn. R. 1300.0120, 1300.0140 and 1300.0150) for performing
construction work without a permit. This
Notice was copied to ENR. ENR obtained
the necessary permits after the notice was received.[56]
49.
As of December
2, 2008, the City License Division had not yet assembled the evidence that
would support a conclusion that ENR’s license should be revoked.[57]
50.
On May 3, 2009, a
rape was reported as occurring in the driveway of a
51.
On May 4, 2009,
an incident occurred inside ENR when a patron refused to comply with ENR
security’s direction to surrender his beer (because it was 2:30 a.m. and no one
could be drinking alcoholic beverages).
The patron began throwing punches at ENR security personnel, who
handcuffed the patron and removed him from the premises. In the struggle, the patron bit one security
staffer on the elbow and in the groin area.
Before the handcuffs were removed, that security staffer wrote the word
“FAG” on the patron’s forehead using a permanent marker. After the staffer released the patron, he
called the MPD, who investigated. The
ENR security staffer admitted his conduct and attributed it to the patron’s
assault.[59]
52.
The owner, Ms.
Lopez-Santamaria and head of security, Carmen Moran, were on the premises
during the altercation but not in the area where the staffer’s misconduct occurred. The particular staffer was newly hired and
still on probation. Ms. Lopez-Santamaria
described his employment references as excellent and noted that the staffer had
significant relevant experience, which had influenced the decision to hire that
staffer. Based on his conduct that evening,
that staffer was promptly fired from ENR.[60]
53.
On October 3,
2009, Inspector Casey observed live entertainment that ended at 2:05 a.m. at
ENR. Consequently, ENR received a
Violation Notice on October 7, 2009, for an alleged violation of MCO §
360.370(f) for allowing live entertainment after 2:00 a.m.[61]
54.
On one occasion
in 2008, ENR hosted a “hip-hop night” event.
The attendance was very large and ENR considered the event to be very
profitable. The clientele that were
attracted to ENR for that event were characterized as a “tough crowd.” ENR security staff had difficulty maintaining
ENR’s standards due to the nature of the crowd.
ENR concluded that no further events of that nature would be hosted to
avoid a repeat of that evening’s events.[62]
55.
The City License
Division described its basis for proceeding with license revocation against ENR
as the conclusion that ENR was operating as a nightclub, and included the
police reports of criminal behavior in the neighborhood. The City License Division characterized that
behavior as the result of ENR operating as a nightclub. The City License Division noted that lesser
sanctions for noncompliance with the liquor license provisions of the MCO are
appropriate where ENR’s operation is within the status of a restaurant.[63]
56.
At the time of hearing
in this matter, ENR has paid all of the administrative citations and all of the
violation notices that had fines associated with them. The City has received payment for all
violations and citations.[64]
Community
Impact
57.
Since 2008, fewer
than ten residents and business owners near ENR have complained to City
officials that ENR is causing negative livability issues in their
neighborhood. These complaints have
primarily been that patrons leaving ENR after closing are loud, disorderly, and
generally disruptive. At the time of the
April 28, 2008 gang-related shooting across the street from ENR, complaints
were received attributing that shooting to ENR’s operations. There is no evidence to support a conclusion
that this criminal activity was in any way connected to ENR.[65]
58.
The majority of
the complaints regarding ENR related to its Saturday night events. On Saturday nights, ENR features live Latino-oriented
entertainment. This entertainment usually
draws capacity crowds. ENR also hosted a
variety of community events for the Latino community.[66]
59.
Inspector Olds and
Inspector Casey each opined that the activities at ENR and the patron behavior
that they observed pose a problem for the neighboring residential community. This patron behavior, in the estimation of
the inspectors, negatively impacts the livability of the neighborhood and supports
City License Division intervention.
Inspector Casey maintained that off-duty police officers are not a good
source of security. That perception arises
out of Inspector Casey’s belief that the business, as the employer, exercises
undue control over the off-duty officers.[67]
60.
The ALJ finds
the off-duty officers’ testimony to be highly credible and finds no evidence to
support a conclusion that their testimony is influenced by their contractual
relationship with ENR.
61.
The off-duty
police officers employed by ENR noted that restaurants and bars located in
other neighborhoods in
62.
ENR submitted a petition
signed by 1,194 people in support of ENR maintaining its existing
operations. ENR described the
signatories as neighbors and patrons. The
petition stated that the signatories believe ENR is an important cultural asset
to the Latino community, and that ENR is “enjoyed by thousands neighborhood
residents and that they greatly outweigh the handful of senior residents whom
have complained for petty issues (at ENR) in the past years - most of which
have now been addressed and resolved.”[69]
63.
On January 25,
2010, State Senator Patricia Torres Ray wrote a letter to Council Member Schiff,
supporting continued operation of ENR. Senator
Torres Ray noted the letter highlights the financial benefits, in the form of
tax revenue, to the State of
64.
Joyce Wisdom is the
Executive Director of the Lake Street Council (LSC) and a resident of the neighborhood
that includes ENR. Ms. Wisdom expressed
her perception that the behavior of ENR has significantly improved over the
years. The LSC has never had any
complaints regarding ENR from any of the other LSC members. Ms. Wisdom maintained that ENR is “in the
spirit with” the 27th and Lake Entertainment District Initiative (Initiative
#8); seeking designation by the City Council of the neighborhood as a “retail
and entertainment centered district.” While
the City Council has not formally adopted the initiative, the LSC believes that
ENR is a business that fits within the proposed neighborhood business plan.[71]
65.
Melanie Majors
is the Executive Director of the Longfellow Community Council. According to Ms. Majors, it has been 18 months
since the Council had a complaint about ENR. She has not had to hold any community meetings
to deal with issues arising from ENR. Ms.
Majors opined that ENR is a crime deterrent in the Longfellow area because it remains
open late and has off-duty police protection during those hours. The Longfellow Community Council supports
Initiative #8 which would make the area around ENR an entertainment district. ENR would compliment that initiative.[72]
ENR
Security Policies and Off-Duty Police Officers
66.
ENR has
implemented multiple preventative measures to address security concerns both on
and immediately adjacent to the business premises. ENR has retained the services of off-duty
police officers. In addition, ENR has increased
its private security staff and has installed all of the video cameras inside
and outside the premises as stipulated in the September 10, 2008, settlement agreement.[73]
67.
ENR has one or two
off-duty police officers employed on weekend nights to maintain security at ENR
and to address neighborhood livability issues.
On rare occasions, ENR requires more off-duty police officers in order
to provide additional security. The off-duty
officers that work at ENR have effective and frequent communication with the
security staff. The management of ENR
communicates with the off-duty officers to maintain a high level of security.[74]
68.
ENR maintains a
“Trespassing List” or “86 List” containing the names and photocopies of the driver’s
licenses or identification cards of people who have been banned from ENR. ENR maintains a record book, which the
security staff reviews before beginning each shift, to prevent unauthorized
people from entering ENR when examining potential patrons’ identification.[75]
69.
ENR maintains a
strict no tolerance policy for weapons and narcotics. ENR conducts a physical search for drugs and
weapons of all people who enter their premises.
The physical search for narcotics is conducted by hand; the security
staff also utilizes a metal detector to check for weapons on all patrons who
initially enter ENR, and all patrons who exit then reenter ENR. ENR has two “wand-style” metal detectors for
this purpose.[76] Any person who violates ENR’s drug or weapon
policy is immediately turned over to the off-duty police officer present. Any narcotics or weapons found on individuals
are turned over to the off-duty police officers. The police then handle these limited
incidents, at their discretion, in accordance with the law.[77]
70.
ENR monitors all
minors that enter the establishment.
Minors must be accompanied by a parent in order to enter ENR. The names of the minors as well as the
information of the parents are obtained when entering ENR. Once permitted entry, minors are identified
with an ink “X” on their hand, while those displaying proper identification are
given single-use wristbands. If a minor
attempts to remove the ink marking, or stands within 4 feet of bar areas they
are issued a warning. If a minor is
observed violating this policy a second time, ENR security removes the minor
from the public area, finds the parents, and then removes the party from ENR.[78]
71.
ENR security staff
removes people who appear to be intoxicated from the establishment. Their security works closely with the
off-duty police officers present to ensure their individual safety, as well as that
of the community, by taking the motor vehicle keys of intoxicated individuals,
and by encouraging these individuals to use public transportation or a taxicab
when required to leave ENR.[79]
72.
At approximately
3:00 a.m., ENR security staff sweeps the area for a full block around ENR to
remove garbage that may have been discarded by ENR patrons leaving the
premises. The ENR staff picks up that
garbage no matter where it originated.
ENR’s cleaning staff does a second pass of that area after 4:00 a.m.[80]
73.
ENR spent
approximately $120,679 in 2008 for security services. ENR paid approximately $13,068 to retain the
services of off-duty police officers, and approximately $107,611 to employ its in-house
security personnel.[81] The state-of-the-art security camera system
installed in 2008, as part of the September 10, 2008 settlement agreement, cost
over $20,000.[82]
74.
ENR spent
approximately $94,622 in 2009 for security services. It paid approximately $20,595 to retain the services
of off-duty police officers, and it paid approximately $74,027 in to employ its
security personnel.[83]
75.
Deputy Director Cervantes
described ENR’s security plan as detailed and well-written. He concluded that ENR’s security and off-duty
police officers performed their duties as expected. Deputy Director Cervantes described ENR’s
security as having generally responded adequately to the incidents which
occurred on ENR premises from 2008 to the date of the hearing in this matter.[84]
76.
Deputy Director Cervantes
noted that ENR security operations have shown exceptional improvements since
2008, and are in compliance with MCO § 259.250. Deputy Director Cervantes described the spike
in the number of incidents requiring police involvement in 2008, as justifiable
where related to the enforcement efforts taken by ENR to reduce illegal
activity on ENR’s premises. Deputy
Director Cervantes acknowledged that from mid-December 2008, to the date of hearing,
two of the five police-related incidents have occurred off of the ENR premises.[85]
77.
Carmen Moran,
ENR head of security from June 2007 through November 2009, has 10 years of
previous nightclub security experience and described ENR’s security operation
as:
A.
ENR’s security
has drastically improved since she has been employed there, as a result of
multiple changes in ENR’s security polices and practices.
B.
ENR strictly
enforces a policy that live entertainment is to stop no later than 1:50 a.m.
C.
ENR security
staff thoroughly cleans the neighborhood after big events; which often results
in ENR staff “picking up the garbage” from other businesses in the area (i.e.
Denny’s).
D.
In response to the
April 28, 2008, shooting that occurred off of ENR’s premises, ENR enhanced its
security by having a range of 9 to 15 security guards on duty during event evenings,
with two security guards posted in the adjacent U.S. Bank parking lot, and
security personnel posted in the alley adjacent to ENR.
E.
ENR hired two
armed security guards to patrol the street in front of ENR to improve the
security of the area outside of the establishment.
F.
Only in rare
instance have narcotics been found on individuals, and she has not seen or
heard of anyone attempting to bring a weapon into ENR.
G.
Compared to
other similar places that he has worked security, ENR is safer and has better
security in place.
H.
ENR is a very
safe place, and that ENR has enhanced the quality of life and the livability of
the neighborhood.[86]
78.
Eric Mulvihill,
ENR head of security from December 2009 to the date of hearing, has a degree in
criminal justice and 13 years of previous nightclub security experience in the
downtown
A.
Strict
enforcement of ENR’s security polices and procedures is maintained at all
times.
B.
Any person who
would attempt to bring drugs or a weapon into ENR would be turned over to
police with the contraband.
C.
ENR is safer and
has better security in place compared to other nightclubs that he has worked at
previously in the City’s Downtown area.
D.
He has never
seen drugs or weapons at ENR.
E.
ENR works very
closely with law enforcement in order to maintain effective security, and has
improved the radio communication of ENR’s security to improve the response of
ENR security to address potential security risks.
F.
ENR is the safest
bar/restaurant that he has ever worked at, and ENR is much safer and has better
security compared to that of nightclubs in the Downtown area.[87]
79.
MPD Officer
Frank Kutz has provided security as an off-duty officer at ENR for four years. Officer Kutz assessed security at ENR as having
significantly improved over the time he has worked there. Officer Kutz made the following observations about
conditions at ENR: [88]
A.
Effective communication
has occurred on a regular basis between ENR’s management staff, security staff,
and the off-duty MPD officers to maintain the high level of security that has
been established at the business.
B.
ENR’s management
has appropriately requested additional off-duty police officers when
needed.
C.
On one specific
occasion, ENR requested 12 off duty officers in the spring time of last year
D.
Regarding people
who are accused of criminal activity; off-duty MPD officers have broad
discretion when handling these alleged criminal offenses and ENR does not
restrain officers from making arrests.
E.
ENR has fewer
incidents, and less severe incidents in comparison to other similar
establishments, but minor incidents can always be expected at establishments
like ENR.
F.
Public urination
occurs outside of ENR, but very infrequently.
G.
The two
shootings that occurred in the vicinity of ENR were very unusual for that area
of
H.
ENR’s current
operation requires only minimal assistance from on-duty law enforcement
personnel.
I.
ENR fits within
the neighborhood.
J.
As a general
matter, loitering at any establishment is difficult to control by law
enforcement, and ENR handles loitering very well.
K.
ENR has adequate
security in place to protect its patrons, the community, and the neighborhood.
L.
ENR’s security
has drastically improved over the four years that he has worked there as an
off-duty officer.
M.
ENR is very
similar to “T’s Place” (located next door to ENR) in the type of establishment
and the type of security problems encountered.
N.
The area patrolled
by the 3rd Precinct has gang issues, but these gang members are not patrons of
ENR.
80.
MPD Officer
Derrick Chauvin has provided security as an off-duty officer at ENR for four years,
typically working there two to three nights per week. Officer Chauvin assessed security at ENR as
having significantly improved over the time he has worked there. Officer Chauvin made the following
observations about conditions at ENR: [89]
A.
Patrons of “T’s
Place” have caused problems which Officer Chauvin has had to address while he
was working off-duty at ENR.
B.
Officer Chauvin
was working off-duty at ENR when a person displayed a firearm off of the
premises of ENR. MPD policy places a
higher priority on responding to such incidents. This policy required Officer Chauvin to respond
to the off-premises situation. For this
reason, he was not able to address an incident that occurred at ENR at the same
time. The off-duty officers working in
conjunction with ENR’s security staff are in an ambiguous and difficult
position when serious offenses occur off of ENR’s premises.
C.
The 3rd
Precinct has a high level of crime in comparison to the City average, but the majority
of serious crime in the 3rd Precinct takes place west of Hiawatha
Avenue [ENR is east of Hiawatha Avenue].
D.
The Downtown area
nightclubs are far more disruptive than ENR.
E.
ENR provides
adequate security and that there have only been one to two very minor incidents
at ENR when he was working as an off-duty officer.
F.
Public urination
occurs outside of ENR infrequently.
Event Closing Procedures
81.
ENR follows a
standard practice of concluding its music at 1:50 a.m. At that time, on nights when live music has
been playing, the live music ends and the entertainment director thanks the
patrons for coming, not to drink and drive, not to litter or make excessive
noise on the way back to their cars. The
patrons are also informed about specials available in the restaurant and
upcoming events. An informal lost and
found is conducted. The patrons are
informed that all alcoholic beverages must be consumed by 2:30 a.m. Recorded mariachi music is then played at a
lower sound volume.[90]
False Alarms
82.
The City License
Division cited ENR for an excessive number of false alarms. ENR paid the fines associated with the
excessive number of false alarms. The City
has not incurred undue expenses arising out responding to false alarms. In the opinion of Deputy Director Cervantes,
the violations relating to false alarms do not rise to the level of conduct
supporting license revocation.[91]
Notice of
Hearing
83.
On January 19, 2009,
the City License Division held a settlement conference with ENR and suggested that
conditions be imposed on ENR’s Class A Liquor License with Sunday Sales. ENR rejected the suggested conditions as
being too restrictive of its business.
ENR provided a proposed floor plan to be adopted as a condition on its
license. The City License Division
refused to agree to the new proposed floor plan.[92]
84.
On May 15, 2009, the City issued a Notice and
Order for Hearing to ENR, seeking a recommendation as to whether the City has good
cause to revoke ENR’s Class A On-Sale Liquor License with Sunday Sales.
Based upon the above Findings of Fact,
the Administrative Law Judge makes the following:
CONCLUSIONS
1.
The
Administrative Law Judge and the Minneapolis City Council have jurisdiction in
this matter under
2.
The Minneapolis
City Council has the authority to consider the charges against the Licensee and
the adverse action, if any, that should be imposed by the City pursuant to Minn.
Stat. § 340A.415, and Chapter 4, Section 16 of the Minneapolis City Charter.
3.
The City License
Division has complied with all relevant substantive and procedural legal
requirements.
4.
The City License
Division gave the Licensee adequate and timely notice of the hearing and of the
charges against it.
5.
As the party
proposing that certain action be taken, the City License Division has the
burden of proving facts at issue by a preponderance of the evidence.[94]
6.
The Minneapolis
Charter authorizes the City Council to license and regulate all bars, taverns,
restaurants and cafes. According to
Chapter 4, Section 5 of the Charter:
Nothing
herein shall limit the authority of the City Council to impose by ordinance
further restrictions or limitations on the granting of any liquor
license . . . . Except
as herein provided; all such on-sale and off-sale liquor establishments shall
continue to be subject to the pertinent statutes of the State of
7.
The Minneapolis
City Charter, Chapter 4, Section 16, states:
Licenses
May Be Revoked. Any license issued by
authority of the City Council may be revoked by the City Council at any time
upon proper notice and hearing for good cause; and upon conviction before any
court of any person holding such a license for the violation of the provisions
of any law, ordinance or regulation relating to the exercise of any right
granted by such license, the city council may revoke such license in addition
to the penalties provided by law or by ordinance for any such violation.
8.
The Minneapolis
Code of Ordinances (MCO) § 259.250, contains the following provisions, among
others, related to the minimum standards and conditions required to hold a
license under Titles 10, 13, and 14 of the Minneapolis Code.[95] Failure to comply with any of these standards
and conditions shall be adequate grounds for the denial, refusal to renew,
revocation or suspension of the license:
(1)
It shall be the
responsibility of the licensee to take appropriate action to prevent further
violations following conduct by any persons on the business premises, including
parking areas, in violation of any of the following statutes or
ordinances:
. . .
h. Minnesota Statutes, Section 609.72 and Section 385.90
of this Code, which prohibits disorderly conduct.
. . .
j.
Minnesota
Statutes, Sections 609.74 and 609.745, which prohibit public nuisance and
permitting a public nuisance.
. . .
l.
Any other
criminal activity arising out of the conduct of the business.
(2)
It shall be the
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.
. . .
(4)
It shall be the
responsibility of the licensee to provide adequate security to prevent criminal
activity, loitering, lurking and disorderly conduct on the business premises,
including parking areas.
. . .
(9) The
provisions of this section are not exclusive.
Adverse license action may be based upon good cause as authorized by
Chapter 4, Section 16 of the Charter.
This section shall not preclude the enforcement of any other provisions
of this Code or state and federal laws and regulations.
7. The
Minneapolis Code of Ordinances provides that any liquor license may be revoked
by the City Council for any violation of City Ordinance Chapter 362 or state
law, or because “of the conduct of the business of the licensee.” A liquor license may also be revoked “as
otherwise provided” by the City Code.[96]
8. Minn.
Stat. § 340A.415 provides that a municipality may revoke a liquor license for
any of five violations: 1) selling
alcoholic beverages to another retail licensee for resale; 2) purchasing alcoholic
beverages from another retail licensee for resale; 3) conducting or allowing
unlawful gambling on licensed premises; 4) the failure to remove or dispose of
alcoholic beverages pursuant to commissioner’s order; or 5) the failure to
comply with an applicable statute, rule or ordinance relating to alcoholic
beverages.
9.
The City has the
authority to revoke liquor licenses for the failure to comply with an
applicable statute, rule or ordinance relating to alcoholic beverages. The City exercises that authority where, in
the totality of the circumstances, the business cannot continue to operate
within its license without engaging in ongoing violations of applicable
statutes, rules, or ordinances.
10.
The City License
Division has not demonstrated that ENR’s ongoing operations constitute
operation of a nightclub, as that term is described under the MCO.
11.
The City License
Division has not demonstrated by a preponderance of the evidence that good
cause exists for the City to revoke ENR’s liquor license.
12.
The City License
Division has demonstrated that the imposition of a fine for the use of
temporary bars is appropriate. The City
License Division has demonstrated the 2:00 a.m. music ordinance was violated,
but the fine for that conduct has already been paid. The City License Division has demonstrated
that the imposition of conditions regarding a minimum number of seats and
retention of earlier conditions on ENR’s license are appropriate pursuant to Minneapolis
Ordinance § 259.250(9).
13.
To the extent
that the following memorandum contains additional conclusions, they are hereby
incorporated herein.
Based upon the above conclusions, the Administrative
Law Judge makes the following:
IT IS
HEREBY RECOMMENDED that the Minneapolis City Council not revoke the liquor
license held by Midwest Latino Entertainment & Talent, Inc., and Maya
Lopez-Santamaria d/b/a El Nuevo Rodeo. Should
the Minneapolis City Council determine that some sanction is appropriate, the
ALJ recommends that the Minneapolis City Council impose a fine for using
temporary bars, and imposing the following conditions on the license: 1)
discontinuing the use of temporary bars absent City License Division approval,
2) establishing an affirmative requirement that no fewer than 353 seats be
available in the licensed premises when the main floor is in use, and 3) that
the conditions established by agreement between ENR and the City License
Division in September, 2008 remain in effect.
Dated: March 17, 2010
s/Raymond
R. Krause
|
RAYMOND R. KRAUSE Chief Administrative Law Judge |
Reported:
Digitally Recorded (No Transcript Prepared)
NOTICE
This Report is a recommendation, not a final
decision. The Minneapolis City Council will make the final decision after a
review of the record and may adopt, reject, or modify these Findings of Fact,
Conclusions of Law, and Recommendation.
Pursuant to
The Minneapolis City Council is requested
to serve notice of its final decision upon each party and the Administrative
Law Judge by first-class mail.
Background
In this proceeding, the City of
Initial
Decision to License
ENR’s business plan is not ambiguous
regarding its planned operations. At the
time of ENR’s initial licensure, the Minneapolis City Council was aware of the
floor plan of the premises that ENR was proposing to use and the manner in
which the business would operate. The
City License Division was fully aware of what those impacts would be since the
prior tenant, Vanandy’s Nightclub, had been operating from that location for
over five years, with attendance at Vanandy’s events regularly filling the
available space.
The economic situation in the Longfellow neighborhood
and in the vicinity of 27th and
The consistent testimony of the City
License Division witnesses was that the initial licensure of ENR as a
restaurant, rather than a nightclub, was a “mistake.” The City maintains that it is not estopped
from correcting this “mistake.”[97] The record in this proceeding demonstrates
that there was no mistake made by the City.
Rather, the City exercised a reasoned judgment to authorize ENR’s
business to be conducted from the licensed premises. There was full disclosure from Ms.
Lopez-Santamaria regarding how ENR was to be run and what could be expected
regarding attendance and the resulting neighborhood impacts; and ENR has been
operating as it represented it would. ENR’s operation is clearly different from the
nightclub that previously operated from the same premises. ENR’s proposed operations were determined to
be compliant with applicable license and zoning regulations. The application of a different standard now
by the City’s inspectors does not change the propriety of the initial decision
to issue ENR its license.
Licensing Authority
Municipal authorities have broad
discretion within their geographical jurisdiction to determine the manner in
which liquor licenses shall be issued, regulated and revoked.[98] In discussing the implied powers of a city to
regulate the sale of liquor, the Minnesota Supreme Court has said,
The power
to regulate the retail sale of alcohol and alcoholic beverages conferred upon
the governing board of a city includes the power to prescribe such reasonable
rules and impose such reasonable restrictions as to the manner and
circumstances in which the business shall be conducted as will tend to promote
order and protect the public from harm.[99]
The City License Division contends
that revocation of ENR’s license is appropriate because ENR is no longer
operating as a restaurant, as required by the terms of its license. Minneapolis Ordinance 362.392 (a) sets out
the standards for establishments such as ENR, whose entrances are less than 500
feet from residentially-zoned properties, as follows:
(1) The
establishment shall maintain, on a monthly basis, gross sales revenue during
each fiscal year from the sale of food and beverages not containing alcohol in
an amount of not less than sixty (60) percent of its total gross revenue from
the sale of food and beverages, except that a bowling center shall maintain
such revenue in an amount not less than fifty (50) percent.
(2) No such premises
shall contain a "bar area" except as permitted herein. A "bar
area" shall mean any area not devoted exclusively to full restaurant
service to customers seated at tables, in which consumption of alcoholic
beverages is a substantial activity, except an area predominantly used as a
holding area for customers waiting for restaurant seating. The size and capacity
of such an area must bear a relationship to the size and capacity of the
restaurant area which is consistent with its purpose as a waiting area. A
waiting area of excessive size shall not be approved.
There is no dispute in this
proceeding that ENR meets the 60 percent gross revenue requirement. The City License Division contends that any
area not having seating is treated as a “bar area” for the purposes of this
ordinance. From this reading, the City
License Division contends that having removed some of the tables from the area
adjacent to ENR’s dance floor constitutes a violation of the prohibition
against a “bar area” on ENR’s premises.
The City License Division cited no language in any other part of its
ordinances in support of this contention regarding bar area.
The City License Division’s reading
of the ordinance bears no relation to the intent of the ordinance or its
application to ENR at the time of the issuance of the license. The common practice in many restaurants is to
have a bar area, just off of the main entrance, used as a waiting area while
tables become available. This area “must
bear a relationship to the size and capacity of the restaurant area.” A dance floor is not a waiting area. The plain meaning of the ordinance does not
allow for a dance floor to be treated as a “bar area.”
The limitations on what constituted
a “bar area” existed at the time ENR’s license was issued. The business plan and floor plan provided
with the application each indicated how the business would be operated. The ongoing operations of ENR have been
consistent with its business plan. The
changes to the seating arrangements did not substantially change the nature of
the business conducted on ENR’s premises from the time that the license was
first issued.
Inspector Olds acknowledged that
there is no effective definition of “nightclub” in the MCO.[100]
As a substitute for a definition in the license ordinances, the City
License Division relied on the
520.160. Definitions. Unless otherwise expressly stated, or
unless the context clearly indicates a different meaning, the words and phrases
in the following list of definitions shall, for the purposes of this zoning
ordinance, have the meanings indicated. All words and phrases not defined shall
have their common meaning.
* * *
Nightclub.
A use engaged in the sale of alcoholic beverages for consumption on the
premises, including taverns, bars, cocktail lounges and similar uses, or a use
other than a sit down restaurant which provides general entertainment.
The City License Division noted that
“little food was being served” at the time that inspectors were present. ENR’s testimony was unrebutted that its
kitchen was open during those times. The
City License Division has not suggested that it imposes any requirement that patrons
order full meals after 10:00 p.m. There
is no obligation under any of the ordinance provisions cited that full meals be
ordered at any time to maintain
operation as a restaurant. What ENR must
do is meet the 60/40 standard and not maintain a “bar area” beyond what was
approved in its business plan.
Inspector Olds acknowledged that ENR
was operating as it had when its license was first granted.[101]
The City License Division itself had approved ENR’s operations as
appropriate for the zoning in place at the time the license was granted.[102]
Applying the plain meaning of the
ordinance to the facts as developed in the record of this proceeding, ENR is
licensed as a restaurant. ENR is in
compliance with the 60/40 gross revenue standard. ENR provides general entertainment in
conjunction with its overall operation (not as a primary function of its
operation). The record in this
proceeding shows that ENR falls within the category of “a sit down restaurant
which provides general entertainment.”
For this reason, ENR does not meet the definition of a “nightclub” as
set out in
The City License Division also cited
the development standards in MCO § 536.20, which states in pertinent part:
536.20. Specific development standards. The uses listed below are subject
to the following specific development standards, in addition to all other
applicable regulations:
* * *
Nightclub.
(1) Where alcoholic
beverages are served, the use shall comply with the requirements of Title 14,
Liquor and Beer, of the Minneapolis Code of Ordinances and Chapter 4 of the
Minneapolis City Charter.
(2) The premises, all
adjacent streets, sidewalks and alleys, and all sidewalks and alleys within one
hundred (100) feet shall be inspected regularly for purposes of removing any
litter found thereon.
(3) Nightclubs
established or expanded after the effective date of this ordinance shall be
located at least five hundred (500) feet from a residence or office residence
district boundary.
The foregoing language does not
define “nightclub.” MCO § 536.20 was in
existence when ENR was first granted its license in 2003. The granting of ENR’s license in 2003
constitutes a determination by the City Licensing Division that the operations
defined in ENR’s business plan did not meet the definition of “nightclub.”
Inspector Casey asserted that the
change in seating supported the conclusion that ENR was now operating as a
nightclub. Inspector Casey indicated
that the standard was what was shown on the business plan and any variance from
that plan needed to be authorized by the City License Division.[103]
The floor plan for the ground floor
submitted by ENR at the time of the application shows seating for 14 persons at
the bar and 80 restaurant seats, totaling 94 seats.[104] The City License Division (as set out in
Findings 7 and 10 above) authorized a “seating capacity” on the ground floor of
94, which matches the number on the floor plan.
The City License Division described the authorized seating as consisting
of 77 seats at tables and a bar with 12 seats.
Those numbers total 89.
At the time of initial licensure, the
City License Division described the seating of the main floor as restaurant
seating for 64 persons at tables and chairs, an oval-shaped bar with seating
for 23 persons, a bar with seating for 17 persons, and additional seating for
160 persons at tables and chairs. In
addition to describing the two bar areas, the City License Division noted that a
stage and dance floor were present on the main floor. The City License Division’s description of
the seating present on the main floor totals 264.[105]
The total number of seats described
by the City License Division at the time of ENR’s application for licensure was
353 (89 lower floor, 264 main floor).
Adjusting for the lower floor total number (94) mentioned by the City
License Division, this total rises to 358.
In the application assessment document, the City License Division
described the total seating capacity as being 573 persons.[106] The total number of seats as shown on the
floor plans for the lower floor and the main floor totals 415.
There is no evidence in this record
to show that ENR ever had seats for 573 persons on its licensed premises. The description of “seating capacity” is,
under the circumstances present in this proceeding, an upper limit only. This conclusion is supported by testimony
from Deputy Director Cervantes. There is
no evidence to support a conclusion that the City License Division expected ENR
to provide seating for 573 persons in its ongoing business operations when ENR
was initially licensed.
Inspector Casey indicated that the City
License Division’s standard was for a business to operate as described in its
business plan at the time of the application, as limited by the terms of the
license issued. Any significant changes
would require approval by the City License Division.[107]
Regarding ENR’s seating, the observed number of seats on April 16, 2008
was 341.[108]
While this number is below the total of 353 City License Division-described
seats, the margin is not exceptional considering the overall size of ENR’s
premises.
The record in this matter shows that
the number of seats present in ENR does not constitute a basis for sanctioning
ENR’s license. The City may choose to
make the availability of 353 seats, while the main floor is in use, a condition
for continued licensure.
The City License Division contends that the
Licensee’s agreement to stop “operating as a nightclub” as part of the December
11, 2006 settlement conference imposed some sort of obligation on ENR.[109] The record in this proceeding shows that the City
License Division has proceeded under a mistaken conclusion that ENR has been
operating as a nightclub. ENR has been
in compliance with the December 11, 2006, settlement conference agreement by
operating in accordance with its business plan.
There is no condition placed on ENR’s license by that settlement
agreement that did not already exist in the license as issued.
Other
Conduct Cited
The City License Division relied on
an alleged failure by ENR to obtain a building permit for construction that
occurred in December 2008, as a basis for sanctioning ENR’s liquor
license. The City Inspector contended
that ENR was responsible for obtaining the permit simply because Ms. Lopez-Santamaria
had said she was.[110] Inspector Casey maintained that the
responsible party for obtaining the permit varies depending on who is doing the
work. The City License Division cited no
MCO provisions in support of this contention.[111]
MCO 87.90(f) authorizes the City’s
building authority to require the “owner, agent, occupant or person in charge
or control of the building involved, or the contractor constructing or altering
the building involved” to bring a noncompliant property into compliance with
the building code. But the following
provision states:
(g) For the purposes
of this subsection, the word "owner" is defined to mean any of the
following: The fee owner of record as recorded in the office of the register of
deeds or the registrar of titles for Hennepin County; the present owner
according to the tax records of the Hennepin County Tax Department; the owner
as filed with the department of inspections for the City of Minneapolis,
according to Chapter 244 herein; a contract vendor under a contract for deed,
or a contract vendee under a contract for deed. The
owner, or owners, shall be responsible for compliance with all orders issued
against their property and within the time period as set out in such orders,
where proper notice has been given such owner. Such notice shall be deemed
sufficient and proper when sent via prepaid, first-class postage to such owner
or owners at their last known address or their address as shown on such
recordations. This subsection shall be effective against any contracts or
conveyances entered into after August 19, 1978. (Code 1960, As Amend., § 10.200;
Ord. of 9-27-74, § 2; 78-Or-143, § 1, 8-11-78; Pet. No. 251752, § 1, 3-16-90) [112]
ENR was not ordered to bring a
condition into compliance. Rather, the
construction was identified as unpermitted.
Under MCO 87.90(g), the building owner, not ENR, was responsible for
obtaining the permit. ENR’s status as a
volunteer in obtaining the permit does not constitute a basis for sanctioning
ENR’s liquor license.
As a further ground for revocation,
the City License Division cited ENR’s delinquency in paying overdue false alarm
fines. This is a de minimis violation
and the fines have been paid. This is
not a valid basis for revoking ENR’s license.
The City License Division has
demonstrated three de minimus violations of MCO § 360.72 (f) on October 28
and November 28, 2008, and October 3, 2009 when music continued until 2:05
a.m. Modest sanctions are appropriate
for these violations, and any associated fine has already been paid. ENR has a policy to terminate its live music
approximately 15 minutes before the 2:00 a.m. deadline. This policy failed once in the past year to
stop the music on time. Revocation of
ENR’s license for these violations is a disproportionate sanction as these
violations do not constitute “good cause.”
ENR has paid the fines associated with
the music violations issued in October and November, 2008. The City License Division had not informed
ENR of the decision arrived at by Director Forte on November 21, 2008 (and
before the required nexus between any incidents and ENR had been determined),
that ENR’s license was to be revoked.[113] Had ENR been informed of that decision, ENR
would have been able to contest those citations as part of this
proceeding. As discussed in other parts
of this Memorandum, the violations underlying these citations do not support
revocation of ENR’s license.[114]
The City License Division contended that
"Evidence of an inordinately high number of incidents of criminal behavior
on the licensed premises was admitted into evidence during the course of the
hearing in the form of official police reports."[115] This contention was refuted by the testimony
of the MPD officers who work off-duty in ENR.
The number and seriousness of incidents of criminal behavior around ENR
are 1) less than that of adjacent areas in the same neighborhood, 2) largely
occurring from September through December 2008 as a result of instituting
stricter standards in ENR, and 3) drastically reduced in the period from
December 2008 to the present. While the
City Licensing Division has sought to attribute the demonstrated reduction in
criminal activity to the current economic recession or the existence of this
proceeding, the evidence in the record supports the conclusion that the
reduction is due to effective security measures implemented by ENR. Furthermore, the suggestion by the Licensing
Division that ENR might relocate to the downtown area belies its current
contention that it is a poorly managed, troubled enterprise.
Revocation of a license issued by
the City is authorized by the City Charter, which states in pertinent part:
Any license issued by authority of the City Council may be
revoked by the City Council at any time upon proper notice and hearing for good
cause.
The standards governing the use of
the MCO provision regarding “good cause” in sanctioning a licensee were
addressed recently by the Minnesota Court of Appeals, which stated:
To satisfy the Due Process Clause, a city ordinance
permitting adverse action against a liquor license must provide sufficient
objective standards to control the discretion of the governing authority and
must give adequate notice to the licensee of the criteria used to permit
adverse action against the license. See
45 Am. Jur. 2d Intoxicating Liquors § 151 (2007) (citing Folsom v. City of Jasper, 279 Ga. 260, 612 S.E.2d 287 (2005)
(holding due process rights violated where city council had discretion to
determine both whether a violation of law had occurred and that such violation
constituted grounds to suspend or revoke the license)).[116]
The City License Division has not
shown that the conditions regarding the current operation of ENR vary in any
significant degree from the business plan as set out in ENR’s initial
application for licensure. Inspector
Casey’s testimony made clear that the decision to seek revocation of ENR’s
license for operation as a nightclub was based on the erroneous belief that
ENR’s current operation somehow differed from the conditions set out in ENR’s
business plan and the application that was approved. Inspector Olds acknowledged that ENR was
operating in the same fashion that was originally approved by the Minneapolis
City Council when ENR’s license was granted.
The City License Division has not shown good cause to revoke ENR’s
license on the basis that it is operating as a nightclub or as a result of
minor miscellaneous infractions.
Revocation
and Lesser Sanctions
While the City has broad authority
regarding sanctions when taking adverse action against a liquor license, the
record in this proceeding demonstrates that revocation is too severe for the
few violations relating to ENR’s liquor license. The City License Division’s witness
acknowledged this to be the case.[117]
Further, ENR’s record of compliance since December 2008, has been exemplary,
with only one violation of the 2:00 a.m. music restriction having
occurred.
As the Minnesota Court of Appeals
has held:
When local governmental units exercise their licensing
authority, especially in connection with the sale of liquor, they must determine
whether continued operations will be ‘detrimental to the public good.’ Sabes
v. City of Minneapolis, 265
The record in this matter,
particularly the testimony of MPD officers with knowledge of the situation in
the immediate environs of ENR, demonstrates that ENR’s operations are not a
cause of problems in the neighborhood.[119] There is ample evidence in the record to show
that the continued operation of ENR is a positive benefit to the
community. Under the holding in Diva’s, the presence of a positive
benefit to the public good should weigh in the decision regarding sanctions,
particularly revocation.
An adequate evidentiary basis for
revocation of a business license was described by the Minnesota Court of
Appeals as follows:
Our exhaustive review of the record indicates that there was
substantial evidence that relator did not abide by the voluntary operating
conditions, considerable criminal activity occurred in the area directly
surrounding relator’s store, and relator violated provisions of the MCO. Further, both the ALJ and the committee
recommended that respondent revoke relator’s licenses. The committee found that relator’s store was
‘poorly-managed,’ ‘had a deleterious impact upon the community,’ and consumed ‘a
disproportionate and unreasonable amount of City enforcement and regulatory
resources.’ The committee also found that
while relator took some steps to address the problems related to criminal
activity occurring around the store, the ‘lengthy negative impact upon the community
and upon City resources’ outweighed any mitigating efforts presented by relator.
These findings are supported by evidence
in the record. See CUP Foods, 633
N.W.2d at 564 (holding that, while the evidence was ‘hardly overwhelming,’
there was substantial evidence to reasonably support respondent’s decision to
revoke relator’s business license).[120]
In this matter, the evidentiary
record shows that ENR has abided by the voluntary conditions on its license,
making extraordinary expenditures to do so.
The behavior cited as criminal activity in the area of ENR has primarily
arisen as ENR security has put in place stringent policies as requested by the City
License Division. Since that period of
adjustment, the number and severity of incidents has fallen dramatically.
The record in this matter shows that
ENR is well-managed and responsive to issues raised by the City License
Division. The substantial security in
place at ENR has significantly reduced the burden of the cost of police
protection on the City. While City
resources have been expended in this proceeding, that has been primarily driven
by the mistaken conclusion that ENR’s licensed operation, as originally
approved by the City License Division, was improperly authorized or has somehow
changed. That expenditure of City
resources on this issue cannot be considered in any way chargeable to ENR.
The record is essentially unrebutted
that ENR has taken effective steps to address problems related to criminal
activity in the vicinity of the business premises and the parking area rented
by ENR. The record is also clear that
ENR’s positive benefit to the community far outweighs the relatively few
problems that have been associated with patrons leaving ENR.
Applying the Amina factors to the record in this proceeding supports the
conclusion that the City License Division has not shown good cause to revoke ENR’s
business licenses. The ALJ respectfully
recommends that the City impose appropriate conditions on the license to
address the demonstrated violation, operation of a temporary bar that was not
described in ENR’s business plan. These
mobile bars do nothing to alter the proportion of food to alcohol nor do they
change the approved floor plan. They should,
however, be explicitly approved by the Licensing Division before use.
Under the holding in Gabby’s, supra, conditions imposed cannot extend to “livability issues” off
of the premises of ENR without a demonstration of a nexus between those issues
and violations of the MCO regarding liquor licenses. As discussed above, the required nexus has
not been shown by the record in this proceeding.
The City License Division has shown
that violations of the MCO regarding liquor licenses have occurred and that
lesser sanctions than revocation are appropriate. The record in this proceeding supports the
imposition of a fine for music continuing past 2:00 a.m. (which has
already been paid), a fine for using temporary bars, discontinuing the use of
such bars in the future absent City License Division approval, establishing an
affirmative requirement that no fewer than 353 seats be available in the
licensed premises when the main floor is in use, and a continuation of the
conditions established by agreement between ENR and the City License Division
in September 2008.
R. R. K.
[1] Ex. P318.
[2] Testimony of
Ricardo Cervantes; Test. of Antonio Gaytan; Test. of Maya Lopez-Santamaria; Test. of Alejandro Rojas;
Test. of Joyce Wisdom; Minneapolis Code of Ordinances § 520.160.
[3] Ex. R66A.
[4] Test. of R.
Cervantes; Test. of Gary Schiff.
[5] Test. of M. Lopez-Santamaria.
[6] Ex. R2.
[7] Ex. R1 at 15.
[8] Ex. R4.
[9] Ex. R2.
[10] Ex. P318.
[11] Test. of M. Lopez-Santamaria.
[12] Test. of
Julie Casey; Ex. P57.1-P57.2.
[13] Test. of M.
Lopez-Santamaria.
[14] Test of A. Rojas.
[15] Test of A. Gaytan; Test. of M. Lopez-Santamaria.
[16] Test. of M.
Lopez-Santamaria.
[17] Test. of J.
Casey; Ex. P57.1-P57.2.
[18] Test. of M.
Lopez-Santamaria.
[19] Test. of R.
Cervantes.
[20] Test. of J.
Casey; Exs. P311 and P317.
[21] Ex. R1.
[22] Test. of R.
Cervantes; Test. of J. Casey; Test. of Michele Olds.
[23] Exs. P60-P69, P78-P122,
P143-P267, P275-P281, P309-P310.
[24] Exs. P11-P12.
[25] Ex. R7; Test.
of J. Casey; Test. of Griselle Bermudez.
[26] Exs. P47.1,
P49-P55; Test. of M. Olds.
[27] Exs. P47.1,
P56; Test. of M. Olds; Test. of M.
Lopez-Santamaria.
[28] Exs. P123-P143, R12, R14,
R17, R19, R23; Test. of R. Cervantes; G. Schiff.
[29] Test. of J.
Casey.
[30] Ex. P41.
[31] Exs. P32,
P38, P39, P41, P42, P43, P43.1; Test. of J. Casey.
[32] Test. of M. Lopez-Santamaria.
[33] Exs. P13-P15.
[34] Test. of M. Olds.
[35] Test. of M. Lopez-Santamaria.
[36] Test. of R. Cervantes; Test. of M. Lopez-Santamaria
[37] Test. of G. Schiff.
[38] Test. of R. Cervantes.
[39] Test. of R. Cervantes.
[40] Test. of R. Cervantes.
[41] Test. of R. Cervantes.
[42] Test. of R. Cervantes.
[43] Exs. P44,
P45, P46; Test. of J. Casey.
[44] Test. of R.
Cervantes.
[45] Test. of R.
Cervantes.
[46] Test. of R.
Cervantes.
[47] Test. of R.
Cervantes.
[48] Ex. R 38.
[49] Ex. R 35.
[50] Test. of R. Cervantes.
[51] Exs. P36,
P36.1; Test. of J. Casey.
[52] Exs. P36,
P36.1; Test. of J. Casey. The City
License Division maintains that the observation of consumption occurred on
November 28 and was erroneously attributed to December 3, 2008. City Brief, at 3.
[53] Exs. P36,
P36.1; Test. of J. Casey.
[54] Test. of M. Lopez-Santamaria.
[55] Exs. P49-P53,
P58, P59, P318, R2-R4; Test. of J. Casey; Test. of M. Olds; Test. of R.
Cervantes; Test. of M. Lopez-Santamaria.
[56] Exs. P70.1,
P70.2, P71- P76; Test. of J. Casey.
[57] Test. of R. Cervantes.
[58] Ex. R50; Test. of G.
Schiff.
[59] Exs. 251-255;
Test. of M. Lopez-Santamaria.
[60] Test. of M.
Lopez-Santamaria.
[61] Exs. P268,
P269; Test. of J. Casey.
[62] Test. of M.
Lopez-Santamaria.
[63] Exs. P268,
P269; Test. of R. Cervantes.
[64] Exs.
P282-P310; Test. of J. Casey.
[65] Test. of R. Cervantes; Test. of M. Lopez-Santamaria; Test. of G. Schiff.
[66] Test. of R. Cervantes; Test. of G. Schiff.
[67] Test. of J. Casey; Test. of M. Olds.
[68] Exs. R67, R68; Test. of Frank Kutz; Test of Derrick Chauvin.
[69] Exs. R72, R73.
[70] Ex. R74.
[71] Ex. R75; Test. of J.
Wisdom.
[72] Test. of Melanie Majors.
[73] Test. of R. Cervantes; Test. of D. Chauvin; Test. of F. Kutz; Test. of M. Lopez-Santamaria; Test. of Carmen
Moran; Test.
of Eric Mulvihill.
[74] Test. of D. Chauvin; Test. of F. Kutz; Test. of M. Lopez-Santamaria; Test. of C. Moran; Test. of E. Mulvihill.
[75] Test. of C. Moran; Test. of M. Lopez-Santamaria.
[76] Ex. R65; Test. of M.
Lopez-Santamaria.
[77] Ex. R65; Test. of M.
Lopez-Santamaria, Test. of D. Chauvin, Test. of F. Kutz, Test. of C. Moran, Test. of E. Mulvihill.
[78] Test. of C. Moran; Test. of E. Mulvihill.
[79] Test. of C. Moran.
[80] Test. of M.
Lopez-Santamaria.
[81] Ex. R65; Test. of G.
Bermudez.
[82] Ex. R65; Test. of M.
Lopez-Santamaria.
[83] Ex. R65; Test. of G. Bermudez.
[84] Test. of R. Cervantes.
[85] Test. of R. Cervantes.
[86] Test. of C. Moran.
[87] Test. of E. Mulvihill.
[88] Test. of F. Kuntz.
[89] Test. of D. Chauvin.
[90] Test. of M. Lopez-Santamaria; Test. of A.
Gaytan.
[91] Test. of R. Cervantes.
[92] Test. of M.
Lopez-Santamaria.
[93]
[94] Minn. R. 1400.7300, subp.
5.
[95] Title 14 of the
[96]
[97] City Brief at 5.
[98] Bourbon Bar & Café Corp. v. City of St. Paul, 466 N.W.2d 438,
440 (Minn. App. 1991), citing Sabes v.
City of Minneapolis, 265
[99] City of
[100] Test. of M. Olds.
[101] Test. of M. Olds.
[102]
[103] Test. of J. Casey.
[104] Ex. P57.2
[105] Ex. R-4.
[106]
[107] Test. of J. Casey.
[108] The total of observed seats comes from the copy of
the floor plans in the record as P57.1 and P57.2. While P57.1 notes the total R-4.
[109] City Brief, at 5 (citing Amina. Inc. v. City of
[110] Test. of J. Casey
[111] The ALJ notes that throughout MCO Chapter 87, the
“owner” is the party with authority to obtain a certificate of code compliance
or seek relief from the Building Code Board of Appeals. The MCO provisions on permits, Chapter 89,
makes no mention of lessees obtaining permits, only owners and
owner-occupants. There may be a practice
on the part of the City permitting process to allow contractors or lessees to
obtain building permits, but such a practice does not change the standards set
out in the MCO.
[112] MCO 87.90(g) (emphasis
added).
[113] Ex. R-35.
[114] Test. of M.
Santamaria.
[115] City Brief at 3.
[116] ITMO On-Sale Liquor License, Class B, Held
by T. J. Management of
[117] Test. of R.
Cervantes.
[118] DRJ, Inc., d/b/a Diva's Overtime Lounge v.
City of
[119] By way of
contrast, clear issues were demonstrated in a license matter regarding a
different licensee in the same building.
In support of its arguments, the City cited ITMO the Applications for Class B and Class E Licenses of Baku
Entertainment & Restaurants, LLC and Fatemeh Engen, OAH Docket No. 8-6010-19615-6 (Findings of Fact, Conclusions and Recommendation
issued March 3, 2009) (Baku). In
[120] Amina, Inc, supra.